FDI in Indian Retail

Sector

Team
members

Manasa
Krishna
Sumanth
Saleem
 Contents
• F.D.I ?
• Retail sector?
• Evolution?
• Classification.
• Categories
• Role of govt in F.D.I
• Why India?
• Reasons for growth.
• Benefits
• Drawbacks


•
 Foreign
Direct

Investment(FDI)


§ The simplest explanation of FDI would be a

direct investment by a corporation in a
commercial venture in another country.
§ FDI plays an extraordinary and growing role in
global business. It can provide a firm with new
markets and marketing channels, cheaper
production facilities, access to new
technology, products, skills and financing. .
§
§
 Retail Sector.
 Retailing is a distribution channel function where one
organization buys products from supplying firms or
manufactures the product themselves, and then sells
these directly to consumers. A retailer is a reseller
(i.e., obtains product from one party in order to sell to
another) from which a consumer purchases products.
EVOLUTION OF RETAIL STORES
 CLASSIFICATION
ORGANIZED SECTOR
 UNORGANIZED SECTOR


• The organized sector  The un-organized

refers to licensed
retailers, that is, those
who are registered for
sales tax, income tax,
etc and primarily
consist of
Hypermarkets,
Supermarkets, Multi
Brand Outlets,
Department Stores,
Malls and Discount
Stores.
sector on the other
hand, refers to the
traditional formats of
low-cost retailing
requiring limited
investment such as
hand cart and
pavement vendors,
mobile vendors, the
local kirana shops
and local village fairs
and melas.
 CATEGORIES

The Indian retail sector is extremely fragmented, with over 12 million outlets
across all sectors. 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, footwear , jewellery ,electronic items ,consumer durables,
multiplexes, hospitals, furniture, telecom
 Role of Government
Ø FDI in India are approved through
two routes:
i.
ii. Automatic approval by RBI
iii.
iv.Foreign Investment Promotion
Board (FIPB).
 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, which include favourable
demographics, rising consumer incomes, real estate
developments, availability of better sourcing options - both
from within India and overseas - and changing lifestyle.
 In addition increase in the number of international brands
available in the Indian market, economic implications of the
government, increasing urbanization, credit availability,
improvement in the infrastructure, increasing investments in
technology and real estate building a world class shopping
environment for the consumers, falling real estate prices,
increase in expenditure for luxury items have all reasons for
growth of the sector.
•
•
 …..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, online marketing,
expansion of telecom sector etc. Will give a ‘big push’ to
other sectors like agriculture, small and medium size
enterprises.


•

 ….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.
 Induce unfair trade practices like predatory pricing,
in the absence of proper regulatory guidelines.
 Increase in real estate prices and marginalize
domestic entrepreneurs.
•

 •
FDI Retailers • PVR
• Marks and Spencers
• Shell
• Vodafone Essar
• Tata AIG