The commitment of money or capital to purchase financial instruments or assets in order to gain profitable returns.

Investment done by citizens and government of one country (home country) invest in industries of another country (host country).

Foreign Investment through

Foreign Direct Investments

Foreign Institutional Investors

Automatic Route

Government

No permission required

Approval /License required.

‡ 1991- FDI allowed selectively up to 51% in priority sectors. ‡ 1997-FDI allowed up to 100% in sectors like mining, manufacturing.

‡ 2000-06 FDI allowed up to 100% in specified sectors. FDI limits increased. Procedures further simplified ‡ The top 3 Indian Regions attracting the highest FDI.  Mumbai, Delhi and Karnataka.  Account for nearly 62% of the total FDI.

Single Brand Retailing Cash and Carry Model

51% 100% 

Incentives attract FDI. Market size and potential are sufficient inducers.  Tax breaks, import duty exemptions, land and power subsidies, and other enticements.

‡ ‡ ‡ ‡ ‡ ‡

Corporates are increasingly coming into this sector. Demand of branded goods on a large scale. Demand of new and varied products. High quality product is preferred . Varied window display. E-tailers increase the presence.

INDIA ‡A large emerging market . Increase in disposable income of a family. 70 mn Indians salary of $18,000. Rise to 140 mn by 2011. Consumer spending power increased by 75% in last 3 years. The per capita income in 2009 2010 has more than doubled to US$ 849 from US$ 348 in 2000 01.

‡Increase in consumer class. Consumer class will grow from 50 million at present to 583 million by 2025. With more than 23 million people taking their place among the world s wealthiest citizens.

Upper class Middle class Lower class

‡Wide demographics -- average age of 25 yrs. ‡Brand consciousness. 60 % of population below age of 30. Awareness through World Wide Web. ‡Changing consumer mindset. Focus shifting from low price to convenience, value and a superior shopping experience. ‡Small Basket Size Shaping of Consumption

‡Employment generation. Second-largest employer after agriculture. Retail trade employing 35.06 million. Wholesale trade generating an additional employment of 5.48 million.

Additional 1.6 mn jobs .

‡Technology p Better use of resources and goods. Wastage and Storage problems will be resolved. Efficient logistics, production, and distribution channels. Digital records.

‡Rural market. Robust Consumption. 70% Indian households. 2/5 of the country s total consumption pie. Accounts to 45% of GDP.

SKILLED WORKERS INFLATION COMPETITION

TAXATION POLICIES

REAL ESTATE PROBLEM

PROBLEM IN RAISING FUNDS SUPPLY CHAIN MANAGEMENT

MARKET POWER

‡ Indian retail sector : Employs 8% (35 million)of the working population. Could yield 12 to 15 million retail jobs in the coming five years. ‡ Out of which organized segment is about 0.3 million. ‡ Retail sector grew at 9.4% on real terms & 15.4% on nominal terms.

‡ Employment. ‡ Unfair competition. ‡ Under-developed organized retail sector.

FDI can be a powerful catalyst to spur competition in the retail industry. It can bring about: ` Supply Chain Improvement ` Investment in Technology ` Manpower and Skill development ` Efficient Small and Medium Scale Industries ` Increase in exports

Lifestyle plans to have more than 50 stores across India by 2012± 13.

Shoppers Stop has plans to invest Rs250 Crore to open 15 new supermarkets in the coming three years.

Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million to add up to existing 2.4 million sq ft retail space. .

Timex India will open another 52 stores by March 2011 taking its total store count to 120

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The initial cap on investment could be pegged at 49%. FDI should be leveraged to create back-end infrastructure. FDI will be a powerful driver to curb inflation.

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To develop our rural sector ,should conditionality s be put on the FDI funded chains relating to employment? For example, should we stipulate that at least 35% of the jobs in the retail outlets should be reserved for the rural youth?

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Urban migration Opportunity to urban and rural unemployed Alternative incentive schemes

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National legal framework cannot be effective. Hamper growth in retail sector. Incentives directly to benefit small retailers.

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Thank You