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Foreign Direct Investment(FDI) in Retail Sector
for the academic session 2009-2010
Prepared By: Shrutika Shahakar
Guided By: Ms. Archana Shrivastava
DATTA MEGHE INSTITUTE OF MANAGEMENT STUDIES ATREY LAYOUT, NAGPUR-440022
I hereby certify that this project Report entitled “Foreign Direct Investment(FDI) in Retail Sector” submitted by Shrutika Shahakar to Rashtrasant Tukadoji Maharaj Nagpur University, Nagpur in the faculty of commerce is bonafide and original research work carried out under my guidance and supervision. It is a piece of research of sufficiently high standard to warrant its submission to the University for the Award of the said degree. No part of the PROJECT has been submitted for any Degree or Diploma or published in any other form. The assistance and help rendered to the researcher during the course of his investigation in the form of basic source material and information have been duly acknowledged. Special thanks to Ms. Archana Shrivastava for her guidance and co-operation.
Ms. Archana Shrivastava
Arora Project Guide Director
10.2010 3 . carried out under the guidance of my Faculty Guide Ms. The facts and figures produced in this report are based on my own experience and study. This report neither full nor in part has ever been submitted for award of any other degree. Place: Nagpur Date: . Archana Shrivastava.DECLARATION I hereby declare that this project work entitled “FDI in Retail Sector” is my original work.
for giving me opportunity to do the project in order to enhance my knowledge. ideas into plans. Dr.ACKNOWLEDGEMENT To get the blossomed tree. Archana Shrivastava for her valuable guidance. It is the guide who inspires and encourages completing the work in stipulated time. SHRUTIKA SHAHAKAR 4 . seeds need to be of utmost quality and environment as well. I owe my sincere thanks to my research guide Ms. Thoughts are converted into ideas. plans into actions and actions into the work. I would like to express my gratitude to the Director of DMIMS. systematic and consistent work under a guide is required. I find myself lacking in expression to extend my profound sense of respect to her. Nagpur. skills and abilities. To reach the heightened goal successfully. I would be failing in my duty if I don’t express my sincere thanks to the faculty members and requisite personnel of my institute for providing me the concerned books and guidance and assistance. without her guidance it would have been mission impossible for me to move ahead with this research.Amishi Arora and Guide Ms. Archana Shrivastava.
…………………………….. FDI in India………………………………………………………………………………….16 8. Growth Drivers……………………………………………………………………………. Global Scenario……………………………………………………………………………..9 5. 6 2. ……………………………..Contents 1..14 7. Reasons for selecting India………………………………………………………. Challenges in India…………………………………………………………………….7 Introduction…………………………………………………… Summary………………………………………………………… 3.11 6.7 4..20 Drawbacks……………………………………………………… 5 . Benefits ……………………………………………………………………………………….20 10.19 9. …………………………. Indian Retail Scenario………………………………………………………………….
• The un-organized sector on the other hand. It can provide a firm with newmarkets and marketing channels. Retail Sector Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves. the local kirana shops and local village fairs and melas. with over 12 million outlets across all sectors. and then sells these directly to consumers.electronic items . Malls and Discount Stores. mobile vendors. telecom. Multi Brand Outlets. income tax. jewellery . These are typically small family owned over-the-counter stores with an average size of 100 square feet . In the organized sector major categories are FMCG products. refers to the traditional formats of low-cost retailing requiring limited investment such as hand cart and pavement vendors. obtains product from one party in order to sell to another) from which a consumer purchases products Retail Sector can be divided into organised and unorganised sectors: • The organized sector refers to licensed retailers. 6 .INTRODUCTION: Foreign Direct Investment (FDI) • • The simplest explanation of FDI would be a direct investment by a corporation in a commercial venture in another country. Supermarkets. products. FDI plays an extraordinary and growing role in global business.consumer durables. hospitals. A retailer is a reseller (i. those who are registered for sales tax. cheaper production facilities. CATEGORIES The Indian retail sector is extremely fragmented. skills and financing. that is.. etc and primarily consist of Hypermarkets. footwear . Role of Government FDI in India are approved through two routes: • • Automatic approval by RBI Foreign Investment Promotion Board (FIPB). multiplexes. furniture.e. access to new technology. Department Stores.
