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Transcript of "Impact of FDI in Retail Sector"

1. 1. Impact of FDI in Retail Sector Presented by, Deep Jyoti Das CUN110501021 BBA 3X
2. 2. Introduction Foreign direct investment (FDI) is direct investment into production in a
country by a company in another country Either by buying a company in the target country
or by expanding operations of an existing business in that country.
3. 3. Foreign Investment In India Is Regulated By RBI- Reserve Bank of India FIPB- Foreign
Investment Promotion Board
4. 4. Foreign Direct Investment In India Starting from a baseline of less Mauritius, Singapore,
US and UK than $1 billion in 1990 were among the leading A recent UNCTAD survey
sources of FDI. projected India as the second FDI in India in 2010 was $44.8 most
important FDI destination billion (after China) for transnational In 2011 experienced an
corporations during 20102012. increase of 13% to $50.8 billion. The sectors that attracted
Mauritius has been the largest higher inflows were Direct Investor in India (US $ services
20 billion) telecommunication The US is the 2nd largest investor construction activities
in India (US$6 billion) computer software and hardware
5. 5. FDI In India40 (US $ Bn) 33.7353025 23 19.7201510 7.6 550 2000-04 2005 2006 2007
2008 (Average)
6. 6. Rapid FDI growth in India from 2005 onwards FDI as % of Gross Total Investment
(%)8.00% 7.40%7.00%6.00% 5.60% 5.60%5.00%4.00% 3.20%3.00%
2.60%2.00%1.00%0.00% 2000-04 2005 2006 2007 2008
7. 7. FDI Inflow in India
9. 9. Forms of FDI in Indian Retailing Joint Ventures Franchising Sourcing of Supplies from
small-scale sector Cash &Carry operations Non-Store Formats
10. 10. Why FDI in India Developing economy Low salaried employees Low wage workers
Abundant human resources Big private economy Growing urban population Changing
customer pattern
11. 11. Present Condition Farmers get only 10-15% of the price we pay 3-4 middlemen in
between farmers & customers Huge post produce losses for farmers due to inadequate
facilities A poorly managed food supply infrastructure
12. 12. Why Do We Need FDI For adequate infrastructure facilities. For controlling food
inflation. It will create 1.5 million more jobs in 5 years. It will increase competition which is
always beneficial for the customers. It will remove the middle-man from the equation. It will
reduce costs which in-turn will reduce prices
13. 13. Challenges of FDI in Retailing Economies of scale:- providing the customer the best at
lowest price Brand Name:- they bring with world class products which have high quality and
high valued brand name Technology:- global players are highly advanced in technology
Attract Skilled Employees:- attractive salary and high incentives can attract skilled employees
towards global players Joint Venture:- global players may not prefer to enter into joint





ventures with Indian firms Political Challenge: The support of the political structure has to be
there towards the investing countries abroad.
14. The customer gains from the wide variety of choices and a more diversified basket.
Increase in real estate prices and marginalize domestic entrepreneurs The huge tax
revenue The entry of large global generated retailer such as Wal-Mart would kill local shop
and millions of jobs Increased investment in because of their superior technology financial
strengths Generates huge employment Foreign players would displace the unorganized
retailers FDI In Retail Advantages Drawbacks
(Confederation of Indian Industry) SALESMajority of the respondents (98.6 percent) are of
the opinion that the opening ofthe FDI in retail will augment growth of sales of their products.
16. Size of Industry, Business
17. New Orders/ ContractsMajority of respondents are of the view that the decision of
opening of the FDI inretail would impact positively in the form of new orders/contracts
18. EmploymentWith regard to employment, around 48 percent of the respondents are of
theopinion that the decision would have a positive impact on their employment