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GRDI Position : 3rd
Size : $ 400 billion
Growth Rate : 13%
GDP contribution : 12%
Major sector : Food and Grocery
Employment : 2nd largest industry
(35.06 million)
Types: 1)Organized (2-4%)
2)Unorganized ( 96%)
Source: IBEF 2011 Report
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Retail Segment Percentage holding insector
Major retailers
Food and grocery 63% Reliance fresh, Caf 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,
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Format Description Retailers
Hypermarkets Offering basket of product Spencers, Big bazaar
Cash and Carry Bulk-buying requirement Bharti-wal-mart
Departmental stores Large layout, Wide merchandise
mix
Lifestyle , Globus
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, levis
outlet
Convenience stores Small Retail stores In and out
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20%
8%
14%
6%
12%
USA
China
Japan
Brazil
India
Contribution Respective
to GDP
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Major challenge faced by Organized retail
sector: In Retail, over 70 per cent of
the labor force in both sectors combined
(organized and unorganized) is either
illiterate or educated below the primary level.
Labor Laws
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Technology
Online Shopping.
Retail media networks(RMN)
RFID.
ERP System.
CRM System.
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51%Single BrandRetailing
100%Cash andCarry Model
Current scenario :- FDI In Multi Brand Retail Trading (MBRT) Is
Prohibited.
- FDI, Up To 51%, In The Single Brand Retail Trading
(SBRT) Sector, Is Permitted, Under TheGovernment/FIPB Route
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FDI POLICY IN OTHER
COUNTRIES
CHINA - 100% FDI LIMITS
THAILAND - 100 % FDI LIMITS RUSSIA - 100% FDI LIMITS
INDONESIA- 100 % FDI LIMITS
Brazil,Argentina,Singapore & Chile allow 100%FDI in retail sector while Malaysia permits FDI to
a certain limit.
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Proposed policy: FDI In Multi Brand Retail Trade (MBRT)
May Be Permitted Up To 51%, With
Government Approval. In respect of proposals involving FDI
beyond 51%, 30% sourcing would
mandatorily have to be done from SMEs/village and cottage industries artisans
and craftsmen.
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FDI in single brand retail trading may
be permitted up to 100% with
Government approval.
The foreign investor should be the
owner of the brand.
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Benefits of FDI :
Foreign investment:
Minimum Amount To Be Brought In, As FDI, ByThe Foreign Investor, Would Be US $ 100 Million
foreign investment. Better returns to farmers:
In the present dispensation, there is a complexchain of procurement involving several middlemen.
FDI in retail will create the enablingenvironment which will ensure direct procurement,at least of horticultural produce from farmers toenable them secure remunerative price
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Employment generation:
Huge Investments In The Retail Sector Will SeeGainful Employment Opportunities In Agro-
processing, Sorting, Marketing, LogisticManagement And The Front-end Retail Business.
About 1.5 Million Jobs Will Be Created In TheFront-end Alone In The Next 5 Years.
Back-end, the direct employment generated bythe organized retail sector in India over thecoming 5 years will be close to 1.7 million jobs.
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Supply chain efficiency:
Foreign Retail Majors Have Gained Decades OfExperience, Technologies And Management
Practices Which Will Ensure Supply ChainEfficiencies.
Impact on food inflation
The opening up of Multi Brand Retail will also havea salutary impact on food inflation as it wouldcontribute to savings to the food which perishes onaccount of inadequate infrastructure.
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FDI can be a powerful catalyst to spur competition
in the retail industry.
It can bring about:
Supply Chain Improvement
Investment in Technology
Manpower and Skill development Efficient Small and Medium Scale Industries
Increase in exports
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Investment into warehouse and cold storage chainwill result in significant efficiency on supply chain.
Farmers benefited through direct marketing andcontract farming programme.
Improves farm production through modern
techniques.
Increasing availability of low interest credit forfarmers.
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News economic times India today assured global retail giants Walmart and Metro that its reforms agenda is
well on course and the decision to put on hold FDIin multi-brand retail is "just a
pause", forced by compulsions of coalition politics. This assurance was given by India's Commerce and Industry MinisterAnand Sharma
when he met Walmart President Doug McMillonand Metro's board
member FransMuller on the sidelines of the World Economic Forum meeting here.
This is for the first time that senior management of the US and German retailers met
any minister after Indian government suspended the controversial decision to open
Foreign Direct Investment (FDI) in multi-brand retail on November 24.
Sharma said the decision to open 51 per cent FDI in multi-brand retail "could not be
implemented because of the compulsions of coalition politics as also partisan
opposition.
"It is just a pause. The decision has only been put on a temporary halt... India growth
story is intact and the government is committed to take forward the reform agenda,"Sharma said.
He said while the government has restarted consultations taking on board concerns of
agrarian states, only the bona fide objections would be taken into account.
Walmart also expressed its willingness to abide by the proposed conditionalities to
open the sector for FDI.
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More news from economic times
Allowing foreign direct investment (FDI) in retail is thee first major step towards reforms
in agriculture sector. FDI will help the farm sector set up the much-needed backward
linkages. Today, the existing organised retail has not been able to supply fresh vegetablesto the consumers because they have not invested in the backward linkages.
When the farmers' produce reaches the end consumer directly (without going through
the middlemen) and it is sorted and packaged on the way to the cities, the farmers will
naturally be benefited. Once the government proves its commitment to the issue, then
the pace of implementation of the decision will not remain a major factor.
The government should not remove all the restrictions on futures trade.
The Commission of Agricultural Costs and Prices (CACP), the Food Corporation of India
(FCI) and the public distribution system (PDS) should all be abolished. CACP is not
needed when futures trade is open up because the farmer will know the price trend at
the time of sowing.
Agricultural scientist MS Sw
aminath
anh
as opposed th
e decision of
allow
ingFDI
inretail on the grounds that it might create monopoly.
When there are many players in the market, the question of monopoly will not arise.
Within two years, we will see (Gujarat chief minister) Narendra Modi and (Maharashtra
chief minister) Prithviraj Chavan competing for attracting FDI in retail in their states.
The concern that the Indian farmer is illiterate and hence more prone to exploitation is
not correct. Though the farmer is illiterate, he is wise.
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APMCs havebeentoutedasfarmers'organisations. What willbetheirfutureandrole
when FDI comes?
We have always said that the APMCs are nothing but slaughterhouses of farmers. They have
become the playgrounds for the children of established politicians. They occupy the prime
lands where the interest of the politicians lies. Despite all this, we are not calling forabolishing the APMCs.
If they have to be reformed, the only way is to let them compete with the national and
multi-national players. The fittest will survive.
WhatisyouropinionaboutthecottonMSP andthesugareconomy?
If the government procures cotton at the minimum support price (MSP) of Rs 3,300/quintal,it will have to bear heavy losses. The cotton prices are bound to decline. We have advised
farmers in Marathwada and Vidarbha not to stock cotton this year in the hope of price
appreciation. They should sell the cotton as soon as it is picked up from the fields.
About sugar, the Maharashtra State Cooperative Bank considers only the price of sugar while
giving pledge loans to the sugar mills. It should also consider the price of byproducts like
baggase and molasses while calculating the component of loan. If they do so, then the millswill be able to pay Rs 2,100/tonne as the first advance of cane payment.
How isthefinancial health ofthefarmersinthecountry?
Today, Indian farmer is heavily indebted. The cost of labour, electricity, diesel etc is all very
high. The government does not give good price to his produce. Land is being fragmented.
Our food security may come into danger if the farmers' financial health do not impro