ABSTRACT

With escalating consumerism, unprecedented awareness, and a youth-heavy customer

base, India is the 'Promised Land' for the Global brands and retailers. Faced with fast
saturating Western markets they are beginning to recognize the Indian consumer mass as
the world's most probable unexplored gold mine. With a stable Government with 2nd
stage reforms in place, India can be reasonably proud of having put in place some of the
most widely accepted Corporate Ethics (Labour Laws, Child Labour Regulations,
Environmental Protection Lobby, Intellectual Property Rights, and Social Responsibility)
and major tax reforms including implementation of VAT, all of which make India a
perfect destination for business expansion.

India is the fastest-growing market in Asia Pacific for international tourist spending,
according to latest Visa Asia Pacific release. The economy is growing by over 8 per cent
a year and India's growth rate can actually exceed that of China by 2015. The Indian
economy is expected to grow larger than Britain's by 2022 and Japan's by 2032 to
become the third-largest economy in the world after China and US and finally become
the second largest economy after China by 2050. The retail industry in India amounted to
US$ 200 billion in 2006, and out of this amount the Indian organized retail sector
amounted to US$ 6.4 billion. The opportunities in India organized retail sector can be
judged from the fact that by 2010 it is expected to rise to US$ 23 billion.

India tops the annual list of most attractive countries for international retail expansion,
according to AT Kearney's Global Retail Development Index 2006
The USD 270-billion Indian retail market is growing at the rate of 13 per cent -- and the
organized segment grew nearly 48 per cent in 2006 at prevailing prices.
Projected growth rate for the organized segment is about 40 per cent for year 2007 and
with major global players and Indian corporate houses entering the fray this growth is
likely to touch 45 per cent per annum over the next three years. Retail opportunity in

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India is expected to grow manifold by 2010 with investments in the sector slated to go up
nearly 12 times to $30 billion over the next five years -- and this is likely a conservative
estimate
With the development of organized retail, the penetration of modern retail formats will
cut deeper
National and regional players are expanding across formats and categories
Among the fastest growing organized retail categories are: Health & Beauty care services
(59% per annum), Food & Grocery (43%), Entertainment, Catering Services (42% each),
Footwear, Mobile Phones (36% each), and Apparel & Fashion Accessories and Jewellery
(32% each). Sales through modern formats are increasing; among the fastest-growing
formats are specialty and supermarket (45 per cent), hypermarket (36 per cent), discount
store (27 per cent), department store (18 per cent), convenience store and e-retailing (9
per cent) Government's favourable talks on Foreign Direct Investment (FDI) has ignited
ambitions in many of the global players to be among the first movers into a virgin retail
territory i.e. India. So far India allows 51 per cent foreign investment in single-brand
retail with prior government permission. Favourable demographic and psychographic
changes relating to India's consumer class, international exposure, availability of quality
retail space, wider availability of products and brand communication are some of the
factors that are driving the retail in India. Development of India as a sourcing hub shall
further make India as an attractive retail opportunity for the global retailers. Though
lucrative opportunities exist across product categories, food and grocery, nevertheless,
presents the most significant potential in the Indian context as consumer spending is
highest on food. The next level of opportunities in terms of product retail expansion lies
in categories such as apparel, jewellery and accessories, consumer durables, catering
services and home improvement. Indian retail industry itself has attracted investment of
over INR 200 billion (over $4 billion) in creating infrastructure, systems & shop-fit. The
additional retail space is expected to add INR 300 billion ($ 6.67 billion) of business to
organized retail.

www.supplychains.in

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 Introduction

Retail business in INDIA is under organization process and major local players are
emerging. Foreign retailers have a big part to play and are contributing their know how.
Opening of the retail business to foreign investment should go further.

Retailing in India is gradually inching its way toward becoming the next boom industry.
The whole concept of shopping has altered in terms of format and consumer buying
behavior, ushering in a revolution in shopping in India. Modern retail has entered India as
seen in sprawling shopping centers, multi-storeyed malls and huge complexes offer
shopping, entertainment and food all under one roof. The Indian retailing sector is at an
inflexion point where the growth of organized retailing and growth in the consumption by
the Indian population is going to take a higher growth trajectory. The Indian population is
witnessing a significant change in its demographics. A large young working population
with median age of 24 years, nuclear families in urban areas, along with increasing
working-women population and emerging opportunities in the services sector are going
to be the key growth drivers of the organized retail sector in India.

Some Key Facts:

- Retail is India’s largest industry, accounting for over 10 per cent of the country’s GDP
and around eight per cent of the employment

- The market size of Indian retail industry is about US $312 billion

- Organized retailing comprises only 2.8 per cent of the total retailing market and is
estimated at around US$ 8.7 billion

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- The organized retail sector is expected to grow to US $ 70 billion by 2010
www.researchandmarkets.com

Opportunities in Indian Organized Retail sector

The opportunities in Indian organized retail sector are many for this sector is witnessing a
boom.

The retail industry in India amounted to US$ 200 billion in 2006, and out of this amount
the Indian organized retail sector amounted to US$ 6.4 billion. The opportunities in India
organized retail sector can be judged from the fact that by 2010 it is expected to rise to
US$ 23 billion.

The various opportunities in the organized retail sector in India are mainly there for the
Indian consumers behavior pattern has changed. Now the Indian consumer gets more
hefty pay- packages, is younger, a large number of women are working, western
influences, and more disposable income have opened a lot of opportunities in Indian
organized retail sector. The Indian consumer wants to shop, eat and get entertainment in
one place and is have also given Indian organized retail sector an opportunity to grow.

The Indian government in 2005 allowed foreign direct investment (FDI) in single brand
retail to 51%. This have opened up a lot of opportunities in India organized retail sector.
In fact 325 departmental stores, 300 new malls, and 1500 supermarkets are being built
which shows the tremendous opportunities in the organized retail sector in India.

Many Indian companies seeing the various opportunities in organized retail sector in
India have entered it. Pantaloons have decided to increase its retail space to 30 million
square feet with an investment of US$ 1 billion. Reliance Industries Limited is targeting
for annual sales of US$ 25 billion by 2011. It is planning to invest US$ 6 billion in order
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to open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint
venture with Telco a global retail giant worth £ 750 million.

www.business.mapsofindia.com

Growth Factors in Indian Organized Retail sector

The growth factors in Indian organized sector are various but it is mainly due to the fact
that India's economy is booming.

