ROLE OF FDI IN RETAIL

AMRITA
YOGITA
UPASANA
PARMINDER
 Retail

A sale to the ultimate consumer - Interface between

the producer and the individual consumer buying for
personal consumption
Organized retailing

Unorganized retailing
 WHAT IS FDI ?

FDI refers to capital inflows from abroad that is

invested in or to enhance the production capacity of
the economy
 How FDI can come in India?

Franchise Agreements

Cash And Carry Wholesale Trading

Strategic Licensing Agreements

Manufacturing and Wholly Owned Subsidiaries

 FDI in Retail

Indian retail sector is highly fragmented with 97 %

of its business being run by the unorganized retailers
Largest source of employment after agriculture, and
has deep penetration into rural India generating
more than 10 per cent of Indias GDP
FDI in single-brand retailing was permitted in 2006,
up to 51 per cent of ownership
Between then and May 2010, a total of 94 proposals
have been received - Of these, 57 proposals have
been approved
An FDI inflow of US$196.46 million under the
category of single brand retailing was received
between April 2006 and September 2010,
comprising 0.16 per cent of the total FDI inflows
during the period
 Why Shall we Allow FDI in Retail?

A. Competition
Catalysts to spur competition & innovation in
retail industry
Ensure highly efficient-low margin business
model
B. Consumers
Improved product availability, quality & reduce
wastages
Consumers to get best products and services at
reasonable price
C. Better Realization for Farmers
Indian farmers realize only 1/3rd of the total price
paid by the final consumer against 2/3rd by farmers
in nations with a higher share of organized retail
FDI to ensure better realization for farmers &
producers
D. Economic Growth
Sourcing from India will increase & Exports to
get significant boost
India can also become a shopping destination for
the world
Sectors like Textile and handicraft will get a
significant boost
F. Low Cost Products - With more foreign
companies investing in retail , consumers will get
more choices and will have to spend less .
G. Employment Will Increase - Govt says lot
many jobs will be created for people - In India,
where unemployment is a major problem, foreign
companies that come to India, will offer jobs to
Indians
Why Shall we not Allow FDI in Retail?

Job Losses: Retail industry in India is the second

largest employer after agriculture, Any game
changing situation can lead to heavy job losses
particularly in rural areas and small cities
Power of Scale: Unfair competition and abilities
of big retailers to sustain losses can lead to large
scale exit of domestic retailers, especially the small
family managed outlets
 Prefer Localization: Indian retail sector
including organized sector is still under-developed
and in a nascent stage, It is critical that the retail
sector is allowed to grow and consolidate first,
before opening to foreign investors
Reduction in employment: Indian Retail Labor
productivity is 6 to 8 % of U.S. Mckinsey Study,
this means Indian Retail employs 100 people when
U.S. Retail employs 6 8 people A study
conducted in USA revealed that for every one job
created by Wal- Mart, the community loose 2 jobs
THANKYOU