FDI in retailBY- T. Vignesh Sunil Manchandia Subhra Dutta
Introduction What is FDI? Investment directly into production of a country, by a company located in another country. Why is it done? Cost of labour. Incentives attract FDI. How does FDI happen? Buy a company in a targeted country. By expanding operations of an existing business in that country.
Retail sector in India Retail sector in India is divided into two parts. Organized. Unorganized. Facts about retail sector in India. GDP contribution:22% Size of retail: $450 billion. GRDI position: 3rd Growth rate : 20% Employment : 2nd largest. Major retail segment: food and grocery
FDI in retail(single brand)Single brand retail(100%) Products to be sold should be of a ‘Single Brand’ only. Products should be sold under the same brand. Foreign investors should be the owners of the brand. It would only cover products covered during manufacture.
•FDI in multi brand retail generally refers to sellingmultiple brands under one brand•FDI in retail is permitted up to 51%• Minimum amount to be brought in as FDI would be US$100 million.•It can only be set up in cities with population more then 10lakhs.•Multi brand retail comes in different formats likesupermarkets, hypermarkets, compact hyper and malls.
•FDI in retail benefits Indian agricultural sector.•Government would have the benefits of proper infrastructure,sophisticated technologies and employment opportunities.•With the allowance of 51 % - half of the profits remain inIndia.• Any profit will be subject to taxes, reducing budget deficient.• Few thousand jobs will be created but thousands will also belost.