fdi in multi brand retailing in india-b.v.raghunandan
DESCRIPTION
Relevance of Foreign Direct Investment in Multi-Brand Retailing in IndiaTRANSCRIPT
Foreign Direct Investment in Multi-Brand Retailing in India
-B.V.Raghunandan, SVS College, Bantwal
Post-Graduate Department of Commerce,
Government College, BarkurOctober 12, 2012
Classes of Foreign Investment
• Foreign Institutional Investment• Foreign Direct Investment
Retailing: Brand Modes
• Single Brand : Also known as vertical brands
- Single Line Format - Multiple Locations - Limited Investment• Multi-Brand : Many brands
including private brands - Limited Locations - Huge Investment
Recent Government Move• 51% FDI in Multiple Brand
Retailing• 100% FDI in Single Brand
Retailing• 30% Outsourcing Locally from
MSME units• Brands need not be Owned by
the Parent, but by any of the Subsidiaries
• In cities with a population of not less than 10 lakh
The Widespread Opposition
• Political Parties are Dominated by Mandis
• Fear of the Middlemen being Removed
• Economic Issues are Adopted when Political Ideologies Whither Away
• Kiranawala is only an eye wash argument
Impact on Local Kiranawalla• Near the Location of
the Customers• Flexibility on the Basis
of Requirements of Customers
• No need to Scale up the Model
• Low Employee and Establishment Costs
• Customer Services• Limited Suitability for
Large Retail Format
Need for FDI • Encouraging Contract Forming• Better Processing of
Agricultural Produce• Networking with Local Retailers• Commercial Warehousing in
Rural Areas• Better Dissemination of Market
Information• Healthier Agricultural Practices• Better Seeds and Organic
Farming• Better Agricultural Research• Avoiding Wastages
Earlier Examples
• ITC’s E’Choupal• Pepsi’s Contract Farming in Punjab• EID Parry’s Farmers-Connect• AMUL’s Success• Nestle’s Dairy Development• Private Dairies
Interest of FDI• Large Markets• Stable Income Levels in
India• Sourcing of Agricultural
Produce• Festivals and Special
Occasions (Multi-etnic and Multi-religious)
• Cash Based Transactions• Diversified Consumption
Problems for the FDI
• Limited Working Hours• Working Hours Unsuitable for Indian Customers• Expensive Real Estate• High Salary to the Employees• High Establishment Expenses• Unsuitable for Many Lines of Products• Indian Corporate Retailers paint a sad Story• Younger Demography
Focus• Development of Infrastructure in Rural Areas• Better Price for the Farmers• Effective Utilisation of Grains in the Godowns of Central and State
Warehousing Corporation• Better Processing Facilities• Increasing the Storage Facilities• Better Farming Practices• Better Farmer Education using Modern Technology
THANK YOU