Also, the rise in the working population which is young, pay- packets which are hefty,
more nuclear families in urban areas, rise in the number of women working, more
disposable income and customer aspiration, western influences and growth in expenditure
for luxury items. All these are the factors for the growth in Indian organized retail sector.

In fact, India retail industry is the fastest growing industry in India and it accounts for
10% of the country's GDP. In 2006, the retail industry in India amounted to US$ 200
billion and out of this, the organized retail sector in India amounted to US$ 6.4 billion.
By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion. In 2003,
the Indian organized retailing sector accounted for more than 4.5 million sq. ft of space
absorption by malls.

Many Indian companies have entered the retail industry in India and this is also a factor
in the growth of Indian organized retail sector. Reliance Industries Limited is planning to
invest US$ 6 billion in the organized retail sector in India by opening 1500 supermarkets
and 1000 hypermarkets. Bharti Telecoms is planning a joint venture worth £ 750 million
with Tesco a global retail giant. Pantaloons is planning to invest US$ 1 billion in order to
increase its retail space to 30 million square feet. Such huge investments is also a factor
in the growth of the organized retail sector in India. .

www.business.mapsofindia.com
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 Scope of the Indian Retail Market

The scope of the Indian retail market is immense for this sector is poised for the highest
growth in the next 5 years. The India retail industry contributes 10% of the countries
GDP and its current growth rate is 8.5%. In the Indian retail market the scope for growth
can be seen from the fact that it is expected to rise to US$ 608.9 billion in 2009 from US$
394 billion in 2005.

The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by
the year 2010. There are under construction at present around 325 departmental stores,
300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for
growth in the Indian retail market.

The growth of scope in the Indian retail market is mainly due to the change in the
consumers behavior. For the new generation have preference towards luxury
commodities which have been due to the strong increase in income, changing lifestyle,
and demographic patterns which are favorable.

The scope of the Indian retail market have been seen by many retail giants and that’s the
reason that many new players are entering the India retail industry. The major Indian
retailers are:

Pantaloons Retail India Ltd

Shoppers Stop
Bata India Ltd
Music World Entertainment Ltd

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Judging the scope for growth in the India retail industry many global retail giants are also
entering the Indian retail market.

THEY ARE :-

Tesco
Metro AG
Wal- Mart
The scope for growth in the Indian retail market is seen mainly in the following cities:
Mumbai
Delhi
Pune
Ahmedabad
Bangalore
Hyderabad
Kolkata
Chennai

www.business.mapsofindia.com

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 WHY INDIA

The Indian retail sector is highly fragmented: mostly owner-run “Mom and Pop” outlets

There are over 15 million such “Mom and Pop” retail outlets

Retail chains such as Pantaloon, Trent and RPG Retail have been growing rapidly; while
Reliance, Bharti and Aditya Birla Group have announced investments of over US$9
billion in the sector

Dairy Farm, Metro, Shopritem, Wal-Mart and Marks & Spencer are some of the major
international retail chains that are already present or in the process of entering the market

More than 100 international luxury brands are planning to set up shop in India

POLICY

100% FDI is allowed in Cash and Carry Wholesale formats. Franchisee arrangements are
also permitted in retail trade

o - 51% FDI is allowed in single brand retailing

o - The government is examining further liberalization of FDI in retail trade

POTENTIAL

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The high growth projected in domestic retail demand will be fuelled by:

The migration of population to higher income segments with increasing per capita
incomes

Increasing urbanization

Changing consumer attitudes, especially the increasing use of credit cards

Growth of the population in the 20 to 49 years age band

There are retail opportunities in most product categories and for all types of formats

Food and Grocery: the largest category but largely unorganized today

Home Improvement and Consumer Durables: over 20% p.a. CAGR estimated in the next
10 years

Apparel and Eating Out: 13% p.a. CAGR projected over 10 years

Opportunities exist for investment in supply chain infrastructure: cold chain and logistics

India also has significant potential to emerge as a sourcing base for a wide variety of
goods for international retail companies

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Many international retailers including Wal-Mart, GAP, JC Penney etc. are already
procuring from India

www.investmentcommission.in

The Indian Consumer

With the largest young population in the world - over 890 million people below 45 years
of age! India is indeed a resplendent market. India has more English speaking people than
in the whole of Europe taken together. Its 300 million odd middle class, the "Real"
consumers, is catching the attention of the world. As the economy grows so does India's
middle class. It is estimated that 70 million Indians earn a salary of over INR 800,000
Players Revenues Retail Format
for Space as
2006-07 on May
in US$ 2007 (Sq.
millions ft.)
Future Group (Pantaloon
821.0 6,630,000 F&G, Specialty
Retail)
Raheja Group (Shoppers’
219.7 1,590,000 F&G, Specialty
Stop)
Tata Group (Trent, Speciality Retail, Electronics,
145.2 880,000
Infiniti Retail) Hyper Markets
RPG Retail 146.0 810,000 F&G, Specialty
A V Birla Group 61.0 890,000 F&G
($18,000) a year, a figure that is set to rise to 140 million by 2011. The number of
effective consumers is expected to swell to over 600 million by 2010 - sufficient to
establish India as one of the largest consumer markets of the world.

Private Consumption & Retail

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With the changing face of retail, the Indian consumer is in for a rapid transformation.
While the consumer spending continues to grow at double digit figures, leading retailers
have recorded an increase in sales between 50 to 100 percent in the calendar year 2006
over the previous year.

According to India Retail Report 2007, the total private consumption touched INR 20,000
billion (US $ 445 billion) at current prices in the calendar year 2006 with organized
sector accounting for INR55,000 crore ($12.4 billion) business increasing its share to 4.6
per cent of the total Indian Retail Value that stood at INR12,000 billion ($270 billion).
Moving forward, organized retailing is projected to grow at the rate of about 37 per cent
in 2007 and 42 per cent in 2008. Organized retail in India has the potential to add over
INR 2,000 billion ($45 billion) business by the Year 2010.

