FDI in Retail India

- Anam Patel- Batul Kagalwala- Beverlee D’Mello- Nisheeta Patankar- Srushti Gangan

Pre-1947 1947 1970s 1980s 1991 1991-95

Haats, Melas and typical

Indian markets were formed

India becomes an independent

nation

First emergence of

organised retail through textile sector

Emergence of brands and brand

retail outlets

India opens doors

through economic reforms

Multiple formats and

product categories introduces

TIMELINE OF RETAILING INDIA

1995--99 2000-05 2005 2006 2006-10

Modern malls are introduced

Rapid expansion of

multiple format Indian

co’s begin

High Street shopping

centers begin to appear

Government allows up to 51% FDI in a single brand

retail firm

Rapid modern mall and

single brand stores

expansion

TIMELINE OF RETAILING INDIA

4

IVIIIIIInitiation

Manufacturers opening their own outlets

Pure play Retailers, realizing the potential start to test waters,

Conceptualization Entry of large Indian corporates and Global Retailers

Large Investment Commitments by large Indian corporate

Expansion by leading Product Brands

Increasing Competition

Large Scale Consolidation

More than 25-30 retail businesses with Revenues in excess of US $ 1 Billion

More Aggression from International Players

Specialty Formats based on finer segmentation of the market

Private brands getting established

Movement to Smaller Cities and Rural Areas

I

Siz

e o

f In

du

str

y

Pre 1995 1995 to 2005

2005 to 2010

2010 Onwards

Entry of large global retailers

Consolidation and Expansion

STRATEGIC LICENSE

AGREEMENTSForeign

company enter into a

licensing agreement

with a partnering with Indianpromoter

owned companies

CASH & CARRY WHOLESALE RETAILING

100 % FDI allowed inwholesale trading which

involves building a

large distribution

network

DISTRIBUTIONAn

international company

can set up a distribution

office in India and

supply products to

local retailers

FRANCHISEE ROUTEThis is

widely used with a

number to international brands in order to set

shop in India

MANUFACTUR-ING

A company can setup

manufacturing units in India along with stand alone retail

outlets

JOINT VENTURES

International firms can enter into

agreements with

domestic players and set up base

in India. Share of MNC is

restricted to 49% over

here

RETAIL ENTRY OPTIONS

DEPARTMENT STORES HYPERMARTS SUPERMARKETS AND CONVENIENCE STORES

Well established, limited competition Relatively new concept, but already as big as department stores Main challenge to mom and pop stores

Entrenched in Indian Mindset Growing fast, but competition to intensify How to compensate for facilities that mom and

pop stores provide namely Home Delivery and Monthly Credit?

Score on shopping experience Price Discount and Wide Varieties act as key attractions

Immense Competitions, building scale to achieve cost efficiencies will be critical

Stress on branding Key to success will be efficient Supply Chains and Store locations

Price not critical as they cater to upper income class

EMERGENCE OF ORGANISED RETAILING

PRESENT SCENARIO

CURRENT FDI POLICY

FDI up to 100% for cash and carry wholesale trading and export trading allowed under the automatic route

FDI up to 51 % with prior Government approval (i.e. FIPB) for retail trade of ‘Single Brand’ products(2006 Series)

FDI is not permitted in Multi Brand Retailing in India.

MAJOR RETAILING PLAYERS IN INDIA

PROPOSED GOVERNMENT POLICY

• FDI up to 100% in ‘single brand’ retail

• FDI up to 51% in ‘multi brand’ retail

GOVERNMENT AND FDI

INDIA AND FDI

OUR TAKE ON FDIRedistribution of jobs.

Fears of small shopkeepers getting displaced are vastly exaggerated.

Stimulation of existing competition.

it's very unlikely that global retail will ever become monopolies.

TO BE.……..OR NOT TO BE???