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FDI in RETAIL
FDI in the retail sector in India presents both opportunities and challenges. It could boost the supply chain and bring investment in technology and skills development. However, there are concerns about the impact on small retailers and employment. If regulated properly with a gradual opening and conditions on investment in rural areas, FDI could benefit farmers and consumers while curbing inflation. The human resource challenges include developing skills to match the demands of the modern organized retail sector. Overall, FDI in retail has the potential to modernize retail and improve efficiency if risks are mitigated and inclusive growth is ensured.
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FDI in RETAIL
- 1.
- 2. FDI in Retail– Policy Perspectives.
- 3. Retail Sector –An Overview.
- 4. FDI Policy inRetail - Opportunities & Challenges.
- 5. Emerging Human ResourceChallenges.
- 6. What lies ahead?Issues for Discussion
- 7.
- 8. An investment is.. The commitment of money or capital to purchase financial instruments or assets in order to gain profitable returns.
- 9. An investment becomesforeign investment when..Foreign Investment through Investment done by citizens and government of one country (home country) invest in industries of another country (host country).Foreign Direct InvestmentsForeign Institutional Investors
- 10. FDI Routes Automatic RouteGovernmentNo permission required Approval /License required.
- 11.
- 12. FDI Policy Initiatives1991-FDI allowed selectively up to 51% in priority sectors.
- 13. 1997-FDI allowed upto 100% in sectors like mining, manufacturing.2000-06 FDI allowed up to 100% in specified sectors.
- 14.
- 15.
- 16. The top 3Indian Regions attracting the highest FDI.
- 17. Mumbai, Delhi andKarnataka.
- 18. Account for nearly62% of the total FDI.Introduction to Modern Retail
- 19. FDI Policy inIndian Retail Sector
- 20. Why Global RetailersLook Up to India?Incentives attract FDI.
- 21. Market size andpotential are sufficient inducers.
- 22. Tax breaks,import duty exemptions, land and power subsidies, and other incentives.Comparison of FDI Inflow.
- 24. RetailIndustry : AnOverview
- 25. Indian Retail SectorGRDIPosition : 3rdSize : $ 400 billionGrowth Rate : 13%GDP contribution : 12%Major sector : Food and GroceryEmployment : 2nd largest industry (35.06 million)Types: Organized ( 5%) Unorganized ( 95%)
- 26. Emerging TrendsCorporates areincreasingly coming into this sector.
- 27. Demand of brandedgoods on a large scale.
- 28. Demand of newand varied products.
- 29. High quality productis preferred .
- 30.
- 31. E-tailers increase thepresence.Major Indian Retailers : Categories
- 32.
- 33. Retail Sector atGlobal LevelOne of the world's largest industries exceeding US$ 9 trillion.
- 34. Dominated by developedcountries.
- 35. 47 global fortunecompanies & 25 of Asia's top 200 companies are retailers.
- 36. US, EU &Japan constitute 80% of world retail sales. Retailtrade in Europe employs 15% of the Europeanworkforce (3 million firms and 13 million workers).
- 37. The world’spopulation is poised to expand 50% by 2050. The world currently comprises of 78% poor, 11% middle income and 11% rich.Contribution Of Retail Industry to GDP of Various Economies
- 39. OrganisedvsUnorganised Retail atGlobal Level
- 40.
- 41. Opportunity Analysis andStrategies in Retail Globally
- 42. India Vs.China
- 43.
- 44. What AreGlobal Retailers Saying?Respondents say BRIC countries remain top targets for expansion.
- 45.
- 46. Increase in disposableincome of a family.
- 47. 70 mn Indians– salary of $18,000.
- 48. Rise to 140mn by 2011.
- 49. Consumer spending powerincreased by 75% in last 3 years.
- 50. The per capitaincome in 2009–2010 has more than doubled to US$ 849 from US$ 348 in 2000–01.Characteristics of Indian MarketSource: McKinsey&Company
- 51. Consumer Class ShiftIncreasein consumer class.
- 52. Consumer class willgrow from 50 million at present to 583 million by 2025.
- 53. With more than23 million people taking their place among the world’s wealthiest citizens. Consumer BehaviourWide demographics -- average age of 25 yrs.
- 54.
- 55. 60 % ofpopulation below age of 30.
- 56. Awareness through WorldWide Web.
- 57.
- 58. Focus shifting fromlow price to convenience, value and a superior shopping experience.
- 59. Small Basket Size Shaping of ConsumptionConsumption BoomSource: McKinsey&Company
- 61. Easy CreditEasy consumercredit.
- 62. EMI & loanvia credit cards -- easy for Indian consumers to afford expensive products.
- 63. For instance, CasasBahia’s- Brazil. Note: BOP C.K.Prahalad.
- 64.
- 65. Second-largest employer afteragriculture.
- 66. Retail trade employing35.06 million.
- 67. Wholesale trade generatingan additional employment of 5.48 million.Additional 12-15 mn jobs .
