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Naveen Gupta
Naveen Gupta

The document discusses Foreign Direct Investment (FDI) in India, specifically in the retail sector. It defines FDI and provides examples of major foreign retailers interested in the Indian market. It outlines the Indian government's policies that allow 51% FDI for multi-brand retail and 100% for single-brand. The document also discusses the types of FDI, sectors that attract FDI in India, and both the advantages and disadvantages of allowing FDI in the retail sector.

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PRESENTATION OF ILP SAM -1ST RE APPER PRESENTED BY NAVEEN KUMAR CUN110501060
FDI or Foreign Direct Investment FDI or Foreign Direct Investment A company from one country making a physical investment into building a factory in another country. FDI has come to play a major role in the internationalization of business
Foreign Direct Investment What is FDI ? Foreign direct investment ( FDI ) is direct investment by a company in production located in another country either by buying a company in the country or by expanding operations of an existing business in the country. Why FDI ? To take advantage of cheaper wages in the country. Special investment privileges such as tax exemptions offered by the country . To gain tariff-free access to the markets of the country or the region.
Entry Options For Foreign Players prior to FDI Policy Franchise Agreements Cash And Carry Wholesale Trading Licensing Agreements Manufacturing and Wholly Owned Subsidiaries.
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FDI Policy for Retail Sector in India The government (led by Dr. Manmohan Singh, announced following prospectivere forms in Indian Retail Sector 1. India will allow FDI of up to 51% in multi-brand sector. 2. Single brand retailers such as Apple and Ikea, can own 100% of their Indian stores. 3. The retailers will have to source at least 30% of their goods from small and medium sized Indian suppliers. 4. All retail stores can open up their operations in population having over 1million.
Types of FDI Horizontal FDI- arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. Platform FDI Vertical FDI- takes place when a firm through FDI moves upstream or downstream in different value chains .
FDI in India India is the second most important FDI destination (after China) for transnational corporations during 20102012. Sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI. FDI in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 25% to $50.8 billion .
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. What does 51% FDI in multi-brand retail ? Minimum investment of $100 million. 50% of the investment is to be in backend infrastructure development. 30% of all raw material has be procured from Indian small and medium industries. Permission to set up malls only in cities with a minimum population of 10 lakhs. Government has the first right to procure material from the farmers. Foreign investor should be the owner of the brand.
FDI advantage and disadvantage Inflow of equipment and technology. Crowding of local industry. Competitive advantage & innovation. Conflicts of laws. Financial resources for Loss of control. expansion. Effect on natural employment generation. Environment environment. Contribution to exports growth. Effect on local culture. Improved consumer welfare through reduced cost , wider choice and improved quality
Diverse foreign direct investment in indian retail is greatly cherished by most of the major and leading including:- Walmart (USA) Rs 455.80 crore Tesco (UK) 贈1bn Metro (Germany)about Rs 650 crore Carrefour (France)488 crore
FDI in Retail sector: FDI in Retail sector FDI in retail sector is not allowed. 100 % FDI is allowed in cash and carry wholesale and export trading, both wall mart and Carrefour have already entered in India in this segment . FDI in retail sector will have both positive and negative effect if allowed. Both organized and unorganized sector will face adverse competition from global players. Wal-Mart has a turnover of $256 billion and growing at an average of 12 -13 % annually. Average size of its stores is 85000sq ft and average turnover is $51 million
Single Brand Retailing only single brand products would be sold (i.e., retail of goods of multi-brand even if produced by the same manufacturer would not be allowed), products should be sold under the same brand internationally, single-brand product retail would only cover products which are branded during manufacturing. any addition to product categories to be sold under single- brand would require fresh approval from the government.
FDI in Multi-Brand Retail The government has also not defined the term Multi Brand. FDI in Multi Brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof. In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce circulated a discussion paper [14] on allowing FDI in multi-brand retail. The paper doesnt suggest any upper limit on FDI in multi-brand retail. If implemented, it would open the doors for global retail giants to enter and establish their footprints on the retail landscape of India. Opening up FDI in multi-brand retail will mean that global retailers including Wal-Mart, Carrefour and Tesco can open stores offering a range of household items and grocery directly to consumers in the same way as the ubiquitous kirana store.
FDI in retail: Positive and Negative impact Positive impact Job opportunities in areas like marketing, agro- processing, packaging, transportation, etc. will be created. Farmers will get a good price for their crops and their exploitation will stop. Infrastructure facilities, refrigeration technology, transportation, etc. will be renovated. Foreign companies will also create a supply-chain in the India market. Negative impact Small retailers and other small Kirana store owners will suffer a large loss. Giant retailers and will displace small retailers. foreign giants will purchase their goods from the international market and not from domestic sources. Affect will be on consumers ,retailers ,wholesalers ,farmers (producers).
Division of Retail Industry Organised licensed retailers, who are registered for sales tax, income tax, Unorganised traditional formats of low-cost retailing,
Why do we need it: We are the second highest producer of fruits and vegetables in the world but still we are not able to utilize is properly because of inadequate infrastructure facilities. It will reduce pre-harvest wastage/losses and thus help control food inflation. It will create 1.5 million more jobs in 5 years. Apart from the huge number of indirect employment. It will increase competition which is always beneficial for the customer. It will remove the middleman from the equation. It will reduce costs which in turn will reduce prices.