namely. 7 . Tesco.S and Europe. promotions. These MNCs retailers have by and large have saturated in their home countries and are looking for penetrating emerging markets of India. Retail marketing efforts have to improve in the country: 1. 2. increasingly being controlled by a handful of powerful corporations based mainly in the U. Efficient management of high-value customers is vital. Carrefour and Metro. managing. 3. The above are some of the aspects which Indian retailers need to focus upon on a more proactive basis. Monitoring customer needs constantly must be done with long-term relationships in view. Advertising. Growth Drivers for the Organised Retail are identified over here: • Higher Disposable Income • Growing Working Women population • Adoption of Nuclear Family culture • Baby Boomer Effect • Growth in Urban Population • Robust Outlook towards branded products • Growth in Retail Malls and various other new formats • Plastic Money becoming a greater pie of credit GLOBAL SCENARIO The Global retail Industry is one of the largest industries worldwide. and coping up with new challenges in an ever-changing marketplace. Wal-Mart. and campaigns to attract customers have to be designed and executed to build loyalty by identifying regular shoppers and offering benefits to them. China and Russia as they are minimally penetrated by organised retail.Why INDIA? India has high population •Low share of organized retailing •Increase in disposable income and customer aspiration •Increase in expenditure for luxury items SUMMARY The retailers in India have to learn both the art and science of retailing by closely following how retailers in other parts of the world are organizing. Indian retailers must use innovative retail formats to enhance shopping experience and try to understand the regional variations in consumer attitudes to retailing.
993 per capita.2 trillion if food service sales are included). The global market will grow rapidly in our flat world. retail industry generates $3. that is approximately $11. with markets such as China and India granting access to the world’s best retailers.3 million associates in the United States and more than 400. • In the US. • There are minimal capital requirements for foreign retailers in Sri Lanka. Thailand and Japan have enforced zoning restrictions for mega-retailers. being entertained and “living” the shopping experience will take on prominence. mega-retailers must seek the views and permission of small local stores before opening a new store. major cities such as Los Angeles. • In Thailand. • In Japan. California. the government has set up an assistance fund for local retailers due to the impact of mega retailers.Shopping will become more experiential.000 internationally. • The Philippines has imposed “sourcing” and reciprocity requirements on foreign retailers.8 trillion in retail sales annually ($4. both in number of establishments and number of employees. Retailing in United States Retail Sector is the second largest industry in U. The second largest retailer in the world is France's Carrefour. Retail Trends in other Countries • China had initially restricted FDI in retailing to only joint ventures at 49 percent foreign holding and only at specified locations subject to a ceiling on the number of stores. Chicago and New York City have restricted the opening of Wal-Mart stores within city limits. S.S. Wal-Mart is the world's largest retailer and the world's largest company with more than $312 billion (USD) in sales annually. • France enacted the Raffairin Act that regulates the growth of hypermarkets larger than 300 square feet. The U. 8 . Indonesia. Wal-Mart employs 1. eating. • Malaysia.
This sector is slated to be the biggest contributor to GDP of around 10 percent and has promisingly generated ~8 percent employment in India. The Retail Industry's Size is presently Rs 1. Retail sector is expected to grow in tandem to the GDP growth-rate.44. S Kumar’s. unregulated. fairly dominated by scattered. Retail-a boom Indian Retail Sector is at its inflexion point awaiting multifold growth. Khadi Bhandaar. Departmental Stores. co-operative stores in Urban cities.S. Australia UK France Middle east Cash & Carry JV JV JV Franchisee Manufacturing NRI/OCB Route Food Food Supply Chain Management Consumer Durables Departmental Stores Apparel Lifestyle Store INDIAN RETAIL SCENARIO History Traditionally Indian Retail can be traced back from Weekly Markets. and Grasim foraying into selling the product through their outlets and competition among FMCG players driving the forces towards retailing. Raymonds. & unorganised players. Apparel Stores. U. Super-marts. that is moving towards a larger generation of employment opportunities in the times ahead. Direction of Organised Retail 9 . Melas. Hyper-marts. Variety and Volume. etc.Global Players operating in India Name Country Route(Franchise/JV/FDI ) Segment Metro AG Mc Donalds Wal-mart Woolworths Marks & Spencer Benetton Landmark Lifestyle Germany U. The evolution of retailing lead to an emergence of various modern formats like Shopping malls. Village Fairs in Small towns and villages to Kirana stores.A.S. catering to majorly all sectors of society providing the all-important 3Vs – Value.A. The wave of retail began with various textile manufactures like Bombay Dyeing.253 crore out of which the organised sector contributes to a mere 4 percent of the market size. PDS outlets.