The consumer spending is ultimately pushing the economy into a growth-and-

liberalization mode. The Indian market is becoming bolder by the day, with the economy
now expected to grow at over 8 per cent and average salaries being hiked by about 15 per
cent, there will be lot more consumption.

Opportunity for Global Players

Favorable demographic and psychographic changes relating to India's consumer class,

international exposure, availability of quality retail space, wider availability of products
and brand communication are some of the factors that are driving the retail in India. Over
the last few years, many international retailers have entered the Indian market on the
strength of rising affluence levels of the young Indian population along with the
heightened awareness of global brands, international shopping experiences and the
increased availability of retail real estate space.

Development of India as a sourcing hub shall further make India as an attractive retail
opportunity for the global retailers. Retailers like Wal-Mart, GAP, Tesco, JC Penney,
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H&M, Karstadt-Quelle, Sears (Kmart), etc stepping up their sourcing requirements from
India and moving from third-party buying offices to establishing their own wholly owned
/ wholly managed sourcing & buying offices shall further make India an attractive retail
opportunity for the global players.

Manufacturers in industries such as FMCG, consumer durables, paints etc are waking up
to the growing clout of the retailers as a shift in bargaining power from the former to the
latter becomes more discernible. Already, a number of manufacturers in India, in line
with trends in developed markets, have set up dedicated units to service the retail
channel. Also, instead of viewing retailers with suspicion, or as a 'necessary evil' as was
the case earlier, manufacturers are beginning to acknowledge them as channel members
to be partnered with for providing solutions to the end-consumer more effectively.

Though lucrative opportunities exist across product categories, food and grocery,
nevertheless, presents the most significant potential in the Indian context as consumer
spending is highest on food. Further, 'wet groceries' i.e. fresh fruits and vegetables is the
most promising segment within food and grocery as very few organized retailers have
tapped this opportunity in spite of wet groceries being the preferred choice of most Indian
households.

The next level of opportunities in terms of product retail expansion lies in categories such
as apparel, jewellery and accessories, consumer durables, catering services and home
improvement. These sectors have already witnessed the emergence of organized formats
though more players are expected to join the bandwagon. Some of the niche categories
like Books, Music and Gifts offer interesting opportunities for the retail players.

Currently the fashion sector in India commands a lion's share in the organized retail pie.
This is in line with the retail evolution in other parts of the world, where fashion led the
retail development in the early stages of evolution and was followed by other categories
like Food & Grocery, Durables etc. Fashion across lifestyle categories makes up for over
50 per cent of organized retail and with the kind of retail space growth that India is
witnessing we can certainly foresee a very healthy prospect for the fashion industry.
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As nations become richer, their people start appreciating luxury goods and fine dining.
India has over one million such people and this number is expected to triple by 2010. A
recent report divides consumers for luxury goods into four categories - luxuriated: source
of affluence is largely traditional and inherited; New rich: adequate spending power and
are acquiring orientation to luxury; Getting there: acquiring spending power and spend
mainly on education, housing and large automobiles; Mid-affluent: are also acquiring
orientation to luxury but unlikely to indulge beyond a limit.

The most important categories for luxury goods consumers are housing, travel, education,
higher end automobiles, electronics and other home improvement products besides
fashion, lifestyle and fine dining. The most important reason for luxury retail not taking
off in India so far has been the lack of luxury retail environment. The presence has been
primarily confined to luxury hotels' with shopping plazas.

Retail Space Growth

100 mn sq ft of quality shopping centre space by 2007-08

To generate retail sales of over Rs. 50,000 cr ($ 11 bn)
Rs. 20,000+ cr ($ 4 bn+) investment in pipeline for retail infrastructure, systems & shop-
fit
Space for 15,000+ new outlets, 100 hypermarkets, 500 department stores and 2000
supermarkets
Over 10,000 small and big existing outlets to undergo complete facelift

By the Year 2010-11 this space will grow to 300 million sq. ft. offering business worth
over $17 billion for Design, Shop Fit and support systems.

Right Time to Think India

India is beginning to make news worldwide. It's just the right time to think India. There's
a new sense of confidence in Indian business. This confidence arises from the growing

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success of Indian enterprise in the face of competition in an increasing number of sectors.
There is today more steel in the resolve of Indian enterprise.

The India growth story is going stronger than ever. More than a third of India Inc., or
almost 34 per cent, have achieved a 'super growth' status in the past year, says a Grant
Thornton survey. India's merchandise exports grew by 23 per cent to touch record levels
of $102.7 billion during the financial year 2005-06 and it is estimated to cross $120
billion by FY 2006-07, according to the Ministry of Commerce and Industry.

The upsurge in exports despite high oil prices, points to the intrinsic strength of the
Indian export sector. On the employment front, it is expected that an additional 25 million
jobs will be created by the end of this decade as a result of export growth.

The India Story has been having an effect at home too. Being part of the Story has
become a much-sought-after career option. Candidates in the top business and
engineering schools in the country are refusing job offers abroad, since jobs in India are
now offering global compensation.

The world is now looking at India as the nation of the future. More significantly, India is
well on its way to emerging as a first-world economy in the fields of information
technology (IT), biotechnology, pharmaceuticals and the automotive sector, pushing the
thrust now on to the retail sector to facilitate the creation of a new surging modern India.

The real estate boom in India will not only propel the economy to sustainable heights, but
will also generate employment for several millions. It is strongly expected that the
growing Indian economy and growing opportunities will ensure that the foundation is laid
for India's tryst with destiny and for it to be fully integrated into the world economy.

www.supplychains.in

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 SLEPT ANALYSIS

Before creating business plans or when evaluating existing ones it is important to 'scan'
the external environment. This takes the form of a SLEPT analysis, i.e. an investigation
of the Social, Legal, Economic, Political, and Technological influences on a business. In
addition it is also important to be aware of the actions of your competitors. These forces

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are continually in a state of change.

Social factors relate to pattern of behaviour, tastes, and lifestyles. A major component of
this is a change in consumer behaviour resulting from changes in fashions and styles. The
age structure of the population also alters over time (currently we have an ageing
population). An understanding of social change gives business a better feel for the future
market situation.
Laws are continually being updated in a wide range of areas, e.g. consumer protection
legislation, environmental legislation, health & safety and employment law, etc.

