FDI or Foreign Direct Investment is a self explanatory term well sort of. In a layman’s language it refers to any monetary investment that is made by an entity in business if any kind on foreign shores.I'am sure this presentation will help you to understand FDI better .
4. • 1991- FDI allowed selectively up to 51% in priority
sectors.
• 1997-FDI allowed up to 100% in sectors like mining,
manufacturing.
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5. • 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.
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7. FDI Policy in Indian Retail SectorFDI Policy in Indian Retail Sector
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8. Incentives attract FDI.
Market size and potential are sufficient inducers.
Tax breaks, import duty exemptions, land and power
subsidies, and other enticements.
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10. GRDI Position : 3rd
Size : $ 400 billion
Growth Rate : 13%
GDP contribution : 12%
Major sector : Food and Grocery
Employment : 2nd
largest industry
(35.06 million)
Types: Organized ( 5%)
Unorganized ( 95%)
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11. • 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.
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12. Format Description Retailers
Hypermarkets Offering basket of product Spencers, Big bazaar
Cash and Carry Bulk-buying requirement Bharti-wal-mart
Departmental stores Large layout, Wide merchandise
mix
Lifestyle , Globus
Supermarkets Household product as well as food
as integral part of the service
Apna bazaar , food
bazaar
Shop-in-shop Shops located in shopping malls Navras ( big bazaar)
Specialty stores Focus on individual product type Brand Factory
Category killers Particular segment The LOFT
Discount stores Branded product at discounted
prices
Subhiksha, levi’s
outlet
Convenience stores Small Retail stores In and out
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13. Retail Segment Percentage holding
in sector
Major retailers
Food and grocery 63% Reliance fresh, Café
brio, food bazaar
Clothing, textile and
fashion
9% Westside, shoppers
stop, globus
jewellery 5% Tanishq
Catering services 5% IRCTC
Consumer durable 4% Viveks, vijay sales,
Croma
pharmaceuticals 4% Piramal group
Entertainment 3% Bowling co.,
Furnishing, utensils 3% Hometown, Tangent
Concept
Mobile handsets 2% The mobile store,NAGESH DIGE
14. • One of the world's largest industries exceeding US$ 9 trillion.
• Dominated by developed countries.
• 47 global fortune companies & 25 of Asia's top 200 companies are
retailers.
• US, EU & Japan constitute 80% of world retail sales.
• The world’s population is poised to expand 50% by 2050. The world
currently comprises of 78% poor, 11% middle income and 11% rich.
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17. India China
Focus on Services Focus on Industry
High labor cost Low Labor Cost
Home grown Capital FDI
Old technology Adaptability to Latest technology
Democratic Government Communist Government
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19. •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.
INDIA
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20. •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.
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21. •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.
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22. •Easy consumer credit.
EMI & loan via credit cards
-- easy for Indian consumers to
afford expensive products.
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23. •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
.
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24. •Technology → Better use of resources and
goods.
Wastage and Storage problems will be
resolved.
Efficient logistics, production, and
distribution channels.
Digital records.
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27. •FDI in Retail sector will resolve problems
regarding foreign exchange in India.
•The life-long basic needs will keep on
driving the Retail Industry.
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30. • Major challenge faced by Organized retail sector:
In Retail, over 70 per cent of the labor force in
both sectors combined (organized and unorganized)
is either illiterate or educated below the primary
level.
• Labor Laws
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31. • A strong competition from mom and pop shops:-
Easily accessible & approachable.
Provide services like Free home delivery and goods on
credit.
They change consumer focus.
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33. Lack of Logistic InfrastructureLack of Logistic Infrastructure
Due to lack of proper storage infrastructure post-harvest losses of
farm produce is Rs. 1 trillion cr. annually.
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34. • Market power is in hands of unorganized retail.
• Potential of Indian Market is US$ 200 billion whereas India
is just earning its 3%.
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36. In terms of corruption India stands at 85th
position.
Because of paper work, corruption is present along the
entire supply chain.
In India, there are additional 2-3 intermediaries as
compared to USA.
i.They dominate the value chain.
ii.They flout mandi norms & their pricing lacks
transparency.
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37. India is still in developing stage in installing and
managing an effective IT system especially in rural areas
which hampers the overall growth of organized retail
sector.
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38. Banks are reluctant to finance retailers because of falling
demand of organized retailers in India as it has witnessed
failure of many stores like Spencer's, Subhiksha, etc.
