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    FDI in Retail Industry: Group 6

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    Akhilesh Dalal
    FDI in retail could provide benefits like investment funds, job creation, improved quality and supply chains, and cost reductions. However, there are also risks like cut-throat competition squeezing out small retailers, foreign monopolies forming, real estate price increases, and job losses in the unorganized sector without protections. Both sides argue for modernizing the retail sector, but disagree on whether allowing large foreign firms is the best path forward or risks harming domestic businesses and farmers.

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    FDI in Retail Industry: Group 6

    Uploaded by

    Akhilesh Dalal
    14 views12 pages
    FDI in retail could provide benefits like investment funds, job creation, improved quality and supply chains, and cost reductions. However, there are also risks like cut-throat competition squeezing out small retailers, foreign monopolies forming, real estate price increases, and job losses in the unorganized sector without protections. Both sides argue for modernizing the retail sector, but disagree on whether allowing large foreign firms is the best path forward or risks harming domestic businesses and farmers.

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    foreign direct investment

    Original Title

    FDI(2)

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    FDI in retail could provide benefits like investment funds, job creation, improved quality and supply chains, and cost reductions. However, there are also risks like cut-throat competition squeezing out small retailers, foreign monopolies forming, real estate price increases, and job losses in the unorganized sector without protections. Both sides argue for modernizing the retail sector, but disagree on whether allowing large foreign firms is the best path forward or risks harming domestic businesses and farmers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    14 views12 pages

    FDI in Retail Industry: Group 6

    Uploaded by

    Akhilesh Dalal
    FDI in retail could provide benefits like investment funds, job creation, improved quality and supply chains, and cost reductions. However, there are also risks like cut-throat competition squeezing out small retailers, foreign monopolies forming, real estate price increases, and job losses in the unorganized sector without protections. Both sides argue for modernizing the retail sector, but disagree on whether allowing large foreign firms is the best path forward or risks harming domestic businesses and farmers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    FDI in Retail Industry

    Group 6
    Analysis
    • India retail industry is the largest industry in India,
    with an employment of around 8% .
    • The share of retail trade in the country's gross
    domestic product (GDP) was between 8–10 per cent in
    2007.
    • It is currently around 12 per cent, and is likely to reach
    22 per cent by 2010.
    • Foreign direct investment (FDI) inflows as on July
    2009, in single-brand retail trading, stood at approx.
    US$ 46.60 million.
    • India has emerged the third most attractive market
    destination for apparel retailers.
    • In India, apparel is the second largest retail category
    and is expected to grow by 12-15 per cent per year.
    • Apparel, along with food and grocery, will lead the
    organized retailing in India.
    • India's overall retail sector is expected to rise to US$
    833 billion by 2013 and to US$ 1.3 trillion by 2018.
    Current Retail FDI structure
    • Cash and Carry (upto 100%).

    • Single Brand (upto 51%).

    • Multi Brand.
    Arguments for FDI by
    Mr. Govind Shrikhande
    • Benefits of FDI in telecom, automobile and Insurance sector
    in terms of large scale investment.

    • Large investments required in manufacturing, retail space,


    technology, food logistics and processing, etc.

    • Will lead to rise in farm productivity, food processing and cold


    storage facilities.

    • Will cut down wastage and help employment, exports and


    GDP grow.
    • Introduction of technology and better management
    practices will improve product availability and quality,
    reduce wastage and increase customer satisfaction.

    • Chinese retailers still hold majority share, number of


    small retailers have doubled.

    • Indian retailer loves to buy and cook fresh, hence will


    continue to visit Kirana store.
    • Not much space available for big retailers in the big
    cities.

    • The indian ways of "free home delivery, monthly khatas


    and personalized approach of kirana store will give a
    competitive edge.

    • Local sourcing will lead to great increase in exports.

    • India will become the shopping destination of the world.


    Arguments against FDI by
    Mr. Praveen Khandelwal
    • Attempt to convert the domestic retail trade into crony
    capitalism.

    • Given their outsourcing skills, resources and facilitation


    from the government, they will be able to crush
    competition and, ultimately, dominate the market by
    charging monopolistic prices.

    • Present intermediaries vs future intermediaries.


    • No attempt made by the govt. to organize and promote
    the present retail sector.

    • The global giants will lead to closure of mandis and lead


    farmers into cut throat competition.

    • Closure of small shops will lead to job loss for millions.


    • No rehabilitation plan for them from the govt.

    • Efforts required to modernize and organize the existing


    retail trade instead of inviting MNCs.
    FDI: Positives and Negatives
    • Increase in domestic employment/drop in unemployment
    • Investment in needed infrastructure (through either boos
    or bots)
    • Positive influence on the balance of payments
    • Development of domestic suppliers
    • New technology and “know how” transfer
    • Increased capital investment
    • Targeted regional and sector development
    • Industrial sector dominance in the domestic market
    • Technological dependence on foreign technology sources
    • Disturbance of domestic economic plans in favor of FDI-
    directed activities
    • “cultural change” created by “ethnocentric staffing,” the
    infusion of foreign culture, and foreign business
    practices.
    Benefits of FDI in retail Drawbacks of FDI in retail

    •Inflow of investment and funds. •Would give rise to cut-throat competition rather
    •Improvement in the quality of employment. promoting incremental business.

    •Generating more employment. •Promoting cartels and creating monopoly.


    •Increased local sourcing. •Increase in the real estate prices.
    •Provide better value to end consumers. •Marginalize domestic entrepreneurs.
    •Investments and improvement in the supply chains •The financial strength of foreign players would di
    and warehousing. the unorganized players.

    •Franchising opportunities for local entrepreneurs. •Absence of proper regulatory guidelines would i

    •Growth of infrastructure. unfair trade practices like Predatory pricing.

    •Increased efficiency.
    •Cost reduction.
    •Implementation of IT in retail.
    •Stimulate infant industries and other supporting
    industries.

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