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FDI in Retail in India

Punit kumar Vipan Singh Mohit Chauhan Sourav Kumar Divyalina Bulyan

THINGS TO REMEMBER
Before we go ahead, we should keep certain basic facts in

our mind.

We are a country with huge population out of which majority

are unprivileged and Below Poverty line.

We are people with tradition, culture and ethics. In our country it is very difficult to get alternate employment.

Our survival is because of our collective strength.


The Govt. policies have been anti growth oriented for traders. The traders voice is not heard by decision makers. In fact traders have no representation in Govt. The decision makers do not ever hear him on policy matters

affecting his trade.

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PRESENT CONDITION OF TRADERS


Fringe Benefit Tax
LICENCES & PERMITS INDUSTRIAL DISPUTE ACT SHOP & ESTABLISHMENT ACT COSUMER PROTECTION ACT WEIGHT & MEASUREMENT ACT PACKAGING ACT PREVENTION OF FOOD ADULTRATION ACT

VAT
INEFFICIENT LABOURS
PREVENTION OF BLOCK MARKETING ACT ANTI HOARDING & PROFEELING ACT MONEY LENDING ACT PRODEND FUND ACT MINIMUM WAGES ACT ESI ACT GRATUITY ACT BONUS ACT

ENTRY TAX FDI in Retail Trade


SERVICE TAX

ANTI SOCAL ELEMENTS

OCTROI

WATER TAX
CENTRAL EXCISE

POLITICIAL INTERFERANCE PURCHASE TAX


POOR MARKET CONDITION

SALES TAX
POWER PROBLEM

INCOME TAX

INSPECTOR RAJ

STAMP DUTY WELTH TAX HIGH BANK CHARGES PROFESSIONAL TAX

Cash Transaction Tax & Quarterly C Form

New Naka Complex

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ESSENTIAL COMMODITIES ACT

Aviation Telecom Infrastructure

Information Technology

Retail Traders
Banking Insurance

Pharma

Mining Steel

Professional
Education

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RETAIL TRADE : BACKBONE OF ECONOMY


Retail trade is worlds oldest business. Retail trade consists of sale of goods & services to consumers for their personal, family or household use. Based on turnover and volume, retail trade is worlds biggest economic activity.

In the year 2000, world turnover in retail trade is estimated around Rs. 3,10,20,000 crores.
In India by investing nominal Capital a person can start retail business. In India Retail shops are generally owned and run by family. The whole family gets self employed.
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HISTORIC CONTRIBUTION BY TRADERS :


During Pre-independence days the traders have helped the leaders in all forms like man power and money. In all social activities & establishment of schools, colleges, hospitals mandir, masjid etc. traders have contributed. Round the year 24 hours a day, traders have made all the goods required by customer available to them During the days of acute shortages, the traders have some how managed to arrange goods for its customers. Relationship of Indian traders and more than mere business customers is much

Indian traders have always seen customer satisfaction above personal profit.
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SUPPORT AND HELP TO GOVERNMENT


Traders are self employed and give employment to entire family

and others.

Traders give employment to that neglected section of society

who do not get employment any where.

Traders take care of entire family of his employees. All direct and indirect taxes levied by Central, State and local

govt. are deposited by trader in Govt. treasury without any charges or commission from Govt.
calamities, the traders have always come out openly to extend full help to Govt.

During famine, floods, earthquakes tsunami and other natural

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TRADERS BEING IGNORED BY GOVEREMENT


In Order to gain political mileage, traders have been termed

by objectionable words. laws have been made.

After independence one after another anti trade, anti trader


Traders have been made slaves under Inspector Raj. Time & again new legislatures are being imported.

Small Traders have been put under heavy burden of book keeping, taxation and compliances under various laws. are being demolished only to give passage to hawkers and footpath shopkeepers to establish their business.

In the name of development and road widening the shops

Local Govt. failed to build new markets. old traditional markets

in different localities are being removed to make way for Big stores to get customers.
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CONTRIBUTION OF TRADERS IN ECONOMY


In comparison

traders.

to world, India has largest number of retail

In our country there are about 1,25,00,000 retail out lets.


