2. WHAT IS FDI?
Foreign direct investment (FDI) is investment
directly into production in a country by a company
located in another country,
By buying a company in the target country
By expanding operations of an existing business in
that country
It is cross border investment
Where foreign assets are invested into the
organizations of the domestic market excluding the
investment in stock.
An Introduction
Foreign direct investment (FDI) is investment
directly into production in a country by a company
located in another country,
By buying a company in the target country
By expanding operations of an existing business in
that country
It is cross border investment
Where foreign assets are invested into the
organizations of the domestic market excluding the
investment in stock.
.
3. Avoiding foreign government pressure for local production.
Circumventing trade barriers, hidden and otherwise.
Making the move from domestic export sales to a locally-
based national sales office.
Capability to increase total production capacity.
Opportunities for co-production, joint ventures with local
partners, joint marketing arrangements, licensing, etc;
Why is FDI important for any consideration of going global?
The simple answer is that making a direct foreign investment allows
companies to accomplish several tasks:
Avoiding foreign government pressure for local production.
Circumventing trade barriers, hidden and otherwise.
Making the move from domestic export sales to a locally-
based national sales office.
Capability to increase total production capacity.
Opportunities for co-production, joint ventures with local
partners, joint marketing arrangements, licensing, etc;
.
4. RETAIL INDUSTRY
The Retail sector of India is vast, and has huge
potential for development, as the majority of its
constituents are un-organized. The retail sector
of India contributes about 15% to the national
GDP, and employs a massive workforce of it,
after the agriculture sector.
Retail Sector in India:
The Retail sector of India is vast, and has huge
potential for development, as the majority of its
constituents are un-organized. The retail sector
of India contributes about 15% to the national
GDP, and employs a massive workforce of it,
after the agriculture sector.
.
5. RETAIL INDUSTRY
The retail sector of India handles about $250
billion every year, and is expected by veteran
economists to reach to $660 billion by the year
2015. The business in the organized retail sector
of India is expected to grow at the rate of 15-20%
every year, and can reach the level of $100
billion by the year 2015.
Retail Sector in India:
The retail sector of India handles about $250
billion every year, and is expected by veteran
economists to reach to $660 billion by the year
2015. The business in the organized retail sector
of India is expected to grow at the rate of 15-20%
every year, and can reach the level of $100
billion by the year 2015.
.
7. DIVISION OF RETAIL INDUSTRY – ORGANIZED AND UN ORGANIZED RETAILING
Organized Retailing
organized retailing refers to
trading activities undertaken
by licensed retailers, that is,
those who are registered for
sales tax, income tax, etc.
These include the corporate-
backed hypermarkets and
retail chains, and also the
privately owned large retail
businesses.
Un organized Retailing
Un organized retailing, on the
other hand, refers to the
traditional formats of low-cost
retailing, for example, the
local kirana shops, owner
manned general
stores, paan/beedi shops,
convenience stores, hand cart
and pavement vendors, etc.
The retail industry is mainly divided into:-
.
Organized Retailing
organized retailing refers to
trading activities undertaken
by licensed retailers, that is,
those who are registered for
sales tax, income tax, etc.
These include the corporate-
backed hypermarkets and
retail chains, and also the
privately owned large retail
businesses.
Un organized Retailing
Un organized retailing, on the
other hand, refers to the
traditional formats of low-cost
retailing, for example, the
local kirana shops, owner
manned general
stores, paan/beedi shops,
convenience stores, hand cart
and pavement vendors, etc.
8. RETAIL INDUSTRY
The Indian retail sector is highly fragmented
with 97 per cent of its business being run by the
Un organized retailers. The organized retail
however is at a very nascent stage. The sector is
the largest source of employment after
agriculture, and has deep penetration into rural
India generating more than 10 per cent of
India’s GDP.
Retail Sector in India:
The Indian retail sector is highly fragmented
with 97 per cent of its business being run by the
Un organized retailers. The organized retail
however is at a very nascent stage. The sector is
the largest source of employment after
agriculture, and has deep penetration into rural
India generating more than 10 per cent of
India’s GDP.
.
9. RETAIL FORMATS IN INDIA
They are family owned
business catering to small
sections; they are
individually handled retail
outlets and have a personal
touch.
Mom-and-pop stores (Kirana store):
.
They are family owned
business catering to small
sections; they are
individually handled retail
outlets and have a personal
touch.
10. RETAIL FORMATS IN INDIA
These are general retail
merchandisers offering
quality products and
services.
Departmental stores:
.
These are general retail
merchandisers offering
quality products and
services.
11. RETAIL FORMATS IN INDIA
The biggest form of retail
in India, malls offers
customers a mix of all
types of products and
services including
entertainment and food
under a single roof.
Shopping malls:
.