Thus India is on the verge of an enormous multi-fold growth oforganised retail. Beauty Care 10 . The mantra expediting the retail growth is ‘Consumer is the King’. staples. organised retail will grow in the metros and large cities. Segmental Growth Food and Grocery This is the largest vertical of 74. Godrej. 54 percent of the rural and 42 percent of urban expenditure was on food. followed by semi-urban and rural areas. Bombay Dyeing. Pyramyd. pulses. that is around Rs 67. being the most untapped pie. Jewellery andWatches Titan is the early entrant in the segment followed by MNCs Oyzterbay. ready to cook and ready to eat meals. Presently only a few players like Gautier. grains.75. the organised retail market is ~4 percent of the total retail. Home Décor and furnishing The demand for furnishing is going to be spearheaded by a huge demand for the realestate. paving way to tap the unorganised segment.5 percent. Increasing disposable incomes and change in the lifestyle needs has pushed the segment. cereals. Koutons having ~16.4 penetration level. The retail revolution signals softening of inflation rate on an yearly basis.310 crore and is expected to compound at 27 percent per annum. and huge advertising and promotion campaigns.44 percent of the total retail) in 2010-11. Apparels Clothing and textile is a large organised vertical dominated by textile manufacturers Raymond. spices and other eatables. processed food. Vimal.4 percent of retail size compromising fruits and vegetables. organised retail is expected to expand in urban cities besides making an entry in semi-urban and rural areas. Gitanjali. & D’damas driven by demand for fashion accessories. Consumer Durables The electronics and consumer durable is the biggest organised segment penetrated to ~20 percent. The retail industry is assumed to grow at GDP growthrate. In a span of just 5 years. There lies more unearthed growth in the verticals as the craze for electronic gadgets have been picking up with the advent of nuclear families. According to NSSO 60th round. aggregating to Rs 1. due to elimination of intermediaries in retailing and passing on of all the benefits to the consumer.103 crore (7. This is least penetrated segment across all verticals of around 1. Swaroski.Due to the urban-rural divide. Presently. & Durian function as organised entities. milk and milk products. and by big retailers like Pantaloon. Orra. Tanishq.
Calcutta. Jaipur and Tier III cities Vadodara. Surat and Ludhiana. Bangalore. Adidas.91 trillion in 2011. The total retail market in the top 67 cities in India in 2006 was Rs. Tier II cities Coimbatore. Chandigarh. Nashik and Madurai. Organised retail is at its nascent phase wherein the large organised retail groups are having aggressive expansion plans to penetrate the Metros and Tier I cities and establish themselves amongst rural masses of Tier I and Tier II cities. which is expected to increase to Rs.The organised players in Beauty Care are HLL (Lakme Salons). large players contributing to meager 10 percent of the total pie. According to CRISIL. FDI in retail in ‘single brand’ is restricted to 51 percent (Tommy Hilfiger. FOREIGN DIRECT INVESTMENT IN INDIA Before 1997. Organised Retail Growth in Indian Cities The Retail sector contributes to around 36 percent of GDP in India and is largest employment generator. a 51:49 JV between Spencer and Dairy Farm International in 1997 started operating in India. After 1997. Indore. Kochi. there was no restriction on FDI in retail sector due to which McDonalds in 1996 and Foodworld. Mini Metros Hyderabad. Health and Glow are having a huge growth impetus. Mumbai. Nagpur. 3. Tier I cities of Kanpur . Bhopal. expected to grow to greater heights with foreign payers like Crocs Inc. There lies a challenge for retailers to experiment with new value formats along with developing customer loyalties. Footwear Leaving aside the Apparel. Footwear segment is forming a big pie in the organised retail sector. urbanization and migration due to transition in urban household growth and income distribution. Vizag. around 87 percent of the retail opportunity comes from top 25 cities compromising Metro Delhi. Marico (Kaya). Since there will be demographic shift in population growth. The second run of reforms are eagerly awaited by industry players as many MNCs are knocking the FIPB door to enter into front and back end 11 . Mango. The sector is dominated by small-scattered unorganised regional players. Lucknow. Mini Metros Ahmedabad and Pune. The stores like Oxford Bookstore etc are experiencing this upswing. the habit of reading books and listening to music is picking up among the Tier-I cities. Books. Music and gifts In addition to Tier-II and Tier-III cities.55 trillion. Thiruvananthpuram. 2. Chennai. Vijaywada. Benetton) and in cash and carry format 100 percent FDI is allowed.
