FDI IN

RETAILING
 GROUP MEMBERS
1. SHRUTI GAVANDI 15
2. KAPIL GIDWANI 16
3. PRIYESH JOSHI 24
4. ANWAR KAZI 29
5. ZUBAIR KHAN 31
6. PRACHI RAWLE 47
7. DEEPAK SAUNDH 50
Agenda
Retailing : An overview
Evolution of Indian retail
Categories of Indian retail

The changing Indian Consumer

FDI in Indian retailing

Why FDI ?
FDI POLICIES

Recommendations ?

Conclusions
 Retailing: An overview

 Retailing
 World’s largest private industry

US$ 6.6 trillion sales annually

 Indian retailing
An overview  Largest employer after agriculture -

8%* of population
 Highest outlet density in world

Around 12 mn outlets

 Still evolving as an industry

Long way to go
 Evolution of Indian retail
Modern Formats/
Historic/Rural Traditional/Perva Government
International
Reach sive Reach Supported
Exclusive Brand
Outlets
Hyper/Super
Markets
Department Stores
Shopping Malls
PDS Outlets
Khadi Stores
Cooperatives
Convenience
Stores
Mom and
Pop/Kiranas
Weekly
Markets
Village Fairs
Melas
Source of Neighborhood Availability/ Shopping
Entertainmen Stores/Convenie Low Costs / Experience/Efficie
t nce Distribution ncy
 Categories of Indian retail
 Corporate Houses
 Tatas: Tata Trent

 RPG group: Food World, Health

and Glow, etc

 ITC: Wills Life Style

 Rahejas(ShoppersStop),
Indian retail Hiranandani(Haiko), DLF(DT
cinemas) etc.
 Dedicated brand outlets
 Nike, Reebok, Zodiac etc

 Multi-brand outlets
 Vijay Sales, Viveks etc

 Manufacturers/ Exporters
 Pantaloons, Bata, Weekender
 The changing Indian consumer
 Greater per capita income
 Increase in disposable income of
middle class households
 20.9%* growth in real disposable

income in ’99-’03.
 Growing high and middle income
Indian population
consumer  Growing at a pace of over 10%* per

annum over last decade

 Affordability growth
 Falling interest rates

 Easier consumer credit

 Greater variety and quality at all

price points
 The changing Indian consumer
 The urban consumer
 Getting exposed to international
lifestyles
 Inclined to acquiring asset

 More discerning and demanding

than ever

Indian  No longer need-based shopping

consumer  Shopping is a family experience

 Changing Mindset
 Increasing tendency to spend

 Post Liberalization children coming

of age
100 mn 17-21 year olds*. Tend to

spend freely.
 Greater levels of education
Growth factors

 Growth determining factors

 Government Policy

 Infrastructure development

Growth  GDP growth

factors  Employment generation and job

creation
In several new sunrise industries

Implies greater purchasing power

 FDI in Indian retailing
 Metro Group of Germany
 Cash-and-carry wholesale trading

 Proposal faced strong opposition

 Entities established prior to 1997

 Allowed to continue with their
Current FDI existing foreign equity components.
 No FDI restrictions in the retail
sector pre-1997
 Foodworld

 51:49 JV between RPG and Dairy

Farm International,
 Leading food retailer in India now

 Mc Donalds
 International retailers in India:
Strategies
 Franchise
 International company gives name

and technology to local partner. Gets

royalty in return
 In case master franchise is
appointed for region or country, he
How they has right to appoint local franchisees
are present Nike, Pizza Hut, Tommy Hilfiger,

Marks and Spencer, Mango

 Manufacturing
 Company sets up Indian arm for
production
 Bata India. It also has right to

retail in India
 International retailers in India:
Strategies
 Distribution
 International company sets up local

distribution office
 Supply products to Indian retailers

to sell
 Also set up franchised outlets for
How they
are present brand
Swarovski, Hugo Boss

 Wholesale trading
 Cash and Carry operations

 100% FDI permitted

 Metro Cash n Carry

 Why FDI?

 Improve competition
 Develop the market
 Greater level of exports due to
increased sourcing by major players
Benefits of  Young Demographic Profile- 54% population
FDI below 25years
 Abundant availability of Skilled Human
Resources
 Adequate natural resources and raw materials
 Large and growing domestic market
 Why FDI?
 Investment in technology
 Cold storage chains solve the perennial
problem of wastage
 Greater investment in the food
processing sector technology
 Better operations in production cycle and

distribution
Benefits of  Better lifestyle
FDI  Greater level of wages paid by
international players usually
 More product variety

 Newer product categories

 Economies of scale to help lower

consumer price
 Increased purchasing capacity of
consumers
 Why FDI?
 Manpower and skill development
 Through retail training and
 Greater managerial talent inflow from

other countries
 Tourism Development
 A strong retailing sector boosts tourism
Benefits of as seen from the experience of
FDI Singapore and Dubai
 Investment in whole supply chain
 Improved product basket from India for
exports
 Long term benefits
 Up-gradation of agriculture
 Development of efficient small and
medium size industries
 Services Sector- Caps
26 %cap in Print media: Publishing newspaper and
periodicals dealing with news and current affairs; and in
Insurance.
49 %in Broadcasting; Air transport services and Stock
Exchanges
51%in single brand product retailing
FDI POLICY 74% in Telecommunication services; ISP with gateways,
radio-paging, end-to-end bandwidth; Establishment and
operation of satellites; and Private sector banks
AGRICULTURE- FDI is not allowed in agriculture and
plantation activities except tea plantation. In the tea sector
FDI
is allowed up to 100% with prior Government approval
REAL ESTATE -FDI is not permitted in Real Estate
business
i.e. buying and selling of properties.
100% FDI IN INDIAN
RETAIL
INDUSTRY

Your
Perception??!
 RECOMMENDATIONS
 The recommendations for India are,

* Permit FDI in phases (first allow for 49 percent,

after some years 74 percent, based on the results 100
percent).
* Invest in supply chain infrastructure
* Grant industry status to retail business
* Ensure flexibility of labor laws.
 CONCLUSION

 FDI in retailing would surely an advantage to India

and it would also help India in becoming 'developed
country'. As the people also accept the retailing it will
be an advantage to them also. So the government
should also open the retail sector to the foreign
investment, as it also serves as an employment
generator