Slide 1

IMPACT OF FDI IN INDIAN RETAIL MARKETINGPresented byS.Kirthiga

FDI is an important constituent of the globalization efforts of the world economy. FDI flows constitute capital provided by foreign investors, directly or indirectly to enterprises in another economy with an expectation of obtaining profits derived from the capital participation in the management of the enterprise in which they invest. The foreign investors acquire ownership of assets in the host country firms in proportion to their equity holdings. FDI by definition is supposed to reflect a long-term commitment as it involves normally a stake of 10% or more in a host country enterprise, together with managerial control. This is the empirical definition of FDI adopted by many countries to distinguish it from portfolio flows. INTRODUCTIONForeign direct investment in IndiaStarting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 20102012. As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, US and UK were among the leading sources of FDI. According to Ernst and Young, foreign direct investment in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 13% to $50.8 billion. India has seen an eightfold increase in its FDI in March 2012.India disallowed OCB's i.e. Overseas Corporate Bodies to invest in India .On 14 September 2012, Government of India allowed FDI; in aviation upto 49%, in Broadcast sector upto 74%, in multi-brand retail upto 51% and in single-brand retail upto 100%.

ADVANTAGES OF FDIIntegration into global economy - Developing countries, which invite FDI, can gain access to a wider global and better platform in the world economy.

Economic growth - This is one of the major sectors, which is enormously benefited from foreign direct investment. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of country.

Trade - Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of goods and services in India both in terms of import and export production. Products of superior quality are manufactured by various industries in India due to greater amount of FDI inflows in the country. Technology diffusion and knowledge transfer FDI apparently helps in the outsourcing of knowledge from India especially in the Information Technology sector. Developing countries by inviting FDI can introduce world-class technology and technical expertise and processes to their existing working process. Foreign expertise can be an important factor in upgrading the existing technical processes.

Increased competition - FDI increases the level of competition in the host country. Other companies will also have to improve on their processes and services in order to stay in the market. FDI enhanced the quality of products, services and regulates a particular sector. Linkages and spillover to domestic firms- Various foreign firms are now occupying a position in the Indian market through Joint Ventures and collaboration concerns. The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market.

Human Resources Development - Employees of the country which is open to FDI get acquaint with globally valued skills.

Employment - FDI has also ensured a number of employment opportunities by aiding the setting up of industrial units in various corners of India.CONCLUSION

FDI in retailing would surely an advantage to India and it would also help India in becoming 'developed country'. As the people also accept the retailing it will be an advantage to them also. So the government should also open the retail sector to the foreign investment, as it also serves as an employment generator.

So, 'FDI in retailing is the need of the hour'

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