Cash and Carry Wholesale Trade In Cash and Carry Wholesale Trading. Wal-mart have entered into joint venture with Indian companies with share not exceeding 49 percent. These are big chunks forming the segregated and 12 . also called ‘mom and pop stores’ in western countries. ushering-in newer economic opportunities. quality standards. Joint Venture Multi National like McDonalds. more employment avenues and to release the growth path for India. Shoprite and Wal-mart have forayed to strengthen the supply-chain management as done by the manufacturers and wholesalers till now. and entertainment are Nike. The foreign players which have opened franchisee across various verticals of fast food. & marketing. Retail Formats Kiranas These are food and non-food neighborhood counter stores.retailing operations as they would like to garner the reaping fruits of Retail boom in India. master franchisee and regional franchisee. Pizza Hut. integration with global supply-chains. The opening-up of the retail sector will bring technology. the franchisee in return for a sum of money. Tommy Hilfiger. apparels. Swarovski and Hugo Boss. Reebok. A player like Metro. The franchisee is allowed to conduct business using the franchiser’s know-how and brand name. Manufacturing The foreign manufactures sets up its Indian unit to manufacture and forward integrated to retailing its products like Bata and Benetton. Subway. There are various levels of franchisee: Unit franchisee. the franchiser to another. Marks and Spencer. Routes adopted by Foreign Players Franchise Franchise route involves granting of rights by one party. 100 percent FDI has been allowed under the automatic route by FIPB to encourage efficiency in back end supply chain management. multiple franchises.
multi-brands Hypermarts Supermarts Departmental Stores Apparel Stores 50.000-10. Speciality Fomats 2.ft. from which mostly housewives makes purchases that too on credit.) 60.00. vegetables. cereals. pulses. Village Haats This form is operating in rural areas where buyers and sellers gather once in a week or month from nearby villages and small towns to cater their livelihood and leisure needs.000-70. Push Cart Vendors The are categories of vendors roaming from door to door in various localities selling fruits. single vertical on specific needs of customers Owned/Franchise product Exclusive Formats 5.000 single 13 .000 Points Differentiation Multi-format. vegetables and fruits.000 5. These haats are a source of entertainment and socialization among rural masses.000-5.000-25.000 20.000-50. The sellers bring across various products like eatables.000 catering lifestyle needs Multi-verticals Single vertical Single vertical Multi branded single on of verticals.000-7. spices etc. Upcoming Retail Formats Modern Formats Shopping Malls Area (sq. Mandis are physically located at different regions to enhance convenient shopping. These are family-ownedand-run retail-outlets picking the goods from wholesalers totaling to around 12 million stores across India.000 20. Mandis These are the largest chunk of unorganised retail catering to urban and rural masses.000 focusing high end customers Multi-branded.unorganised retail segment.multiproduct. and other eatables. The most prominent of them are sabzi mandis found in most of the localities across India.00-5.
Advantages of Conventional and Modern Organised Retail Formats Conventional Low operating-cost & overheads Proximity to consumers Long operating hours Strong relations with customers Modern organized Large bargaining power Range & variety of goods Quality assurance (brand-related. Cash-&-carry Wholesale Model Cash-&-carry is a form of retail trade in which goods are sold from a wholesale warehouse operated either on a self-service basis where customers settle the invoice onthe-spot or pay cash and carry the goods away themselves. whereby one large store supports various smaller stores in the nearby residential areas. both traditional and modern retail formats will co-exist providing the benefits of both the formats. including selling and promoting. bulk-breaking. this will not take much time. The cash-&-carry player also performs many value-added functions. warehousing. risk-bearing.000) is expected to reach 48 percent by 14 . which will fall under the new evolving hub-and-spoke. transporting. Organised retail will dominate the traditional formats. involving both large payers acting as wholesalers and local kiranas as retail outlets. financing. With efficient supply chain management. supplying market information. This is winwin model is well-suited to the Indian business scene where large stores obtain supplies from the warehouse and supplies to the consumers. GROWTH DRIVERS : Higher Disposable Income The disposable income has been showing a rapid increase from the last few years and is expected to grow steadily because the proportion of the major consuming class (population having incomes higher than Rs 90. and cash-&-carry models. Hub-and-spoke Model Retail Chains are entering residential areas with the hub-and-spoke model. buying and assortment building. and providing management services. durability) Convenience & Hygiene In the long run. The Piramyd Retail’s Trumart Stores (food and grocery) in Mumbai and Pune are based on a similar model. availability of space and proper technology in place.
