FDI in Retail

Myth or Reality?
Swaati Singh - 22
Chinmayee - 36
Anusha Gupta - 09
Abhinav 58
Vidya Jyoti - 45
Regulations
Up to 100% for cash and carry wholesale
trading and export trading allowed under the
automatic route.
Up to 51% with prior Government approval
for Single Brand products.
50 % of the total FDI brought in first tranche
of 100 million has to be invested in backend
infrastructure in 3 years.

MYTHS & REALITIES
Myth1: Organized retailing will demolish
unorganized retailing
Reality: No such evidence

Myth2: Organized retailing will have adverse
impact on intermediaries
Reality: Yes this is true

MYTHS & REALITIES
Myth3: FDI will impact domestic manufacture
Reality: Yes, till the necessary reforms are
implemented

Myth4: FDI will impact farmers
Reality: Yes, but in positive sense

Myth5: FDI will benefit consumer
Reality: Yes, will benefit with new experience

Challenges
Farmers
Supply chain and Food Inflation.
Traditional Food retailers.
Technology
Economies of Scale
J oint Venture
Political Challenges

NEED FOR FDI
Foreign direct investment (FDI) in India
has played an important role in the
development of the Indian economy.

FDI in India has in a lot of ways enabled
India to achieve a certain degree of
financial stability, growth and
development.


This money helps in focusing on the areas that
need an economic attention, and various
problems that challenge the country.
In 1998-99, the Indian national government
announced a number of reforms designed to
encourage a favorable business environment
for investors.
Many projects have been implemented in
areas like electricity generation, distribution
and transmission, the development of roads
and highways, with opportunities for foreign
investors.
In 2007, India received $34 billion in FDI, a
huge growth, less than the $134 billion
that flowed into China.

Although the Chinese approval process is
complex, China continues to outshine
India as a choice destination for foreign
investors.

Currently, FDI is allowed in financial
services, including the growing credit card
business. These also include the non-
banking financial services sector.
IMPACT OF FDI
Forex- The Inflow Of Capital Would Increase The
Capital Reserve in the BOP which shows the ability
in terms of Foreign Exchange.
Infrastructure: The Players are imposed with the
restriction of investing 50% of their Investment on
Infrastructure.
Farmers: Fiscal Deficit which is mostly caused by
subsidy given to farmers. Govt should be ensuring
that farmers are getting paid according to what
they are eligible.


Employment: More Employment created Either
directly or Indirectly. It would be generated in
agriculture , Manufacturing , Service Industry
which Consists Of GDP.
Retail Industry: Allowing FDI in multi brand retail
would infuse the new blood into the industry
that has potential. Foreign Players That Are
competition Oriented Would Implement New
Strategy.
Contd
Clearance of the FIPB because in starting it
would come under the approval route.
Minimum entry threshold of foreign investment
is pegged at $ 100 million.
At least 50% of the amount invested would
necessarily be required to allocate in back end
infrastructure.
Future Prospects
Retail stores established by global giants will be permitted
only in the cities having population greater than 1 million
Foreign entrants have to source at least 30 % of their stock
from MSMES, those having a capital investment of not
more than $1 million.
Small retailers can be protected by restricted FDI for
stores having floor size greater than 2000 sq.ft.
Monopolies can be controlled by enforcement of strict
regulation and where needed through the Competition
Commission of India
Retail stores established by global giants will be
permitted only in the cities having population
greater than 1 million.
Foreign entrants have to source at least 30 % of their
stock from MSMES, those having a capital
investment of not more than $1 million.
Small retailers can be protected by restricted FDI for
stores having floor size greater than 2000 sq.ft.
Monopolies can be controlled by enforcement of
strict regulation.
Thank you