FDI in Retail Continues to Haunt UPA Government

7/27/2019 FDI in Retail Continues to Haunt UPA Government

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FDI in Retail Continues to Haunt UPA GovernmentSUBMITTED BYMONICA ANAND ON WED, 11/30/2011 - 04:44

While senior Congress leaders tried to present positive sides of the allowing FDI in Retail Sector,

the opposition parties were in no mood to listen. BJP leaders have sent clear message that they

wont allow any activity to proceed in the parliament till the time UPA backtracks on the bill

issue.

Pranab Mukherjee held meetings with Congress MPs on FDI policy and Prime Minister

Manmohan Singh also tried to paint a positive picture of allowing foreign companies in retailsector in India.

As per latest reports, Sonia Gandhi has also stepped in to find a solution to the problem. Left

Parties have also condemned the governments decision.

Opposition parties are asking for a rollback of the decision citing farmers security and retailers

business as reasons for the protest.

Hindustan Times has published results of a survey which says that 2/3rd of Indians are in favor

of allowing retail FDI. It will bring in more competition and will offer much better pricing forfarmers. The decision will also help reduce the gap of price a farmer gets and the price a

consumer pays at final point of sale.

Retail business was also expecting big hit from organized retail shops coming up across the

country. However, after two years of organized retail operations in India, the negative impact on

small retail shops was minimal.

Some big chains have also setup wholesale shops in various cities to help retailers get

commodities at lower price. Bharti Wal-Mart and French retail giant Carrefour have setup

wholesale shops and their business is growing as more retailers accept the new model of sourcingcommodities.
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The parliament was adjourned yesterday and with strong message coming from opposition, one

can expect the issue to drag further.

Ikea in Indiafinally!july 1, 2012 byandreas de rosileave a comment

Ikea in India: 100% FDI in singlebrand retailLast week Anand Sharma, Indias commerce and industry minister met with Swedish home-ware company Ikeas CEO M Ohlsson in St. Petersburg. They discussed investment

prospects of Ikea in India following the relaxation of rules guiding FDI in single-brand retail.

The government had increased the FDI cap for investing in single-brand retail from 51%to 100% earlier this year, subject to the clause that 30% of the sourcing has to be fromdomestic small and medium enterprises (and up to $ 1 million investment is made in plantand machinery).

After putting its India plans on hold, because of the 30% local sourcing clause, Ikea will nowfinally come to India with an investment of 1.5 billion.This makes it the largest foreign

investment in Indias retail sector and gives India a much needed booster in investor
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confidence, which is currently quite low due to the government failing to enact importantreforms.

Ikea in India: 25 stores acrossvarious citiesIkeas investment in India will be done in two phases: 600 million in the first phase followed

by a 900 million investment in the second tranche.Ikeasubmitted a formal proposal totheForeign Investment Promotion Boardto set up a 100% subsidiary in India. This willmake Ikea the second retailer to do so after the UK based footwear firmPaversapplied

beginning of this year.

Ikea however still sees the clause that requiers goods to be purchased from small and medium

enterprises as a challenge. The management believes that in order to secure low prices andbenefit the Indian economy and society, small industries need to grow and develop.Nonetheless, Ikea said it expected to function within the spiriti of the policy and hopes that

the definition of small industries is reviewed and will provide some flexibility in the future.

Ikea in India: Its values and itssupply chain

Ikea was founded in Sweden by Ingvar Kamprad, a man known for never showing off hismoney and not spending on unnecessary products and lifestyle (he never stayed in expensivehotels, always travelled in economy class and encouraged his employees to write on bothsites of the paper). Ingvar Kamprad shaped the value system of Ikea. He created a set ofvalues, which are beyond simply returning enhanced value to shareholders, but has biggerobjectives, such as helping to reduce poverty, create a better environment and promote moreequality.

Anderson Dahlvig, former CEO of IKEA, wrote in his book The IKEA edge:In allcountries and social systems, eastern as well as western, a disproportionately large part of

all resources are used to satisfy a small part of the population. In our line of business for

instance, too many new and beauti ful designed productscan be afforded by only a small

group of better-off people. Ikeas aim is to change this situation. [...] The company tries to

eliminate all status symbols and create a trustful relationship between employees and

mangers. This makes a difference to many workers and entices them to stay with Ikea evenwhen other firms offer them more
http://www.inter-ikea.com/http://www.inter-ikea.com/http://www.inter-ikea.com/http://www.fipbindia.com/http://www.fipbindia.com/http://www.fipbindia.com/http://www.paversengland.co.in/http://www.paversengland.co.in/http://www.paversengland.co.in/http://www.amazon.com/IKEA-Edge-Building-Global-Growth/dp/0071777652http://www.amazon.com/IKEA-Edge-Building-Global-Growth/dp/0071777652http://www.paversengland.co.in/http://www.fipbindia.com/http://www.inter-ikea.com/


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When Ikea enters developing markets such as China it offers top quality and design,providing a unique offer to the customers and shows its local employees that these countriesare important as are Western markets.

Ikea already sources many products from Indiaand plays a major role in Indias exports;

the company is responsible for 20% of all rug exports from India and in future Ikea might usemore of its Indian vendors for its global needs. In Russia for example 40% of all Ikea

products sold are produced in Russia. More then 50% of the units sold in China areproduced in China. Hence, Ikeas India operation will probably source much more than the

required 30% in the long run.

Ikea typically does not invest in factories, but works closely with enterprising entrepreneursto meet its global supply standards. This means that the small and unorganised furnituremanufacturer in India will benefit from Ikeas market entry. Though India is not rich innatural wood, Ikea could help develop new non-wood categories like outdoor patio furniture,

etc. A large number of these vendors will be small and medium sized enterprises andtherefore help create manufacturing jobs at the bottom end of the pyramid. Ikea is one ofthe most trusted and ethical retail brand in the world. It is delivering products that helpimprove the lives of the many, combined with sustainable job creation it is the best way totackle poverty.

Ikea in India: Buying furniture inIndia to be fun

Ikeas entry into India will meet with five important customer needs:

1. Fantastic value for money (design, function, quality at low prices)2. Exclusive products (Scandinavian design sold only at Ikea, plenty of options)

3. Inspiration and ideas (solutions for your home)

4. Ease of shopping (everything in one place, take home direct, big parking space)

5. Fun (a day out, eat at the restaurant inside the store, leave children at the children play

ground etc.)

So where to find Ikea in India? And when will Ikea open its first shop in India? These detailshave still not been disclosed by Ikea, but it may take a year or two until Ikea opens its firststore in India and it is likely to be in the the outskirts of big cities like Mumbai, Delhi,Chennai, Bangalore and Calcutta.


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If you have any news or comments about Ikea in India and if you want to share your views onhow Ikeas entry into India will affect the furniture industry, please do leave your comment

below.

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FDI in retail sector

Advantages

1. Increase economic growth by dealing with different international products

2. 1 million (1 Crore) employment will create in three years UPA Government

3. Billion dollars will be invested in Indian market

4. Spread import and export business in different countries

5. Agriculture related people will get good price of their goodsDisadvantages

Will affect 50 million merchants in India

Profit distribution, investment ratios are not fixed

An economically backward class person suffers from price raise

Retailer faces loss in business

Market places are situated too far which increases traveling expenses

Workers safety and policies are not mentioned clearly

Inflation may be increased

Again India become slaves because of FDI in retail sector

Read more:http://www.funinstore.com/2012/09/advantages-and-disadvantages-of-fdi-in-

india/#ixzz2999NNvXe
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FDI in Retail Continues to Haunt UPA Government