- 68. TechnologyTechnology Betteruse of resources and goods.
- 69. Wastage and Storageproblems will be resolved.
- 70. Efficient logistics, production,and distribution channels.
- 71.
- 72.
- 73.
- 74.
- 75. 2/5 of thecountry’s total consumption pie.
- 76. Accounts to 45%of GDP.Fiscal GrowthFDI in Retail sector will resolve problems regarding foreign exchange in India.Evergreen NeedThe life-long basic needs will keep on driving the Retail Industry.Let the liberalisation be in steps rather than being a leap.
- 77.
- 78.
- 79. Major challenge facedby Organized retail sector: In Retail, over 70 per cent of the labor force in both sectors combined (organized and unorganized) is either illiterate or educated below the primary level.
- 80. Labor LawsLack ofSkilled Workforce
- 81. A strong competitionfrom mom and pop shops:-
- 82. Easily accessible &approachable.
- 83. Provide services likeFree home delivery and goods on credit.
- 84. They change consumerfocus.COMPETITION
- 86. Problem of RealEstate
- 87. Organized Retail Formatsin India
Editor's Notes
- #18 Varied window displat : now a days retailers know that if your product is dosplayed properly acc. to the culture of the state you are operating in , will definaltey help you
- #27 Count the country and then speak on the 4 things showed here
- #52 This is not all there is still more
- #78 In 2881, India had the highest shop density in the world, with 11 outlets for every 1,888people.. The high density restricts their scope of expansion, and thereby ofupgrading. This also means that, except in the case of severely segmented markets, thissector stands little chance of competing against large retailing corporations operatingwith economies of scale.
- #79 It will bring out many positive changes i.e. improvement in supply chain management. It is noticed that 35-40% of the agriculture produce perishes every year due to poor infrastructure in India and there are only 6522 cold storages in India mainly used for potatoes.Investment in technologies and infrastructure by the retail corporations will act as a boon for our economy.These org will come in with technical know how and expertise and will train indian manpower and hone their skills as suitable for the industry.Moreover small players who have already been working with Internationalchains like Wal-Mart/Carrefour in India have benefitted a lot by manufacturing their private label products & also showcasing ourproducts in their stores by reaching end consumer directly at competitiveprices which would otherwise launching and building a new brand is a task in itself.It is understood that MNC that invest in retail in india would also source indian goods to their international outlets in a big way, thus provide a boost to indian exports. Indian retail chains would get integrated with global supply chain since Fdi will bring in technology, quality standards and marketing.
- #82 technological know how, soil quality improvement, pesticide and fertilizer usage,grading, sorting, capabilities and increasing availability of low interest credit forfarmers.
- #84 After observing the opportunities and challenges, the views of different org. and the benefits that are likely to take place in indian economy..the panel recommends that fdi in multi brand retail should be allowed but a cap of 49% should be imposed to protect the interest of small and medium size retailers and give them a breathing space to adjust themselves to the new environment and also work to bring in their competitive advantage. China opened the fdi 49% in 1992 and has been immensely benefitted due transfer of technical know how and increased exports there are currently appx 40 foreign players contributing to org retail sector. Now, its time for india to open the borders and be benefitted by the retail growth.A major proportion of initial FDI should be invested in developing back endinfrastructure. For e.g. the foreign partners need to tell the total amount thatthey will be investing in next five years. Out of these atleast 80% of the FDIhas to be made in initial three years.We talked of large percentage of agriculture produce getting wasted annually. Well investment in technology and supply chain will surely prevent such wastages consequently curb the supply caused inflation which is currently hovering around 15.46%.
- #85 It is well noted that urban migration has created a significant excess of labour in India's largeand medium-sized cities. Retail jobs can offer a viable career opportunity for the urbanunemployed who may lack in formal education and training, just as they can for those inrural areas. Rather than stipulating employment conditionalities that may obstructemployment generation in urban areas, alternative incentive structures may be used toencourage companies to train and employ youth in the areas in which retail outlets arelocated - both rural and urban.Additionally, if incentive structures or conditionalities are imposed, they should be mandatedupon both domestic and foreign funded retail chains equally.Furthermore, it is being discussed that retailers should be restricted to larger citiesof 10 lakh or more. This point is in direct conflict with a stipulation requiring the hiring ofrural youth, who will likely be unable to travel to their place of employment in a consistent,cost-effective manner.
- #86 And u can well see difference in the share of spending in these 3 categories by rural and urban households.
- #87 Retail investments and operations are typically executed with local and regionalconsiderations in mind, so a national legal framework cannot truly be effective. State andlocal licensing requirements are sufficient to protect small retailers, and otherwise regulatethe industry.Implementing new regulations will likely hold back growth in this sector, as well as weaken itsAttendant benefits on SME suppliers, consumers and supply chain investment. Rather thanimpose such regualtion, the government may consider policies and incentives that directlybenefit small retailers. These incentives can include, for example, access to low-cost capital,training on quality and technical standards, and infrastructure investment in their ownbusinesses.