Businesses need to take a pro-active approach and be ahead of these changes, rather than
hurriedly making alterations to products and processes in a reactive way.

Economic changes are closely related to social ones. The economy goes through a series
of fluctuations associated with general booms and slumps in economic activity. In a
boom nearly all businesses benefit and in a slump most lose out. Other economic changes
that affect business include changes in the interest rate, wage rates, and the rate of
inflation (i.e. general level of increase in prices). Businesses will be more encouraged to
expand and take risks when economic conditions are right, e.g. low interest rates and
rising demand.

Political changes relate to changes in government influence. In recent years these changes
have been particularly significant because as members of the European Union we have to
adopt directives and regulations created by the EU which then become part of UK law..
Changes in technology have also become particularly significant in the post-millennium
world. This is particularly true in terms of modern communication technologies. The
creation of databases and electronic communications have enabled vast quantities of
information to be shared and quickly distributed in a modern company enabling vast cost
reductions, and often improvements in service. Organizations need to be aware of the
latest relevant technologies for their business and to surf the wave of change.

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www.thetimes100.co.uk

POLITICAL / ECONOMIC SOCIO- TECHNOLOGICAL

LEGAL CULTURAL
Environmental Type of economic Income Recent technological
regulation and system distribution development
protection
Tax policies Government Population growth Technology’s impact on
intervention product offering
International trade Infrastructure Lifestyle changes Impact on value chain
regulations and quality structure
restrictions
Consumer Economic growth Education Rate of technological
protection rate diffusion
Employment laws Inflation rate Living conditions Government research
spending
Political stability Stages of the Demographics Energy use and cost
business cycle
Safety regulations Taxation Fashion , hypes Changes in internet
Pricing regulation Consumer Attitude New inventions and
confidence development

Our national government as well as the European Union play a big part in influencing
business activity today:

through taxation and spending

through laws, directives and regulations
through encouraging business activity through subsidies and support
by providing advice and support for business.

Here are some examples of the way in which government influences business activity
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today:
1. Taxation policy:
Businesses can make a valuable contribution to the community by the taxes they pay. In
return, the government can help businesses by spending money on projects like airports,
roads, aid to developing countries and many other items.
2. International policy:
The government can promote trade, encourage sales of goods abroad (exports), or
discourage goods coming in from other countries (imports).
www.thetimes100.co.uk

Businesses are affected by all sorts of legislation, including:

• Legislation that sets up new public bodies, such as the Legal Services
Commission and the Public Defender System.
• Consumer Protection legislation that gives rights to consumers.
• Taxation legislation that creates a framework for taxing business.
• Employee rights and Health and Safety legislation.
• Trade Union Rights legislation.
• Fair competition legislation.
www.thetimes100.co.uk

The Employment Rights Act

Subsequently amended by the Employment Relations Acts of 1999 and 2003, provides a
range of contractual rights for employees, including:
entitlement to an itemized pay statement
entitlement to the National Minimum Wage
that the terms and conditions of work must be set out in writing
protection against unfair dismissal at work.
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The Sex Discrimination Act

Protects employees against discrimination on the grounds of gender, for example:

in job advertisements
in selection of employees for jobs
in promoting employees
offering training and career development opportunities.

There are some situations in which the Act does not apply related to Genuine
Occupational Qualifications (GOQs). For example, it is regarded to be legitimate to
advertise for a 'male lavatory attendant', or for a female actor to play a female part in a
film.

The Equal Pay Act

Sets out that women and men should receive the same pay for doing the same type of
work or ranked as being of the same value.

The Employment Relations Act

Sets out that employers have to recognize trade unions where at least 40% of those
eligible to do so take part in a ballot, and a majority of those voting are in favour of union
recognition. In organizations where already more than 50% of the workforce were union
members there was automatic recognition.
www.thetimes100.co.uk

There are a number of laws to protect consumers including:

The Sale of Goods Act

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Sets out that goods must be:

'of satisfactory quality'

'fit for the purpose' for which they are intended
'as described' by the seller.

The Trades Descriptions Act

Sets out that goods must be as described. The description provides part of the contract
between the buyer and seller.

The Weights and Measures Act

Sets out to make sure that consumers get the weight or measure (e.g. for liquids) that they
are offered.

The Consumer Protection Act

Provides for liability for damage by defective products.

The Trading Standards Department of your local authority has powers to investigate
complaints. Environmental Health Inspectors check on a range of premises including
those where food is prepared.

Standards

Every product or service that is bought and sold must meet standards. These standards
include legal requirements such as those under the Sale of Goods Act, as well as those
created by standardizing bodies.
www.thetimes100.co.uk

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There are a number of laws that protect the customer against the actions of unscrupulous
manufacturers and sellers.
Particularly important are the Sale of Goods Acts. These set out that goods must be:

• 'Of merchantable quality' - i.e. free of significant faults; accepting faults that are
drawn to your attention by the seller (e.g. a tea shirt that is discounted because it
has a snag in it).

• 'Fit for the purpose' - including any particular purpose mentioned by you to the
seller. For example, if you ask for a pair or trousers that a machine-washable you
should not be sold a pair that can only be hand washed.

• 'As described' - i.e. on the package or sales literature.

Any good that you buy from any sort of trader should meet these basic requirements.

Customers are also protected when buying a service.

When you pay for a service (for example from a travel agent, or washing machine
repairer) you are entitled to certain standards.
A service should be carried out:

• 'With reasonable care and skill'. The job should be done to a proper standard of
workmanship. For example, if you have your central heating system serviced then
you would expect it to function properly rather than break down the next day.

• 'Within a reasonable time'. If you have to have your central heating system that
has just been installed repaired. You would expect the repair to take place fairly
promptly.

• 'At a reasonable charge, if no price has been fixed in advance'.

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There are other consumer laws governing the way in which goods and services are
described in advertising. There are others which concern Food Safety (what sorts of
ingredients should go into food) and Toy Safety. The Weights and Measures Act also
seeks to ensure that you get fair weights of materials supplied and the measures that you
expect e.g. in fluids.
www.thetimes100.co.uk

FDI in retail

India, at present, remains alien to FDI in retail, the extant policy allowing FDI up to 51
per cent with prior government approval, in retail trade of ‘single brand’ products. The
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guidelines for the same read as: Products to be sold should be of a ‘single brand’ only;
Products should be sold under the same brand internationally; and ‘single brand’ product-
retailing would cover only products which are branded during manufacturing.

