Fdi in india:An analysis on the impact of fdi in india’s retail sector
FDI in Retail sector
-
Upload
manpreet1989 -
Category
Education
-
view
178 -
download
4
Transcript of 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