The document discusses Foreign Direct Investment (FDI) in India, specifically in the retail sector. It defines FDI and provides examples of major foreign retailers interested in the Indian market. It outlines the Indian government's policies that allow 51% FDI for multi-brand retail and 100% for single-brand. The document also discusses the types of FDI, sectors that attract FDI in India, and both the advantages and disadvantages of allowing FDI in the retail sector.

1. PRESENTATION OF ILP
SAM -1ST RE –APPER
PRESENTED BY
NAVEEN KUMAR
CUN110501060

2. FDI or Foreign Direct Investment
• FDI or Foreign Direct
Investment A company from
one country making a
physical investment into
building a factory in another
country.
• FDI has come to play a major
role in the
internationalization of
business

3. Foreign Direct Investment
 What is FDI ?
 Foreign direct investment ( FDI ) is direct investment by a
company in production located in another country either by
buying a company in the country or by expanding operations
of an existing business in the country.
 Why FDI ?
 To take advantage of cheaper wages in the country.
 Special investment privileges such as tax exemptions offered
by the country .
 To gain tariff-free access to the markets of the country or the
region.

4. Entry Options For Foreign Players prior to FDI
Policy
Franchise Agreements
Cash And Carry Wholesale Trading
Licensing Agreements
Manufacturing and Wholly Owned
Subsidiaries.

6. FDI Policy for Retail Sector
in India
 The government (led by Dr. Manmohan Singh, announced
following prospectivere forms in Indian Retail Sector
 1. India will allow FDI of up to 51% in ―multi-brand‖ sector.
 2. Single brand retailers such as Apple and Ikea, can own 100%
of their Indian stores.
 3. The retailers will have to source at least 30% of their goods
from small and medium sized Indian suppliers.
 4. All retail stores can open up their operations in population
having over 1million.

7. Types of FDI
 Horizontal FDI- arises when a firm duplicates its
home country-based activities at the same value
chain stage in a host country through FDI.
 Platform FDI
 Vertical FDI- takes place when a firm through
FDI moves upstream or downstream in different
value chains .

8. FDI in India
• India is the second most important FDI destination (after
China) for transnational corporations during 2010–2012.
• Sectors which attracted higher inflows were
services, telecommunication, construction activities and
computer software and hardware.
• Mauritius, Singapore, the US and the UK were among
the leading sources of FDI. FDI in India in 2010 was
$44.8 billion, and in 2011 experienced an increase of
25% to $50.8 billion .

10. . What does 51% FDI in multi-brand
retail ?
 Minimum investment of $100 million.
 50% of the investment is to be in backend
infrastructure development.
 30% of all raw material has be procured from Indian
small and medium industries.
 Permission to set up malls only in cities with a
minimum population of 10 lakhs.
 Government has the first right to procure material
from the farmers.
 Foreign investor should be the owner of the brand.

11. FDI
advantage and disadvantage
 Inflow of equipment and
technology.
 Crowding of local
industry.
 Competitive advantage &
innovation.  Conflicts of laws.
 Financial resources for  Loss of control.
expansion.
 Effect on natural
 employment generation.
Environment
environment.
 Contribution to exports growth.  Effect on local culture.
 Improved consumer welfare
through reduced cost , wider
choice and improved quality

12. Diverse foreign direct investment in indian
retail is greatly cherished by most of the major
and leading including:-
Walmart (USA) Rs 455.80 crore
Tesco (UK) £1bn
 Metro (Germany)about Rs 650 crore
 Carrefour (France)488 crore

13. FDI in Retail sector:
 FDI in Retail sector FDI in retail sector is not allowed.
 100 % FDI is allowed in cash and carry wholesale and
export trading, both wall mart and Carrefour have already
entered in India in this segment .
 FDI in retail sector will have both positive and negative
effect if allowed. Both organized and unorganized sector
will face adverse competition from global players. Wal-Mart
has a turnover of $256 billion and growing at an average of
12 -13 % annually. Average size of its stores is 85000sq ft
and average turnover is $51 million

14. Single Brand Retailing
 only single brand products would be sold (i.e., retail of goods
of multi-brand even if produced by the same manufacturer
would not be allowed),
 products should be sold under the same brand
internationally,
 single-brand product retail would only cover products which
are branded during manufacturing.
 any addition to product categories to be sold under ―single-
brand‖ would require fresh approval from the government.

15. FDI in Multi-Brand Retail
• The government has also not defined the term Multi Brand. FDI in Multi Brand
retail
• implies that a retail store with a foreign investment can sell multiple brands under
• one roof.
• In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry of
• Commerce circulated a discussion paper [14] on allowing FDI in multi-brand retail.
• The paper doesn‘t suggest any upper limit on FDI in multi-brand retail. If
• implemented, it would open the doors for global retail giants to enter and
establish
• their footprints on the retail landscape of India. Opening up FDI in multi-brand
retail
• will mean that global retailers including Wal-Mart, Carrefour and Tesco can open
• stores offering a range of household items and grocery directly to consumers in
the
• same way as the ubiquitous ‘kirana’ store.

16. FDI in retail: Positive and Negative impact
• Positive impact
• Job opportunities in areas like marketing, agro-
processing, packaging, transportation, etc. will be created.
• Farmers will get a good price for their crops and their exploitation will stop.
• Infrastructure facilities, refrigeration technology, transportation, etc. will be
renovated.
• Foreign companies will also create a supply-chain in the India market.
• Negative impact
Small retailers and other small ‘ Kirana store owners’ will suffer a large loss.
• Giant retailers and will displace small retailers.
• foreign giants will purchase their goods from the international market and
not from domestic sources.
• Affect will be on consumers ,retailers ,wholesalers ,farmers (producers).

17. Division of Retail Industry
Organised
 licensed retailers,
 who are registered for sales tax, income tax,
 Unorganised
 traditional formats of low-cost retailing,

18. Why do we need it:
• We are the second highest producer of fruits and
vegetables in the world but still we are not able to
utilize is properly because of inadequate infrastructure
facilities.
• It will reduce pre-harvest wastage/losses and thus help
control food inflation.
• It will create 1.5 million more jobs in 5 years. Apart
from the huge number of indirect employment.
• It will increase competition which is always beneficial
for the customer.
• It will remove the middleman from the equation. It will
reduce costs which in turn will reduce prices.