Allowing FDI in multi-brand retail will be a courageous decision of the government of

India. Reason: The unorganized retail sector in India employs mass population which
ultimately forms the bulk of the vote bank. The political implications may have refrained
the government from taking a firm decision on FDI in retail, but the fact is India will
have to, one day or the other, accept FDI in retail.

www.indiaretailing.com

India is the ideal country to make Foreign Direct investments in because of its
features like :

Developing economy
Low salaried employees
Low wage workers
Abundant human resources
Big private economy

India is looking forward to a high growth rate of almost 16% – double that of the
current 8%. Hence, there is a distinct need for larger FDI.

www.business.mapsofindia.com

The Shops & Establishment Act

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This Act lays down the following rules:
• Working hours per day and week.
• Guidelines for spread-over, rest interval, opening and closing hours, closed days,
national and religious holidays, overtime work.
• Employment of children, young persons and women.
• Rules for annual leave, maternity leave, sickness and casual leave, etc.
• Rules for employment and termination of service.

Under this Act, registration of shop/establishment is necessary within thirty days of

commencement of work. Fifteen days of notice is required to be served before the closing
of the establishment State government can exempt, either permanently or for specified
period, any establishments from all or any provisions of this Act.

Objectives
- To provide statutory obligation and rights to employees and employers in
the unorganized sector of employment, i.e., shops and establishments.

Scope And Coverage

- A state legislation; each state has framed its own rules for the Act.

- Applicable to all persons employed in an establishments with or without

wages, except the members of the employer's family.

- State government can exempt, either permanently or for a specified

period, any establishments from all or any provisions of this Act.

- Main Provisions
- Compulsory registration of shop/establishment within thirty days of
commencement of work.
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 - Communications of closure of the establishment within 15 days from the
closing of the establishment.

- Lays down the hours of work per day and week.

- Lays down guidelines for spread-over, rest interval, opening and closing
hours, closed days, national and religious holidays, overtime work.

- Rules for employment of children, young persons and women

- Rules for annual leave, maternity leave, sickness and casual leave, etc.

- Rules for employment and termination of service.

- Maintenance of registers and records and display of notices.

- Obligations of employers.

- Obligations of employees.

When To Consult And Refer

- At the time of start of an enterprise.

- When framing personnel policies and rules.

www.exim.indiamart.com

Employees State Insurance Act

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Objective
To provide for health cover, Medical care and Cash benefits for

- Sickness

- Maternity

- Employment injury

- Pensions to dependents in case of Death (or) Employment injury

Eligibility
- Employees drawing wages not exceeding Rs.3000/- per month

Benefits
- Compensation for Death Minimum - Rs.20,000 Maximum - Rs.1,14,000

- Compensation for Permanent disablement Minimum - Rs.24,000 Maximum -

Rs.70,000

- Temporary disablement 50% of wages for a maximum period of 5 years.

www.exim.indiamart.com

Employment of Women - Legal provisions

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 The Contract Labour (Regulation & Abolition) ACT, 1970
- Not to be required to work beyond 9 hours between 6 A.M. and 7 P.M. -
with the exception of mid-wives and nurses in plantations.

The Inter-state Migrant Workmen (Regulation of Employment and

Conditions of Service) Act, 1979
- ISMW ACT - Separate toilets and washing facilities to be provided in
employment covered by the 3rd and 6th laws.

Maternity Benefit Act

- Maternity benefits to be provided on completion of 80 days working.

- Not required to work during six weeks immediately following the day of
delivery or miscarriage.

- No work of arduous nature, long hours of standing likely to interfere with

pregnancy/normal development of foetus or may cause miscarriage or
likely to affect health to be given for a period of one month immediately
preceding the period of six weeks before delivery.

- On medical certificate, advance maternity benefit to be allowed.

- Rs.250.00 as medical bonus to be given in case when no prenatal

confinement and post-natal care is provided free of charge.

Equal Remuneration Act, 1976

- Payment of equal remuneration to men and women workers for same or
similar nature of work protected under the Act and also under the
provisions at ISMW Act, mentioned above.

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 - No discrimination permissible in recruitment and service conditions
except where employment of women is prohibited or restricted by or under
any law.

www.exim.indiamart.com

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 Employees Provident Fund Act

Objectives

To make provisions for the future of the industrial worker after he retires or for his
dependents in the case of his early death

- Compulsory Provident Fund

- Family Pension

- Deposit linked insurance

Scope and coverage

- Can be made applicable by central government to establishments employing

less than 20 persons or if the majority of employees agree.

- Excludes establishments employing 50 or more persons or 20 or more persons

but less than 50 persons, until the expiry of three years in the case of the former,
and five years in the case of the former, and five years in the case of the latter,
from the date of setting up of establishment.

- Applicable to all persons who are employed directly or indirectly through

contractors in any kind of work.

Eligibility
- Employees drawing pay not exceeding Rs.3500/- per month.

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Benefits

- Apart from terminal disbursal of non-refundable withdrawals for Life Insurance

Policies

- House building

- Medical treatment

- Marriage

- Higher education

- Family pension

- Retirement-cum-withdrawal benefits

www.exim.indiamart.com

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 Inflation in India

According to the 2008 Economic Survey Report, India’s inflation rate was targeted by the
Reserve Bank of India (RBI) to be 4.1%, down from a rate of 5.77% in 2007. Inflation
rates for many investment goods have decreased dramatically in recent years. The price
of basic goods such as lentils, vegetables, fruits and poultry were expected to slow their
rise. The price of various manufactured goods also fell in 2007, and this contributed to a
reduced inflation rate

However, the beginning of 2008 has seen a dramatic rise in the price of rice and other
basic food stuffs. There has also been a no-less alarming rise in the price of oil and gas.
When coupled with rises in the price of the majority of commodities, higher inflation was
the only likely outcome.

Indeed, by July 2008, the key Indian Inflation Rate, the Wholesale Price Index, has risen
above 11%, its highest rate in 13 years. This is more than 6% higher than a year earlier
and almost three times the RBI’s target of 4.1%.