The biggest form of retail
in India, malls offers
customers a mix of all
types of products and
services including
entertainment and food
under a single roof.
12. RETAIL FORMATS IN INDIA
Are retailers providing
online buying and selling
of products and
services.
E-traders:
.
Are retailers providing
online buying and selling
of products and
services.
13. RETAIL FORMATS IN INDIA
These are factory outlets
that give discount on the
MRP.
Discount stores:
.
These are factory outlets
that give discount on the
MRP.
14. RETAIL FORMATS IN INDIA
It is a relatively new
entry, in the retail sector.
Here beverages, snacks
and other small items
can be bought via
vending machine.
Vending:
.
It is a relatively new
entry, in the retail sector.
Here beverages, snacks
and other small items
can be bought via
vending machine.
15. RETAIL FORMATS IN INDIA
Small specialty stores that
offer a variety of categories.
They are known as category
killers as they focus on
specific categories, such as
electronics and sporting
goods. E.g. Selection Centre
Sports, Strand Book Store
Category killers:
.
Small specialty stores that
offer a variety of categories.
They are known as category
killers as they focus on
specific categories, such as
electronics and sporting
goods. E.g. Selection Centre
Sports, Strand Book Store
16. RETAIL FORMATS IN INDIA
These are retail chains
dealing in specific categories
and provide deep
assortment. Mumbai's
Crossword Book Store and
RPG's Music World are a
couple of examples.
Specialty stores:
.
These are retail chains
dealing in specific categories
and provide deep
assortment. Mumbai's
Crossword Book Store and
RPG's Music World are a
couple of examples.
17. DIFFERENCES IN SINGLE BRAND RETAIL AND MULTI BRAND
RETAIL:
Nike Company opens outlets in Ahmadabad, Bangalore,
Delhi and Mumbai selling nothing but Nike Shoes, Nike
wrist-watches and Nike t-shirts only.
This is single brand retail.
FDI in Single-Brand Retailing was permitted in 2006, to
the extent of 51%.
These were mostly outlets for sportswear, luxury goods,
apparel, fashion clothing, jewellery, hand bags, life-style
products.
Single Brand Retail:
Nike Company opens outlets in Ahmadabad, Bangalore,
Delhi and Mumbai selling nothing but Nike Shoes, Nike
wrist-watches and Nike t-shirts only.
This is single brand retail.
FDI in Single-Brand Retailing was permitted in 2006, to
the extent of 51%.
These were mostly outlets for sportswear, luxury goods,
apparel, fashion clothing, jewellery, hand bags, life-style
products.
.
18. DIFFERENCES IN SINGLE BRAND RETAIL AND MULTI BRAND
RETAIL:
But neither the Political parties nor Local Kiranawala
raised any voice against this, why?
Because these are ‘high-end’ luxury items for brand
conscious upper middle class and rich class people. It
doesn’t hurt population at large. It was not like people
would stop purchasing from local garment store to get
Nike or Adidas.
Single Brand Retail:
But neither the Political parties nor Local Kiranawala
raised any voice against this, why?
Because these are ‘high-end’ luxury items for brand
conscious upper middle class and rich class people. It
doesn’t hurt population at large. It was not like people
would stop purchasing from local garment store to get
Nike or Adidas.
.
20. DIFFERENCES IN SINGLE BRAND RETAIL AND MULTI BRAND
RETAIL:
Big Bazaar opens mall in above cities: selling t-shirts of
multiple-brands such as Reebok, Nike, Adidas, Allen
Solley, Van Huesen, Peter England etc.
+and+ they also sell unbranded t-shirts (you know those
buy one get three t-shirts free from unknown companies.)
So this is multi-brand retail: when an outlet sells a
product (t-shirt, tie, shoes anything) of more than one
brand.
Multi Brand Retail:
Big Bazaar opens mall in above cities: selling t-shirts of
multiple-brands such as Reebok, Nike, Adidas, Allen
Solley, Van Huesen, Peter England etc.
+and+ they also sell unbranded t-shirts (you know those
buy one get three t-shirts free from unknown companies.)
So this is multi-brand retail: when an outlet sells a
product (t-shirt, tie, shoes anything) of more than one
brand.
.
22. FDI IN RETAILING IN INDIA:
In December 2011, under pressure from the opposition, Indian government
placed the retail reforms on hold till it reached a consensus.
In January 2012, India approved reforms for single-brand stores welcoming
anyone in the world to innovate in Indian retail market with 100%
ownership, but imposed the requirement that the single brand retailer
source 30% of its goods from India.
Until 2011, Indian central government denied Foreign Direct Investment
(FDI) in multi-brand retail, forbidding foreign groups from any ownership
in supermarkets, convenience stores or any retail outlets.
Even single-brand retail was limited to 51% ownership and a bureaucratic
process.
