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Impact of FDI in Retail Sector
1. Impact of FDI in Retail
Sector
Presented by,
Deep Jyoti Das
CUN110501021
BBA 3’X
2. Introduction
• Foreign direct investment (FDI) is direct investment
into production in a country by a company in
another country
• Either by buying a company in the target country or
by expanding operations of an existing business in
that country.
3. Foreign Investment In India Is Regulated By
• RBI- Reserve Bank of India
• FIPB- Foreign Investment Promotion
Board
4. Foreign Direct Investment In India
• Starting from a baseline of less • Mauritius, Singapore, US and UK
than $1 billion in 1990 were among the leading
• A recent UNCTAD survey sources of FDI.
projected India as the second • FDI in India in 2010 was $44.8
most important FDI destination billion
(after China) for transnational • In 2011 experienced an
corporations during 2010–2012. increase of 13% to $50.8 billion.
• The sectors that attracted • Mauritius has been the largest
higher inflows were “Direct Investor” in India (US $
– services 20 billion)
– telecommunication • The US is the 2nd largest investor
– construction activities in India (US$6 billion)
– computer software and
hardware
9. Forms of FDI in Indian Retailing
• Joint Ventures
• Franchising
• Sourcing of Supplies from small-scale sector
• Cash &Carry operations
• Non-Store Formats
10. Why FDI in India
• Developing economy
• Low salaried employees
• Low wage workers
• Abundant human resources
• Big private economy
• Growing urban population
• Changing customer pattern
11. Present Condition
• Farmers get only 10-15% of the price we pay
• 3-4 middlemen in between farmers & customers
• Huge post produce losses for farmers due to
inadequate facilities
• A poorly managed food supply infrastructure
12. Why Do We Need FDI
• For adequate infrastructure facilities.
• For controlling food inflation.
• It will create 1.5 million more jobs in 5 years.
• It will increase competition which is always beneficial for the
customers.
• It will remove the middle-man from the equation.
• It will reduce costs which in-turn will reduce prices
13. Challenges of FDI in Retailing
• Economies of scale:- providing the customer the best at
lowest price
• Brand Name:- they bring with world class products which have
high quality and high valued brand name
• Technology:- global players are highly advanced in
technology
• Attract Skilled Employees:- attractive salary and high
incentives can attract skilled employees towards global
players
• Joint Venture:- global players may not prefer to enter into joint
ventures with Indian firms
• Political Challenge: The support of the political structure has to
be there towards the investing countries abroad.
14. FDI In Retail
Advantages Drawbacks
Generates huge employment × Foreign players would displace
the unorganized retailers
Increased investment in because of their superior
technology financial strengths
The huge tax revenue × The entry of large global
generated retailer such as Wal-Mart would
kill local shop and millions of
jobs
The customer gains from the
wide variety of choices and a
more diversified basket. × Increase in real estate prices
and marginalize domestic
entrepreneurs
15. THE IMPACT OF FDI IN RETAIL ON SME SECTOR-
A Survey Report by CII (Confederation of Indian Industry)
SALES
Majority of the respondents (98.6 percent) are of the opinion that the opening of
the FDI in retail will augment growth of sales of their products.
17. New Orders/ Contracts
Majority of respondents are of the view that the decision of opening of the FDI in
retail would impact positively in the form of new orders/contracts generated.
18. Employment
With regard to employment, around 48 percent of the respondents are of the
opinion that the decision would have a positive impact on their employment