Inflation has climbed steadily during the year, reaching 8.75% at the end of May. There
was an alarming increase in June, when the figure jumped to 11%. This was driven in
part by a reduction in government fuel subsidies, which have lifted gasoline prices by an
average 10 %.

www.economywatch.com

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 SOCIO-CULTURAL FACTOR

KOLKATA PATNA BHUBANESWAR

DEMOGRAPHICS Bengalis comprise The population of Bhubaneswar has a
the majority of Patna is over population of 647,302.
Kolkata's population 1,885,470. The Males constitute 56%
(55%), with population density of the population and
Marwaris,Oriya and is 1132 persons per females 44%. In 2001,
Bihari communities square kilometer. the city had an average
forming a large There are 839 literacy rate of 74%,
portion of the females to every higher than the national
minorities (20%)[76]. 1,000 males. The average of 65.4%. Ten
Some of Kolkata's overall literacy rate percent of the
minor communities is 62.9%, and the population is under 6
include Chinese, female literacy rate years of age. The
Tamils, Nepalis, is 50.8%. literacy rate is ever
Telugus, Assamese, growing with huge
Gujaratis, Anglo- student and white collar
Indians, Armenians, migrations into the city.
Tibetans,
Maharashtrians,
Punjabis,
Malayalees and
Parsis. According to
the 2001 census,
77.68% of the
population in
Kolkata is Hindu,
20.27% Muslim,

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 0.88% Christian and
0.75% Jains. Other
minorities such as
Sikhs, Buddhist,
Jews and
Zoroastrian
constitute the rest of
the city's population
ECONOMY West Bengal has the From the very Orissa's gross state
third largest ancient time Patna domestic product for
economy (2003– has rich 2004 is estimated at
2004) in India, with socioeconomic $18 billion in current
a net state domestic background. Patna prices. Following
product of US$ 21.5 has long been a India's independence,
billion. During major agricultural Orissa has not been a
2001–2002, the center of trade, its focus of investment by
state's average SDP most active exports the central government,
was more than 7.8% being grain, causing its
— outperforming sugarcane, sesame, infrastructure and
the National GDP and medium- educational standards
Growth The state grained Patna rice. to lag behind the rest of
has promoted It is also an the nation.
foreign direct important business Bhubaneswar was
investment, which centre of eastern meant to house the
has mostly come in India. state's machinery and
the software and hence was designed to
electronics fields. be a largely residential
Kolkata is the main city with outlying
business, industrial areas. The
commercial and city's economy had few

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 financial hub of major players till the
eastern India. The 1990s and was
city has a large dominated by Public
unskilled and semi- Sector Units, retail and
skilled labour small scale
population, along manufacturing. With
with other blue- the economic
collar and liberalization policy
knowledge workers. adopted by the
Kolkata's economic Government of India in
revival was led the 90s, Bhubaneswar
largely by IT received large
services, with the IT investments in the
sector growing at fields of
70% yearly — twice telecommunications, IT
that of the national and higher education,
average. particularly
engineering. The city
accounts for almost all
of the IT revenue of
Orissa and is one of the
fastest growing regions
in India in this sector.
CULTURE Kolkata has long Residents of Patna Oriya belongs to the
been known for its are natives of one Indo-Aryan branch of
literary, artistic and of the four other the Indo-European
revolutionary regions of Bihar - language family, and is
heritage. As the Bhojpur, Mithila, closely related to
former capital of Vajj or Ang. Bengali and Assamese.
India, Kolkata was Intermarriages and A few tribal languages

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 the birthplace of cultural belonging to the
modern Indian intermixing among Dravidian and Munda
literary and artistic the people of the language families are
thought. Kolkatans five regions has still spoken by the
tend to have a been so common Adivasis (original
special appreciation that it may be inhabitants) of the state.
for art and literature; difficult for an The state has a very
its tradition of outsider to discern opulent cultural
welcoming new the differences. heritage, one of the
talent has made it a Intermixing of richest in India.
"city of furious people is also Bhubaneswar is home
creative energy.” A common at the to several monumental
characteristic village level. temples of regional and
feature of Kolkata is national importance.
the para or
neighborhoods
having a strong
sense of community.
Typically, every
para has its own
community club
with a clubroom and
often, a playing
field. People here
habitually indulge in
adda or leisurely
chat, and these adda
sessions are often a
form of freestyle
intellectual

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 conversation..
CLIMATE Kolkata has a Patna, as most of The city has a tropical
tropical wet-and-dry Bihar, has a wet and dry climate,
climate. The annual subtropical climate the average
mean temperature is with hot summers temperatures range
26.8 °C (80.2 °F); from late March to between a minimum of
monthly mean early June, the around 10 °C in the
temperatures range monsoon season winter to a maximum
from 19 °C from late June to of 40 °C to 45 °C in the
(66.2 °F) to 30 °C late September and summer. The south-east
(86.0 °F). Summers a mild winter from monsoons appear in
are hot and humid November to June.
with temperatures in February.
the low 30's and
during dry spells the
maximum
temperatures often
exceed 40 °C
(104 °F) during May
and June. Winter
tends to last for only
about two and a half
months, with
seasonal lows
dipping to
9 °C – 11 °C
(54 °F – 57 °F)
between December
and January. The
highest recorded

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 temperature is
43.9 °C (111.0 °F)
and the lowest is
5 °C (41.0 °F). On
an average, May is
the hottest month
with daily
temperatures
ranging from a low
of 27 °C (80.6 °F) to
a maximum of
37 °C (98.6 °F),
while January the
coldest month has
temperatures
varying from a low
of 12 °C (53.6 °F) to
a maximum of
23 °C (73.4 °F).

OTHER Bengali women Shopping is one of People are religious

INFORMATION commonly wear the the favourite and family-oriented,
shaŗi as per tradition recreational and their lives are
and global/western activities of deeply rooted in
outfits. Among men, Patnaites. tradition.. The interests
western dressing has Numerous of the family take
greater acceptance. shopping precedence over that of
Men also wear complexes exist in an individual.
panjabi with dhuti, Patna, including:
which developed as N.P.Centre,

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 a trend during the Maharaja
renaissance period Kameshwar
of Bengal. Complex, Verma
Kolkatans are Centre, Kulharia
becoming brand complex and
conscious, which is Khaitan market.
attracting global Maurya lok is one
brands to set up base of the oldest and
there. largest shopping
areas of Patna.
Patna market and
Hathwa market are
also famous
shopping points of
the city. A number
of shopping malls
have also been
opened in the city,
including :Vishal
Mega Mart at
Frazer Road,
Patliputra
Shoppers' Plaza,
Aditya's 9 to 9
Supermarket,
Daily Needs
Supermarket, Low
Price Super Store
at old Jakkanpur.

