SWOT ANALYSIS ON FDI IN RETAIL SECTOR

BYNarendrasingh Patankar

Present Retail Sector in India

Like every other economy, the retail sector is also one of the most crucial and extremely potential sector of the Indian Economy. As of now, the retail sector in India accounts for approximately 33-35% of the GDP with 46% growth rate in past three years. The Indian retail market is one of the top 5 retail markets in the world and employs 7% of the total Indian work-force

Current FDI Policy in respect of Retail Sector in India

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

2. FDI up to 51% with prior Government approval for retail trade of ‘Single Brand’ products. (now 100% allowed vide notification dated 11/Jan/2012).

3. FDI is not permitted in Multi Brand Retailing in India

PROSPECTED changes in FDI Policy for Retail Sector in India

1. India will allow foreign direct investment of up to 51 per cent in "multi-brand" sector;

 

2. Single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores, up from the previous cap of 51 percent. This has been allowed lately on 11/Jan/2012.

The bill

1. The retailers (both single-brand and multi-brand) will have to source at least 30% of their goods from small and medium sized Indian suppliers.

 2. All retail stores can open up their operations in having

population over 1 million. Out of approximately 7935 cities and towns in India, 55 cities satisfy such criteria.

 3.Multi-brand retailers must bring a minimum investment of

US$ 100 millions.  

4. The opening of retail competition (policy) will be within the parameters of state laws and regulations.

SWOT ANALYSIS

• Strengths

 

1. Major contributor to the GDP

2. High growth rate

3. High potential

4. High employment generator

• Weaknesses (limitations):

1. Lack of Competition

2. Highly unorganised

3. Low productivity:

4. Shortage of talented professionals:

• Opportunities (benefits):1. There will be more organization in the sector. 2. Healthy competition will be boosted and their

will be an check on the prices (inflation)3. Create transparency in the system 4. Quality Control and control over leakage and

wastage 5. Heavy flow of foreign capital will help in

building up the infrastructure for the growing population

• Threats (drawbacks):

1. Political situation

2. Global Economy Status

CONCLUSION

• Instead poking the political game in the economic reform issues like these, all the political parties (ruling party and all other opposition parties also) of India, should work in symbiosis, not only for their selfish benefits, but for the welfare of the public at large. Needless to say India is a democratic country... !!!!