Retail trade contributes about 10% - 11% of our countrys GDP. Total turnover of retail sector is about Rs. 8,75,000/- crores.

After

agriculture, Retail trade maximum number of persons.


people.

provides

employment

to

1.25 crore shops are providing employment to about 4 crore

In a study conducted by Reserve Bank of India, India Retail

Traders charge less margin.

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FOREIGNERS ARE MORE DEARER THAN INDIANS


Indian traders, Businessman and Industrialists have established their leadership across the world.

India is emerging as a big economic power.


Our country is progressing in all economic fields. We have lagged behind in infrastructure, irrigation power etc. i.e. such sectors which were under control / monopoly of Govt. We could not grow to full potential in such sectors.

These infrastructure sectors require huge investment with larger gestation period. Hence special emphasis has to be given to these section.
It is unfortunate that instead of focusing development of such core areas the govt. want to hand over our established retail trade to foreigners. It is surprising that suddenly govt. feels that our traders are incompetent to serve the people or handle retail shops OR in disguise of Foreign Direct Investment our retail trade is being sold to foreigners.

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WHAT WAS THE CRITERIA FOR FDI

Some time in 1991-92, the then Finance Minister and present Prime Minister Dr. Manmohan Singhji referred to certain criteria for allowing Foreign Direct Investment. These were : Establishment of basic industries requiring huge capital and advanced sophisticated technology. Infrastructure projects like electricity generation road building etc. Projects which would generate employment

1.

2.

3.

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WILL THIS HAPPEN WITH FDI IN RETAIL TRADE


Throughout the world it is known fact that huge

investment is not required to open a retail shop. sophisticated technology is not required in retail trade. large chain of Retail stores. from day one.

Investment is required to build infrastructure for shop, Small Retail shops provide more employment then There is no gestation period. Hence business starts Instead of developing under developed areas these

stores capture prime commercial property in cities.

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In 60s Big foreign houses entered in retail trade in other parts of

WHAT DO FOREIGN / MULTINATIONAL COMPANIES DO

world.

This is against our culture of One family One shop. These big companies, in order to crush competitors sell goods

cheap. Later on effective prices of goods are increased.

These companies buy material from International market.

Hence local producers are put to loss

These

companies buy in bulk quantities directly manufacturers. The intermediaries loose business. companies have now entered Asian markets.

from

After conquering the markets of Europe and America, these After establishing their footings in Thailand, Indonesia, China,

Japan, Philippines, etc in Asia, these companies are now targeting India.

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EMPLOYMENT GENERATION UNDER EXISTING SYSTEM


FARM LABOURS HAMALS DALALS BROKERS TRANSPORTERS TEA SHOP OWNERS HOTELS DHABAS SHOP KEEPERS

AFTER M.N.C. TAKE OVER


ALL WORKS IN FARM BY MACHINE UNDER CORPORATE FARMING AUTOMATIC TRANSFER AND PACKING BY MACHINES. SALE TO CUSTOMERS THROUGH CHAIN OF DEPARTMENTAL STORES. LARGE NUMBER OF SELF EMPLOYED TO BECOME UNEMPLOYED.
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These companies open chain of shops. With a shop in each area the retail small shopkeepers will be put to heavy loss Slowly the local shops will start closing down. These shops will capture the trade. In countries where they have established their market share is

WHAT WILL HAPPEN TO RETAIL TRADE

Name of Country America England Western Europe Brazil Thailand Korea China Malaysia India

% of Market Share 80% 80% 70% 40% 40% 35% 20% 20% 3%

Remember example of BATA in shoe business. Imagine Roadside DHABAs after RELIANCE FOOD CHAIN Starts working. Cold drink business in India.
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WHAT WILL HAPPEN TO LOCAL RETAIL TRADE


Number of Retail outlets Between 1981-99 in United

Kingdom came down from 56862 to 25800. were closed.

Between 1970-80 in Europe about 4 lakhs Retail shops


Competition shall be limited to Big Retail Houses In the year 2000 Five Big Fast food companies

captured following percent market share : Country Norway Switzerland Sweden UK Portugal % Share 99 94 57

88 64

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WHAT HAPPENED IN THAILAND


In price war traditional shop keepers are facing problem of

survival. Many small shop keepers have closed down their shops.