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http://en.wikipedia.org
http://en.wikipedia.org
http://en.wikipedia.org
http://en.wikipedia.org
http://en.wikipedia.org
http://en.wikipedia.org

POPULATION (2001 census)

Economic profile of West Bengal

80176197
MALES 41465985
FEMALES 38710212
SEX RATIO (females/1000 males) 934
DENSITY OF POPULATION 904
(Persons/ Square Km)
URBAN POPULATION % 28.03%
LITERACY RATE (census 2001) in 68.6
%
MALE LITERACY in % 77
MALE LITERATE in numbers 27452426
FEMALE LITERACY in % 59.6
FEMALE LITERATE in numbers 19743975
BIRTH RATE (PER 1000) (2002)P 20.3
DEATH RATE (PER 1000) 6.6
NSDP at current prices (2002-2003)* 143538 Rs Crores
*(2001-2002)
PER CAPITA NSDP (2002-03) at 17769 Rs *(2001-
current prices 2002)

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USEFUL INFORMATION

Economic Activity: Manufacturing- 28%; Services- 37%; Agriculture - 35%

Investor Profile: Govt. 39.4.1%; Foreign 21.7%; Indian 38.9%
State priority areas: Petrochemicals; Iron & steel; Food processing; pharma; Infotech.
Investment Strengths: Large market with considerable rural purchasing power; national
and international connectivity; power availability with low T&D losses.
www.economywatch.com

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 Economic profile of Bihar

POPULATION (2001 census) 829988509

MALES 43243795
FEMALES 39754714
SEX RATIO (females/1000 males) 921
DENSITY OF POPULATION 1132
(Persons/ Square Km)
URBAN POPULATION % 10.47
LITERACY RATE (census 2001) in 47
%
MALE LITERACY in % 59.7
MALE LITERATE in numbers 20644376
FEMALE LITERACY in % 33.1
FEMALE LITERATE in numbers 10465201
BIRTH RATE (PER 1000) (2002)P 30.9
DEATH RATE (PER 1000) 7.9
NSDP at current prices (2002-2003)* 51345 Rs Crores
Rs Crores *(2002-2003)
PER CAPITA NSDP (2002-03) at 6015 Rs * (2002-
current prices Rs 2003)

USEFUL INFORMATION

Bihar State Financial Corporation (BSFC) is the main state level institution providing
term lending facilities to industrial entrepreneurs. Banks have also shown increasing
interest in term lending to industrial units. BSFC will be restructured and strengthened to
meet the growing financial and mercantile needs of entrepreneurs.

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 Economic profile of Orissa
The Corporation also undertakes the appraisal of projects coming up in the state with a
view to raising money from the capital market (Public/Rights Issues).
POPULATION (2001 census) 36706920
www.economywatch.com
MALES 18612340
FEMALES 18094580
SEX RATIO (females/1000 males) 972
DENSITY OF POPULATION (Persons/ 236
Square Km)
URBAN POPULATION % 14.97
LITERACY RATE (census 2001) in % 63.31
MALE LITERACY in % 75.3
MALE LITERATE in numbers 11992333
FEMALE LITERACY in % 50.5
FEMALE LITERATE in numbers 7844722
BIRTH RATE (PER 1000) (2002)P 23.1
DEATH RATE (PER 1000) 0.9
NSDP at current prices (2002-2003)* Rs 37891 Rs
Crores Croroes
PER CAPITA NSDP (2002-03) at current 10103 Rs (2002-
prices Rs 03)

USEFUL INFORMATION
Orissa has been a pioneer among States in India in embarking on a comprehensive reform
of the electricity industry of the State. The objective to make power supply more efficient,
meet the needs of a growing economy and develop an economically viable power industry
which will enable Orissa to attract private capital while safeguarding the interests of the
consumers.
www.economywatch.com

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 Technological Environment

Why is it So Important? So Important?

1. It brings new products, processes, and materials.

2. It directly impacts every aspects of our society (transportation, energy,
communications, entertainment, health care, food, agriculture, industry).
3. It alters the rules of global trade and competition.

Application of knowledge

* Intends to solve practical problems

* consists of:
– Applied research with specific objectives
– Development resulting in workable prototypes
– Engineering defining the knowledge for commercial exploitation
– Commercialization including mass production

IMPORTANCE OF TECHNOLOGY?

It is one of the most important driving force post-II world war in shaping up economies
of various countries.

It improves quality of life in the society. New and improved products and processes are
made available in society.

Technology is directly linked to level of scientific knowledge, particularly applied

sciences.

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Technology is both hard and soft-that is machine, as well as, way of thinking

Technology is thus level of scientific sophistication and level of knowledge in application

of sciences to production processes, be it goods or services (like Heart operations or
Aircraft flying, or designing and fabricating a nuclear reactor).

The changes in Technology are so rapid now that the Industry has to keep track of same
and keep modernizing to remain competitive and in business.

Some of the areas of technology objectives are:-

- Method of manufacturing a product
- Improvement in product design or manufacturing process
- Reduction of waste
- Reduction of manufacturing cost
- Using new raw materials
- Using eco-friendly materials
- Improving process quality and reliability
- Introducing new products and services
- New methods of delivery and distribution
- New ways of management control and information (like ERP, VSAT, Video
conferencing, and now Convergence technology)

India's Expenditure on R&D is less than 1% of GDP as against 2.5 % of

developed nations and the GDP itself being very low compared to these countries,
the absolute investment and expenditure on R&D is very poor (As against USA
247 Billion $ India had barely 3.5 Billion $s). Apart from this the contribution of
Corporate India is poor (only 15%) in this. A good part of it goes into Strategic
research budget like space and defense.

