fdi in retail sector

Presented By:-Manpreet Singh

•FDI in Retail – Policy Perspectives

•Retail Sector – An Overview

•FDI Policy in Retail - Opportunities & Challenges

•Conclusion

Issues for Discussion

Investment done by citizens and government of one country (home country) invest in industries of another country (host country).

Foreign Investment

through

Foreign Direct

Investments

Foreign Institutional

Investors

Automatic Route Government

No permission required Approval /License required.

• 1991- FDI allowed selectively up to 51% in priority

sectors

• 1997-FDI allowed up to 100% in sectors like

mining, manufacturing

• 2000-06 FDI allowed up to 100% in specified sectors

FDI limits increased

Procedures further simplified

• The top 3 Indian Regions attracting the highest FDI

Mumbai, Delhi and Karnataka

Account for nearly 62% of the total FDI

Bartersystem

Weekly market

Village melas

KiranaStores

Government Stores

Super markets

Hyper markets

Malls

Brand outlets

Incentives attract FDI

Market size and potential are sufficient inducers

Tax breaks, import duty exemptions, land and power

subsidies etc

FDI inflows from August 1991 to

April2010 were Rs. 6750 billion

FDI inflows from 2000-10 crossed Rs.

15000 billion

• Size : 400 billion Rs.

• Growth Rate : 13%

• GDP contribution : 12%

• Major sector : Food and Grocery

• Employment : 2nd largest industry

(35.06 million)

Types: Organized ( 5%)

Unorganized ( 95%)

Current Dollar Rate (52.64 rs)Money Control

20%

8%

14%

6%

12%

USA

China

Japan

Brazil

India

Contribution Respectiveto GDP

US

Sales: Rs. 18750 bn

Earnings: Rs. 650 bn

Stores: 6,800

worldwide

France

Sales: Rs. 6500 bn

Earnings: Rs. 300 bn

Stores: 87,422

worldwide

UK

Sales: Rs. 5150 bn

Earnings: Rs. 303 bn

Stores: 3,729

worldwide

Germany

Sales: Rs. 5100 bn

Earnings: Rs. 100 bn

Stores: 2,221

worldwide

US

Sales: Rs. 3900 bn

Earnings: Rs. 250 bn

Stores: 2,258

worldwide

•A large emerging market

Increase in income of a family

Consumer spending power increased by 75% in

last 3 years

The per capita income in 2009–2010 has more

than doubled to Rs. 35400 from Rs. 18096 in

2000–01

INDIA

•Employment generation.

Second-largest employer after

agriculture

Retail trade employing 35.06 million

Wholesale trade generating an

additional employment of 5.48 millions

Additional 1.6 mnjobs .

•Technology Better use of resources and

goods

Wastage and Storage problems will be

resolved

Efficient logistics, production, and

distribution channels

Digital records

•Rural market's

60% Indian households

2/5 of the country’s total consumption pie

Accounts to 45% of GDP

• Major challenge faced by 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

• CSR September,2012

• A strong competition from mom and pop shops:-

Easily accessible & approachable

Provide services like Free home delivery and goods on

credit

They change consumer focus

IND

IAN • Pantaloons

• Reliance• Bharti retail• RPG• Lifestyle• K raheja• Subhiksha• Piramyd• Trent• Vishal group

GL

OB

AL • Tesco

• Walmart• Metro• Carrefour• B&Q• Target

• Market power is in hands of unorganized retail

•95%Unorganized

•5%Organized

India is still in developing stage in installing and

managing an effective IT system especially in rural areas

which hampers the overall growth of organized retail

sector.

Banks are reluctant to finance retailers because of falling

demand of organized retailers in India as it has witnessed

failure of many stores like Spencer's, Subhiksha etc.

• Taxation laws in India favors only small retail businesses

• Implementation of non-uniform VAT across states

• Octroi and entry tax in some states

The increased flow of FDI in a country has given a major boostto the country's economy

FDI has provided better access to technologies for the localeconomy

Multinational firms have increased the degree of competitionin host-country markets which will force existing inefficientfirms to invest more in physical or human capital

India, with its skilled labor and manpower has thepotential to overtake China as the most preferreddestination for Foreign Investments.

Hence measures must be taken in order to ensure that theflow of FDI in our country continues to grow.

Thank You