various organised branded products have entered into Indian markets. expected to fall further to 5. the urban population was estimated to be 281 million (27. According to the census report. the earning population is expected to increase to 62. thereby developing and widening the basket for branded finished goods. new trends and lifestyles are evolving among India masses resulting into 10-15 percent growth in branded products. 15 .36 in 2007.3 percent of total population) constituted the age bracket of 15-60 yrs – growing from an unprecedented level of 335 million people (54 percent of total population) in 1975 at a rate of 77 percent (CAGR of 2.7 percent over the last 10 years (1990-2000). With the advent of International competition. at the 2001-02 prices. In 2000.7 percent of the total population). 593 million people (58. This trend is likely to continue and urbanization is expected to grow at 2.3 percent) in contrast to a population growth of 64 percent (CAGR of 2 percent) over the same period of 25 years.2009-10 from 20 percent in 1995-95.8 percent in 2015. at a CAGR of 9. Robust Outlook towards Branded products Due to liberalization of manufacturing sector. Growth in Urban Population Urbanization has increased at a rate of 2. constituting 32. translating into a population of 782 million. Adoption of Nuclear Family culture The increase in per capita income paved way to increase the nuclear-family culture. The proportion of nuclear families as a percentage of total household population has increased as shown by fall in average household size from 5.3 percent over the next 8 years leading to new consumption patterns due to increasing depth in the consumers’ pocket. In 2000. Baby Boomer Effect The demographics of Indian population has a steep growth inearning population (15-60 yrs). This has established the base for organised retail market in India. This will fuel the growth of organised retail. the population of working women increased to 26 percent in 2001 as compared to 22 percent in 1991. In 2015 the urban population is expected to be 401 million.3 times as compared by housewives. Over the next 15 years.4 percent between 2000 and 2015.57 in 1991to 5.02 by 2011. Growing Working women population The propensity to spend in the case of working women is higher by 1.2 percent of the total population.
Around 358 malls have come up by 2007. DLF. Taxation that favors small retail businesses.Growth in Retail Malls and various other new Formats Real Estate players like Raheja’s. covering a total space of 87 million square feet. Omaxe. Increase in trained work force. These shopping-cum-entertainment malls are wooing young buyers to increase their conversion rate backed by increasing foot-falls.Franchisee arrangement allowed Government does not recognize the industry • • Lack of urbanization Poor transportation Implications Absence of global players • Limited exposure to best practices Restricted availability of finance-Restricts growth and scaling up • Lack of awareness of Indian consumers Restricted retail growth • • • • Lack of Industry Status Structural Impediments 16 . Presence of developed supply-chain and integrated IT management. and to over-come cumbersome local laws. Plastic Money becoming a greater Pie of credit The use of plastic money in the form of debit and credit cards has expanded multifold in last 5 years. Unitech are developing retail malls and leasing out the retail spaces to various retailers of varied products making it a one-stop shopping destinations in urban and semi-urban cities. Future Group. To become a truly flourishing industry. Piramal Group. The customers have adopted the habit of electronic payments and leveraging their pockets shifting from basic needs to lifestyle products. Parsvnath. Factors Barriers to FDI Description FDI not permitted in pure retailing . constant threat of product obsolescence and low margins. Intrinsic complexity of retailing – rapid price changes. thereby pushing organised retail to new heights. Regulations made to restrict real-estate purchases. retailing needs a few changes in regulations and functions: • • • Automatic approval not permitted for foreign investment in retail. CHALLENGES IN INDIA : Retailing as an industry in India still has a long way to go. The number of credit cards has grown at a CAGR of 28 percent and debit cards galloped by 140 percent.
minimumwage payments Multiple licenses/clearances required Local consumption habits . absence of cold chain infrastructure • Long intermediation • • Growth of small.high stamp duty (10 percent) • Several segments like food and apparel reserved for SSIs • Distribution. with unmatchable cost structure • Wastage of almost 20 percent-25 percent of farm produce • Difficult to find good real estate in terms of location and size • High land cost owing to constrained supply Disorganised nature of transactions • • Limited product range Makes scaling up difficult High cost and complexity of sourcing & planning Lack of value addition and increase in costs by almost 15 percent • • Complex Taxation System • • Multiple Legislations • • • Customer Preferences • • chain Differential sales tax ratesacross states Multi-point octroi Sales tax avoidance by smaller stores Stringent labor laws governing hours of work.Need for variety Cultural issues Added cost and complexity of distribution • Cost advantage for smaller stores • through tax evasion • Limits flexibility in operations Irritant value in establishing chain operations. onestore formats.• infrastructure Consumer habit of buying fresh foods Administered pricing • High cost of Real Estate Supply Chain bottlenecks Pro-tenant rent laws Non-availability of Government land. zoning restrictions • Lack of clear ownership titles. logistics Constraints restrictions of purchase and movement of food grains. adds to overall costs Leads to product proliferation Need to stock larger number of SKUs at store level Increases complexity in sourcing & planning Increases the cost of store management Lack of trained personnel Higher trial and error I in managing retail • • • • • • Availability of Talent Highly educated class does not consider retailing a profession • • • 17 .
