FDI IN

RETAIL

SECTOR

The commitment of money or

capital to purchase financial

instruments or assets in order to

gain profitable returns.

An investment is..

Investment done by citizens and government of one country (home country) invest in industries of another country (host country).

An investment becomes foreign investment when..

Foreign Investme

nt through

Foreign Direct

Investments

Foreign Institutional Investors

◦ Foreign direct investment (FDI) is direct investment into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

◦ Foreign direct investment is done for many reasons including to take advantage of cheaper wages in the country, special investment privileges such as tax exemptions offered by the country as an incentive to gain tariff-free access to the markets of the country or the region.

What is FDI?

Multi brand retail-51% Civil aviation sector-49% Insurance-26% Defence-26% Printmedia-26% Broadcasting-fm radio stations-20% cable network-49% direct 2 home services-49% Banking (new bank after august 2011-49% private sector(74%)

FDI Limits in India

1. Atomic Energy2. Lottery Business including Government / private lottery, online lotteries etc 3. Gambling and Betting including casinos etc.4. Business of chit fund;5. Trading in Transferable Development Rights (TDRs)6. Activities/sector not opened to private sector investment 7. Agriculture8. Real estate business, or construction of farm houses

Sectors were FDI is banned

Barter system

Weekly marketVillage melas

Kirana StoresConvenience store

Government Stores

Super marketsHyper marketsMallsBrand outlets

Introduction to Modern Retail

Why Global Retailers Look Up to India?

Incentives attract FDI.

Market size and potential are sufficient inducers.

Tax breaks, import duty exemptions, land and power subsidies, and other

enticements.

Quick and easy market penetration

Availability of cheap labor.

• Corporate are increasingly coming into this sector.

• Demand of branded goods on a large scale.

• Demand of new and varied products.

• High quality product is preferred .

• Varied window display.

• E-tailers increase the presence.

Emerging Trends

Major Indian Retailers : Categories Format Description Retailers

Hypermarkets Offering basket of product Spencer's, Big bazaar

Cash and Carry Bulk-buying requirement Bharti-walmart

Departmental stores Large layout, Wide merchandise mix

Lifestyle , Glob us

Supermarkets Household product as well as food as integral part of the service

Apna bazaar , food bazaar

Shop-in-shop Shops located in shopping malls Navras ( big bazaar)

Specialty stores Focus on individual product type Brand Factory

Category killers Particular segment The LOFT

Discount stores Branded product at discounted prices

Subhiksha, Levi's outlet

Convenience stores Small Retail stores In and out

Retail Segment Percentage holding in sector

Major retailers

Food and grocery 63% Reliance fresh, Café brio, food bazaar

Clothing, textile and fashion

9% Westside, shoppers stop, globus

jewellery 5% Tanishq

Catering services 5% IRCTC

Consumer durable 4% Viveks, vijay sales, Croma

pharmaceuticals 4% Piramal group

Entertainment 3% Bowling co.,

Furnishing, utensils 3% Hometown, Tangent Concept

Mobile handsets 2% The mobile store,

Segmentation

• One of the world's largest industries exceeding US$ 9

trillion.

• Dominated by developed countries.

• 47 global fortune companies & 25 of Asia's top 200

companies are retailers.

• US, EU & Japan constitute 80% of world retail sales.

Retail Sector at Global Level

US

Sales: $374.5 bn 

Earnings: $12.9

billion 

Stores: 6,800

worldwide

France

Sales: $130 bn

Earnings: $5.2 billion

Stores: 87,422

worldwide

UK

Sales: $102.6 billion

Earnings: $5.5 billion

Stores: 3,729

worldwide

Germany

Sales: $101 billion  

Earnings: $1.5 billion

Stores: 2,221

US

Sales: $77.3 bn 

Earnings: $4.2 billion

 

Stores: 2,258

•Employment generation.

Second-largest employer after

agriculture.

Retail trade employing 35.06 million.

Wholesale trade generating an additional

employment of 5.48 million.

Employment Generation

Additional 1.6 mn jobs .

•Technology Better use of resources and

goods.

Wastage and Storage problems will be

resolved.

Efficient logistics, production, and

distribution channels.

Digital records.

Technology

Challenges

SKILLED WORKERS

COMPETITION

REAL ESTATE PROBLEM

MARKET POWER

SUPPLY CHAIN MANAGEMENT

PROBLEM IN RAISING FUNDS

TAXATION POLICIES

INFLATION

INDI

AN

• Pantaloons

• Reliance

• Bharti retail

• RPG• Lifest

yle• Subhi

ksha• Piram

yd• Trent• Vishal

group

GLOBAL

• Tesco• Wal-

Mart• Metro• Carref

our• B&Q• Targe

t

Lifestyle plans to have more than 50 stores across

India by 2012–13.

Future Investments

Major Retail Players Entering Into India

• Investment into warehouse and cold storage chain will result in significant efficiency on supply chain.

• Farmers benefited through direct marketing and contract farming programme.

• Improves farm production through modern techniques.

• Increasing availability of low interest credit for farmers.

Benefits Envisaged To Agriculture Through The Opening Of FDI

What additional steps should be taken to protect small retailers?

Should an exclusive legal and regulatory framework be established to protect their interests?

Can foreign markets compete with kirana shops?

?????

Restrict the number of stores that can be operated in a city.

Allow access to the small retailers to the stores through special windows.

Recommendations

Yamini reddy 

Thank You