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39. • Taxation laws in India favors only small retail businesses.
• Implementation of non-uniform VAT across states.
• Octroi and entry tax in some states.
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42. • 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.
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48. 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
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50. • Investment into warehouse and cold storage chain will
result in significant efficiency on supply chain.
• Farmers benefited through direct marketing and contract
farming programme.
• Improves farm production through modern techniques.
• Increasing availability of low interest credit for farmers.
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51. 0
0.2
0.4
0.6
0.8
1
1.2
1.4
2008 2011 2013 2018
0
0.59
0.83
1.3
ExpectedGrowth
CAGR
10%
• In the last four year, the
consumer spending in India
climbed up to 75%.
• By the year 2013, the
organized sector is also
expected to grow at a CAGR of
40%.
• The total number of shopping
malls is expected to expand at
a CAGR of over 18.9 per cent
by 2015.
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52. Industry experts predict that the
next phase of growth in the
retail sector will emerge from
the rural markets.
By 2012 the rural retail market
is projected to have a total of
more than 50 per cent market
share.
Apparel, along with food and
grocery, will lead organised
retailing in India.(RNCOS)
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53. FDI should be leveraged to create back-end infrastructure.
FDI will be a powerful driver to curb inflation.
we Should stipulate that at least 35% of the jobs in the
retail outlets should be reserved for the rural youth
Opportunity to urban and rural unemployed
Restrict the number of stores that can be operated in a city.
Allow access to the small retailers to the stores through
special windows.
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55. Strength:
Growing economy
Availability of man power
Improvement in the standard of living
Increase in demand driven by working youth
Weakness:
Lack of trained manpower
Inadequate infrastructure
Lack of expertise in supply chain management
Fast changing needs of consumer
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56. Opportunity:
Untouched rural market.
Investment opportunities
Fast evolving shopping mall formats
Upcoming international players
Threat:
The tax structure in India favors small retail business
Lack of adequate infrastructure facilities
High cost of real estate
Low retail management skill
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Varied window displat : now a days retailers know that if your product is dosplayed properly acc. to the culture of the state you are operating in , will definaltey help you
Count the country and then speak on the 4 things showed here
This is not all there is still more
In 2881, India had the highest shop density in the world, with 11 outlets for every 1,888
people.. The high density restricts their scope of expansion, and thereby of
upgrading. This also means that, except in the case of severely segmented markets, this
sector stands little chance of competing against large retailing corporations operating
with economies of scale.
It will bring out many positive changes i.e. improvement in supply chain management. It is noticed that 35-40% of the agriculture produce perishes every year due to poor infrastructure in India and there are only 6522 cold storages in India mainly used for potatoes.
Investment in technologies and infrastructure by the retail corporations will act as a boon for our economy.
These org will come in with technical know how and expertise and will train indian manpower and hone their skills as suitable for the industry.
Moreover small players who have already been working with International
chains like Wal-Mart/Carrefour in India have benefitted a lot by manufacturing their private label products & also showcasing our
products in their stores by reaching end consumer directly at competitive
prices which would otherwise launching and building a new brand is a task in itself.
It is understood that MNC that invest in retail in india would also source indian goods to their international outlets in a big way, thus provide a boost to indian exports. Indian retail chains would get integrated with global supply chain since Fdi will bring in technology, quality standards and marketing.
technological know how, soil quality improvement, pesticide and fertilizer usage,
grading, sorting, capabilities and increasing availability of low interest credit for
farmers.
And u can well see difference in the share of spending in these 3 categories by rural and urban households.
After observing the opportunities and challenges, the views of different org. and the benefits that are likely to take place in indian economy..the panel recommends that fdi in multi brand retail should be allowed but a cap of 49% should be imposed to protect the interest of small and medium size retailers and give them a breathing space to adjust themselves to the new environment and also work to bring in their competitive advantage. China opened the fdi 49% in 1992 and has been immensely benefitted due transfer of technical know how and increased exports there are currently appx 40 foreign players contributing to org retail sector. Now, its time for india to open the borders and be benefitted by the retail growth.
A major proportion of initial FDI should be invested in developing back end
infrastructure. For e.g. the foreign partners need to tell the total amount that
they will be investing in next five years. Out of these atleast 80% of the FDI
has to be made in initial three years.
We talked of large percentage of agriculture produce getting wasted annually. Well investment in technology and supply chain will surely prevent such wastages consequently curb the supply caused inflation which is currently hovering around 15.46%.