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 Current Trends in the Technological Environment:

* Globalization – Resource allocated to technology development

– Changing location of manufacturing facilities
– Rise of multinationals
– Comparative advantage of nations
* Time Compression – Shortened product life cycles
– Shortened development times
– Decreasing payback periods
* Technology Integration
– Combining technologies to develop new products
– Combining technologies to commercialize products

Models like CRM (Customer relationship management, ERP and Retail Supply Chain
management have changed the complexion of retailing from Fragmented to Consolidated,
from Local to Global from Traders to Retail Brand Managers and Market Place to Market
Space.
www.123eng.com

Information Technology is a major problem and India must act fast if it wishes to create a
smooth field for organized retailing. Digitization of services will make transfer of goods
easy and an improvement in supply chain management will definitely play a significant
role in attracting more consumers and less consumer grievances. Besides, it will generate
easier payments option for customer and easier money movement for the CEOs of these
highly diversified malls.

www.economywatch.com

Future of E-retailing in India

There are divergent views on the future of e-retailing in India. Some experts are of the
opinion that the giant, big brand retailers would dominate the small ones due to their
wider investment capacities. It would be next to impossible for the small retailers and the
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kiranas to prove their existence in the battlefield of online retailing. Another viewpoint is
that there would be an exponential growth in the online retailing business in India.

www.economywatch.com

Conclusion

The advent of organized retailing in an economy where spending power is growing fast
and Tier II as well as Tier III town dwellers are becoming brand conscious is sure to
bring a revolution in the retail sector.

Major Findings

1. The Retail Sector in India can be split up into two, the organized and the unorganized.
The organized sector whose size is expected to triple by 2010 can be further split up into
departmental stores, supermarkets, shopping malls etc.
2. In terms of value the size of the retail sector in India is $300 billion. The organized
sector contributes about 4.6% to the total trade.
3. The retail sector in India contributes 10% to the Gross Domestic Product and 8% to the
employment of the country.
4. In terms of growth the FMCG retail sector is the fastest growing unit and the retail
relating to household care, confectionery etc, have lagged behind .
5. The foreign retail giants were initially restricted from making investments in India. But
now FDI of 51% is permitted in India only through single branded retail outlets. Multi
brand outlets are still beyond their reach. Again they can only enter the market through
franchisees,. This was how Wal-Mart had entered joining hands with Bharati Enterprises.

6. On line retailing is still to leave a mark on the customers due to lacunae that we have
already mentioned.

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In a nutshell we may conclude that the retail industry in India has a very bright future
prospect. It is expected to enrich the Indian Economy in terms of income and
employment generation.

www.economywatch.com

Recommendation

Indian Retail: Past Vs Present

It is widely accepted that the retail industry has undergone a drastic change in last five
years and there is yet more to come. Let us compare the image of Indian retailing in
2004-05 to that of its status in 2007-08 in the following table:

Magnification of the Indian Retail Industry

Yardstick Situation in 04-05 Situation in 07-08

Value of retail sales Rs. 10,20,000 crore Rs 12,00,000 crore
Annual growth rate 5% 5.7%
Value of organized market Rs 35,000 crore Rs 55,000 crore
Share of organized market 3.4% 4.6%
in the sector
Forecasts (after 5 years) Over Rs. 1,00,000 crore Rs. 2,00,000 crore
about size of organized
retail market
Forecasts about growth Around 30% Around 40%
rate of organized retail
market

The above table clearly shows that the retail market as well as the mindset required for it

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has experienced a thorough revisal in the last three years. This is just the beginning and
Indians are sanguine that the sector will see rosy days in the future. This confidence has
helped India acquire the No.1 position among 30 most attractive retailing destinations in
the world according to the Global Retail Development Index of 2005 (by AT Kearney,
India). Among emerging markets, India holds the second position after China in the list
of most favored retail destinations.

The retail industry employs a huge share of the total workforce in India. It is the second
largest employer after India. Presently 7 percent of the total labor force is employed in
the retail sector. According to available data it is also the largest employer in the services
sector and maximum growth in the non-agricultural sector has been witnessed by retail
trade. According to market analysts 300 new malls, 1,500 supermarkets and 325
departmental stores are going to come up in India in the next few days. The shopping
revolution that has led to this retail boom is going to continue and this is a good news for
the government as well as those who wish to work in the organized sector.

www.economywatch.com

This is a complete list of some successful persons in the fields of Retail:

Value of equity
Promoter/chairman/family Company
holdings (Rs Business
head /group
crore)
Kishore Biyani & associates Pantaloon Retail 2,332.83 Retail
Nikhil Chturvedi & family Provogue(India) 213 Retail
K. Raheja & family Shoppers' Stop 1,285.40 Retail
Urvi Piramal & family Piramyd Retail 276.78 Retail

www.economywatch.com
According to researches, 41 percent of total consumption expenditure goes to the
segment of food and groceries and it accounts for 77 percent of total retail sales. So it is
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obvious that this is the most preferred section of retailers. But unfortunately the foible
taste bias for 'wet market' (i.e. fresh food available through hawkers) has marred this
prospect also. Therefore supply chain management, storage of fresh perishable foods and
persuading the customers that the food is inexpensive despite being fresh are genuine
challenges to the newcomers. Diversifying the product base to consumer products such as
readymade garments, furniture, mobiles and computers can mitigate the losses, if any
from food marketing and also broaden the reach to consumers.
www.economywatch.com
Retailing in India: a forecast:

Future of organized retail in India looks bright. According to recent researches it is

projected to grow at a rate of about 37% in 2007 and at a rate of 42% in 2008. It will
capture a share of 10% of the total retailing by the end of 2010.

According to the Union Minister of Commerce & Industry, Shri Kamal Nath, the
organized retail sector is expected to grow to a value of Rs. 2,00,000 crore (US$45
billion) and may generate 10 to15 million jobs in next 5 years. This can happen in two
forms- 2.5 million of these people may be associated directly with retailing and the rest
10 million people may be gainfully employed in related sectors that will be pulled up
through the strong forward and backward linkage effects.

However to compete in this sector one needs to have up-to-date market information for
planning and decision making. The second most important requirement is to manage
costs widely in order to earn at least normal profits in face of stiff competition.
www.economywatch.com

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 50
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