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  • 1. PRESENTATION OF ILP SAM -1ST RE APPER PRESENTED BY NAVEEN KUMAR CUN110501060
  • 2. FDI or Foreign Direct Investment FDI or Foreign Direct Investment A company from one country making a physical investment into building a factory in another country. FDI has come to play a major role in the internationalization of business
  • 3. Foreign Direct Investment What is FDI ? Foreign direct investment ( FDI ) is direct investment by a company in production located in another country either by buying a company in the country or by expanding operations of an existing business in the country. Why FDI ? To take advantage of cheaper wages in the country. Special investment privileges such as tax exemptions offered by the country . To gain tariff-free access to the markets of the country or the region.
  • 4. Entry Options For Foreign Players prior to FDI Policy Franchise Agreements Cash And Carry Wholesale Trading Licensing Agreements Manufacturing and Wholly Owned Subsidiaries.
  • 6. FDI Policy for Retail Sector in India The government (led by Dr. Manmohan Singh, announced following prospectivere forms in Indian Retail Sector 1. India will allow FDI of up to 51% in multi-brand sector. 2. Single brand retailers such as Apple and Ikea, can own 100% of their Indian stores. 3. The retailers will have to source at least 30% of their goods from small and medium sized Indian suppliers. 4. All retail stores can open up their operations in population having over 1million.
  • 7. Types of FDI Horizontal FDI- arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI. Platform FDI Vertical FDI- takes place when a firm through FDI moves upstream or downstream in different value chains .
  • 8. FDI in India India is the second most important FDI destination (after China) for transnational corporations during 20102012. Sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI. FDI in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 25% to $50.8 billion .
  • 10. . What does 51% FDI in multi-brand retail ? Minimum investment of $100 million. 50% of the investment is to be in backend infrastructure development. 30% of all raw material has be procured from Indian small and medium industries. Permission to set up malls only in cities with a minimum population of 10 lakhs. Government has the first right to procure material from the farmers. Foreign investor should be the owner of the brand.
  • 11. FDI advantage and disadvantage Inflow of equipment and technology. Crowding of local industry. Competitive advantage & innovation. Conflicts of laws. Financial resources for Loss of control. expansion. Effect on natural employment generation. Environment environment. Contribution to exports growth. Effect on local culture. Improved consumer welfare through reduced cost , wider choice and improved quality
  • 12. Diverse foreign direct investment in indian retail is greatly cherished by most of the major and leading including:- Walmart (USA) Rs 455.80 crore Tesco (UK) 贈1bn Metro (Germany)about Rs 650 crore Carrefour (France)488 crore
  • 13. FDI in Retail sector: FDI in Retail sector FDI in retail sector is not allowed. 100 % FDI is allowed in cash and carry wholesale and export trading, both wall mart and Carrefour have already entered in India in this segment . FDI in retail sector will have both positive and negative effect if allowed. Both organized and unorganized sector will face adverse competition from global players. Wal-Mart has a turnover of $256 billion and growing at an average of 12 -13 % annually. Average size of its stores is 85000sq ft and average turnover is $51 million
  • 14. Single Brand Retailing only single brand products would be sold (i.e., retail of goods of multi-brand even if produced by the same manufacturer would not be allowed), products should be sold under the same brand internationally, single-brand product retail would only cover products which are branded during manufacturing. any addition to product categories to be sold under single- brand would require fresh approval from the government.
  • 15. FDI in Multi-Brand Retail The government has also not defined the term Multi Brand. FDI in Multi Brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof. In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce circulated a discussion paper [14] on allowing FDI in multi-brand retail. The paper doesnt suggest any upper limit on FDI in multi-brand retail. If implemented, it would open the doors for global retail giants to enter and establish their footprints on the retail landscape of India. Opening up FDI in multi-brand retail will mean that global retailers including Wal-Mart, Carrefour and Tesco can open stores offering a range of household items and grocery directly to consumers in the same way as the ubiquitous kirana store.
  • 16. FDI in retail: Positive and Negative impact Positive impact Job opportunities in areas like marketing, agro- processing, packaging, transportation, etc. will be created. Farmers will get a good price for their crops and their exploitation will stop. Infrastructure facilities, refrigeration technology, transportation, etc. will be renovated. Foreign companies will also create a supply-chain in the India market. Negative impact Small retailers and other small Kirana store owners will suffer a large loss. Giant retailers and will displace small retailers. foreign giants will purchase their goods from the international market and not from domestic sources. Affect will be on consumers ,retailers ,wholesalers ,farmers (producers).
  • 17. Division of Retail Industry Organised licensed retailers, who are registered for sales tax, income tax, Unorganised traditional formats of low-cost retailing,
  • 18. Why do we need it: We are the second highest producer of fruits and vegetables in the world but still we are not able to utilize is properly because of inadequate infrastructure facilities. It will reduce pre-harvest wastage/losses and thus help control food inflation. It will create 1.5 million more jobs in 5 years. Apart from the huge number of indirect employment. It will increase competition which is always beneficial for the customer. It will remove the middleman from the equation. It will reduce costs which in turn will reduce prices.