FDI IN RETAIL

Presented By
Anuraj Babu Rahul Kachhava Gajanan Kini Aditya Thakur Ratnesh Waghmare
To,

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goilkar

WHAT IS FDI ?

FDI stands for Foreign Direct Investment. The simplest explanation of FDI would be direct investment by corporation in a commercial venture in another country.

FDI is ownership of atleast 10% of business.

For examples: Johnson and Johnson, Maersk Shipping Company, Metro Cash & Carry.

WHY IS FDI IMPORTANT ?

Major source of external finance

Preserve and maintaining relationships

Reduction of poverty

INDIA VS FDI
According to ministry of commerce & industry fdi is freely Allowed in all sectors including service sectors,except few sector Where the existing sectoral policy does not permit fdi beyond a Ceiling. FDI limits for other sectors are o Banking- 74% o Insurance- 26% o Telecommunication -74% o Electricity- 100% o Advertising- 100%

ADVANTAGES OF F.D.I IN RETAIL

FDI will provide access to larger financial resources for investment in the retail sector and that can lead to several of the other advantages that follow. The larger supermarkets, which tend to become regional and national chains, can negotiate prices more aggressively with manufacturers of consumer goods and pass on the benefit to consumers. With the availability of finance, the supermarkets can invest in much better infrastructure facilities like parking lots, coffee shops, ATM machines, etc. All this will make shopping a pleasant experience. The ability of supermarkets to demand pricing and quality standards from manufacturers will benefit even kirana shops, who can even buy from the supermarkets to sell the same products in smaller towns and villages.

OTHER POSITIVE ASPECTS

Elimination of Middle Men . Quality standards and cost-competitiveness . Wider global market .

Economic development .
More investments in the end to end supply chain .

Low spillage and wastage .

More options for the consumer.

DISADVANTAGES

The disadvantages of foreign direct investment occur mostly in case of matters related to operation, distribution of the profits made on the investment and the personnel. One of the most indirect disadvantages of foreign direct investment is that the economically backward section of the host country is always inconvenienced when the stream of foreign direct investment is negatively affected. The chief problem is of making sure that the entities that are making the foreign direct investment in their country adhere to the environmental, governance and social regulations that have been laid down in the country.

OTHER NEGATIVE ASPECTS

Existence of Indian biggies. Little incremental value .

No prices reduction for consumers.

MNC enjoys high competitive advantages. Subsidiaries operate polices that may be inefficient or create distortion.

POSITIVE IMPACT OF FDI IN RETAIL SECTOR IN INDIA Achieve expected growth in Indian GDP by encouraging export To reduce gap between farm prices and final retail prices through structural change in distribution - Inflation control mechanism To acquire market-savvy, market-intelligent and best management practices

POSITIVE IMPACT OF FDI IN RETAIL SECTOR IN INDIA

Provide an aid to Indian agriculture to become lowest cost source of farm produce To bring trade balance To increase liquidity by the way of foreign exchange reserves

NEGATIVE IMPACT OF FDI IN RETAIL SECTOR IN INDIA

Threat on unorganized retail players Threat on organized retail players Huge spread of retail chain stores Monopoly among suppliers Replacement of established national brands by the brands of the retail giants

RECOMMENDATIONS

Implementing policies. Suggesting various measures. Safeguarding domestic retailers. Steps to improve manufacturing sector. Remove various entry barriers.

CONCLUSION

Even though there are both positive and negative aspects to FDI in retail. If we try to weigh the number of positive aspects outruns the negative ones.

Also in the longer run it will prove to be very useful to the Indian economy. It will also provide solution to the present scenario of recession and unemployment.