Big companies have seen growth of 40% There was adverse impact on 60000 small shopkeepers. A small shopkeeper fired rocket in Big shop & committed

suicide," frustration.

The Prime Minister of Thailand agreed that there was adverse

impact on retail trade.

The Govt. which had opened its door for FDI in retail trade with

big bang had to provide financial assistance to retail traders by establishing a special fund.

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WHAT HAPPENED IN CHINA


There is a race to capture more & more space for

retail trade. stores.

There is allegation of flouting the norms on these


There is anger against these companies amongst

general public.

Media is also reporting how

been thrown out.

traditional shops have

The suppliers and manufactures are also facing

problem. These are closing down.

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WHAT HAPPENED IN OTHER ASIAN COUNTRIES


Other countries are also unhappy.

started taking precautions.

Many countries have

Indonesia and Malaysia have established zones within which

these foreigners can do trade.

In Japan Big companies have to discuss with small traders.

There is Zoning system also. Hence these companies have to establish their shops outside city limits. amongst shopkeepers & people in the countries to which these store belong. allow opening of new shops to WALMART. France, Germany and America.

There is wide discontent

The city counselor of California & Chicago have refused to These shops are required to take permission in countries like

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NOW ITS TURN OF INDIA


The tough stand taken till recently by Central Govt., Foreign Retail

Traders could not enter India. Retail Trade.

It is unfortunate that Central Cabinet has given approval to FDI in


Shift of Major retail trade to these big companies will render small

traders & their employees unemployed.

Many companies with the help of contract farming will sell goods

produced in farms directly from their chain of stores.


will start dictating.

After establishing control over purchases & sale these companies These companies will keep only graduates and above in their

employment. There will be no scope for employment to under graduate and others. impossible to reach owners.

In the event of non receipt of payment of supplies, it becomes

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CONTRACT FARMING

COLLECTION OF AGRICALTURE PRODUCTS

TO OWN FACTORY

TO CUSTOMER

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TO OWN DEPT. STORE

REQUEST STOP FDI IN RETAIL TRADE


If Domestic Retail Trade is allowed by Big MNCs etc., there

will be Large Scale Unemployment.

A new class of unemployed called Unemployed Traders will

join the existing force of unemployed persons. Domestic Industry will suffer.

These companies will sell internationally procured products. Everybody knows how Big Fish eats away small fishes. Keeping the experience of other countries in mind, Govt.

should not take any such decision for which the whole country and coming generation will have to suffer.

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SELF EMPLOYMENT IN INDIA


India has huge force of unemployed persons.

Govt. has failed to generate need based

employment..

Majority of people in India are self employed. The Major area of self employment is Agriculture

and Retail Trade .

The farmers problems were not addressed timely.

They are committing suicide.

WHAT is the future of Indian Traders in India? WILL next generation pardon us?

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WHAT SHOULD GOVT. DO


Govt. should identify the weakness of present retail

trade.

Govt. should specify the areas where customers are

not being served properly.

Govt. should specify what it expects from retail

trade that is not being met presently.

Govt. should publicise the sector / persons who

have demanded FDI in Retail Trade.

Govt. should come out with white paper on FDI in

Retail Trade specifying the picture after 25 years and 50 years.

VIPAN

INDIA : MY COUNTRY
DONT SEE INDIA AS POPULATION OF ONE HUNDRED CRORE MOUTHS TO FEED. SEE IT AS A MARKET OF ONE HUNDRED CRORE CONSUMERS WITH TWO HUNDRED CRORE EYES TO WATCH YOUR PRODUCTS AND TWO HUINDRED CRORES HANDS TO BUY YOUR PRODUCTS.

WORLDS LARGEST EMERGING RETAIL MARKET : WHO WILL CONQUOR IT : WE OR THEY?


DO NOT MAKE MY GOVEREMENT AS,
GOVEREMENT BY MNC, GOVEREMENT OF MNC AND GOVEREMENT FOR MNCS

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