These market reforms paved the way for retail innovation and competition
with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well
single brand majors such as IKEA, Nike, and Apple
In December 2011, under pressure from the opposition, Indian government
placed the retail reforms on hold till it reached a consensus.
In January 2012, India approved reforms for single-brand stores welcoming
anyone in the world to innovate in Indian retail market with 100%
ownership, but imposed the requirement that the single brand retailer
source 30% of its goods from India.
Until 2011, Indian central government denied Foreign Direct Investment
(FDI) in multi-brand retail, forbidding foreign groups from any ownership
in supermarkets, convenience stores or any retail outlets.
Even single-brand retail was limited to 51% ownership and a bureaucratic
process.
These market reforms paved the way for retail innovation and competition
with multi-brand retailers such as Wal-Mart, Carrefour and Tesco, as well
single brand majors such as IKEA, Nike, and Apple
.
24. IMPACT OF FDI : DIFFERENT POINTS OF VIEW
Benefit
Fresh produce
Local source
Consistent quality
Safer food
Value for money
Lower cost compared to open market buys
Government Argument
Benefit
Fresh produce
Local source
Consistent quality
Safer food
Value for money
Lower cost compared to open market buys
.
25. CONTROVERSY LEAD TO THREATS
Work will be done by Indians, profits will go to
foreigners.
Like the East India Company, Wal-Mart could
enter India as a trader and then take over
politically.
There will be sterile homogeneity and Indian
cities will look like cities anywhere else.
The government hasn't built consensus.
Dual effect on unemployment , Development &
Economy
Work will be done by Indians, profits will go to
foreigners.
Like the East India Company, Wal-Mart could
enter India as a trader and then take over
politically.
There will be sterile homogeneity and Indian
cities will look like cities anywhere else.
The government hasn't built consensus.
Dual effect on unemployment , Development &
Economy
25
26. “The language that the BJP has employed to
threaten foreign investors is condemnable, very
regrettable and tantamount to verbal lumpenism. To
say that governments will change in states after
recent elections and new government may cancel
decisions taken by the Centre on FDI is against the
spirit of democratic polity....this indicates their
dictatorial mindset of my way or highway”
“The language that the BJP has employed to
threaten foreign investors is condemnable, very
regrettable and tantamount to verbal lumpenism. To
say that governments will change in states after
recent elections and new government may cancel
decisions taken by the Centre on FDI is against the
spirit of democratic polity....this indicates their
dictatorial mindset of my way or highway”
“The language that the BJP has employed to
threaten foreign investors is condemnable, very
regrettable and tantamount to verbal lumpenism. To
say that governments will change in states after
recent elections and new government may cancel
decisions taken by the Centre on FDI is against the
spirit of democratic polity....this indicates their
dictatorial mindset of my way or highway”
“The language that the BJP has employed to
threaten foreign investors is condemnable, very
regrettable and tantamount to verbal lumpenism. To
say that governments will change in states after
recent elections and new government may cancel
decisions taken by the Centre on FDI is against the
spirit of democratic polity....this indicates their
dictatorial mindset of my way or highway”
Manmohan Singh, Prime Minister of India
27. “There was a time when even the entry of
computers was resisted in the belief that it
would lead to a loss of jobs. If FDI can
unleash the true potential of agricultural value
chain, we must welcome it. As far as the
kirana store is concerned, let us not
underestimate Indian ingenuity. Wal-mart can
co-exist with the small shop, each adding to
customer choice.”
“There was a time when even the entry of
computers was resisted in the belief that it
would lead to a loss of jobs. If FDI can
unleash the true potential of agricultural value
chain, we must welcome it. As far as the
kirana store is concerned, let us not
underestimate Indian ingenuity. Wal-mart can
co-exist with the small shop, each adding to
customer choice.”
“There was a time when even the entry of
computers was resisted in the belief that it
would lead to a loss of jobs. If FDI can
unleash the true potential of agricultural value
chain, we must welcome it. As far as the
kirana store is concerned, let us not
underestimate Indian ingenuity. Wal-mart can
co-exist with the small shop, each adding to
customer choice.”
“There was a time when even the entry of
computers was resisted in the belief that it
would lead to a loss of jobs. If FDI can
unleash the true potential of agricultural value
chain, we must welcome it. As far as the
kirana store is concerned, let us not
underestimate Indian ingenuity. Wal-mart can
co-exist with the small shop, each adding to
customer choice.”
Rajan Mittal, MD, Bharti Enterprises
28. BIBLIOGRAPHY:
Print Media:
1. The Times Of India
2. The Hindu
Electronic Media:
1. NDTV 24X7
2. Times Now
3. Headlines Today
4. CNN IBN
Print Media:
1. The Times Of India
2. The Hindu
Electronic Media:
1. NDTV 24X7
2. Times Now
3. Headlines Today
4. CNN IBN
.