28 million Tender by India Infrastructure Development Fund based in Mauritius that is likely to bring US$ 517.9% in its portfolio management arm Tenders by SaharaOne. With the fiscal structure gaining momentum.6% FDI.89 million. as per the report by Planning Commission of India. In 2009. the nation's endowments in infrastructure industry doubled. nine tenders contributing total FDI of US$ 112. as per the survey by Ernst & Young on globalization.324 million and 28 deals amounting to US$ 223 million in 2009 and 2008. developing economies gained a massive share of 51.25 million was sanctioned by the central administration. as per the report conducted by a premiere sectoral body.167 million against 8 deals amounting to US$ 1. KS Oils and NDTV Imagine NDTV Lifestyle tender worth US$ 54. respectively. more than what the developed nations gained.Manufacturers Backlash of choice • Lack of proper training • No increase in margins • • operations Increase in personnel costs Manufacturers refuse to disintermediate and pass on intermediary margins to retailers FDI Scenario in India The aggregate cost of 32 domestic mergers and acquisition (M&A) agreements in India in January 2010 stood at US$ 2. In January 2010. the Indian government gave its consent to 14 FDI tenders which are likely to bring foreign investment amounting to US$ 157. that was 50% less than FDI in 2008. Mitsui and Company of Japan is expected to contribute US$ 69. This was chiefly because of major decline in FDI into industrial markets. These encompass: • • • • • US$ 58.3.82 million worth FDI tender by Asset Reconstruction Company FDI valuing US$ 44. endowment proposals in India Inc witnessed an upsurge of around 16% in 2009 to US$ 345.29 million 18 . From 4% of 2004 to 8% of 2005.39 million by Standard Chartered Bank that is likely to elevate to 100% from 74. Among the sanctioned tenders. In the fiscal year 2009.83 million to set-up a fully governed subsidiary in the warehousing industry.
increasing urbanization. Pranab Mukherjee. • In addition increase in the number of international brands available in the Indian market. real estate developments. in Union Budget 2010-11. Entire liberalization of costing and imbursement of technology transmit charges and trademark. Additionally. to enhance investment ambiance in India on February 26. As the Union Home Minister. economic implications of the government. Mr P Chidambaram. credit availability. availability of better sourcing options – both from within India and overseas .FDI in India – Policy Initiatives The Indian government has assured to release an improvised FDI policy in every six months. increasing investments in technology and real estate building a world class shopping environment for the consumers. and royalty expenses. the Indian government has permitted the Foreign Investment Promotion Board (FIPB). rising consumer incomes.16 million were presented in front of Cabinet Committee of Economic Affairs (CCEA) for authorization.and changing lifestyle. the exemption would accelerate foreign direct investment inflow. to sanction FDI tenders of up to US$ 358. 19 . falling real estate prices. which include favourable demographics. WHY INDIA? • • • • India has high population Low share of organized retailing Increase in disposable income and customer aspiration Increase in expenditure for luxury items REASONS FOR GROWTH : • This anticipated growth of the Indian retail sector is owing to the following factors.3 million. improvement in the infrastructure. Previously all the tenders that entailed foreign direct investment of more than US$ 129. 2010 entail: • • • Measures implemented to un-complicate the FDI system System for computation of indirect foreign investment in Indian firms has been comprehensively classified. The offers announced by Union Finance Minister. increase in expenditure for luxury items have all reasons for growth of the sector.
20 . small and medium size enterprises. Will give a ‘big push’ to other sectors like agriculture. Increase in real estate prices and marginalize domestic entrepreneurs. online marketing.BENEFITS : • • • • • Generate huge employment Increased investment in technology The huge tax revenue generated. The consumer gains from the wide variety of choices and a more diversified basket of prices available under one roof The indirect benefits like better roads. in the absence of proper regulatory guidelines. Induce unfair trade practices like predatory pricing. DRAWBACKS : • • • • Foreign Players would displace the unorganized retailers because of their superior financial strengths. The entry of large global retailers such as Wal-Mart would kill local shops and millions of jobs. expansion of telecom sector etc.
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