FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL SECTOR By:

Ankita Singh (2K14G014)Chirag Parashar(2K14G028)Nishant Maheshwari

(2K14IB04)Parikshit Shome

(2K14G063)Samarth Chandra

(2K14BFS07)Sub: Managerial Economics ISec: CTrimester: 1

WHAT IS FOREIGN DIRECT INVESTMENT?

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

Types of FDI:

Horizontal FDI: Arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.

  Platform FDI: From a source country into a destination

country for the purpose of exporting to a third country.  Vertical FDI: A firm through FDI moves upstream or

downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.

• Services , telecommunication , construction and computer software and hardware these sectors are highly attracted in India.

• India is the second most important FDI destination for transitional corporations.

• China is the largest recipient of FDI. In 2013 the china has 34.7 market share into the Asia-Pacific region.

• United Kingdom has a very free market economy. • United States has a open economy and low barriers to FDI. In

SCENARIO OF FOREIGN DIRECT INVESTMENT?

DATA ANALYSIS ON PERCEPTION

Impact on other Indian industries over FDI in retail0%

50% 35%24%

41%

Will benefitWill not benefitCan't say

Impact on consumers over FDI in retail0%

50%

100%88%

10% 2%

Will benefitWill not benefitCan't say

Impact of un-organized retail sector over FDI in

retail

0

3

4.32.4 2 Will benefit

Will not benefitCan't say

MAJOR PLAYERS EXPECTED TO ENTER INDIAN RETAIL SECTOR

How FDI can come in India?

• Franchise Agreements

• Cash and Carry Wholesale trading

• Strategic Licence Agreements

• Manufacturing and Wholly Owned Subsidiaries

Benefits Drawbacks

• Inflow of investment and funds. • Increase in the real estate prices.

• Cost reduction. • Promoting associations and creating monopoly.

• Generating more employment. • Rise to cut-throat competition.

• Growth of infrastructure. • Marginalize domestic entrepreneurs.

• Franchising opportunities for local entrepreneurs.

• The financial strength of foreign organisations would replace the unorganized players.

• Long run aggregate supply will shift outwards.

• Absence of proper regulatory guidelines would induce unfair trade practices.

• Increased efficiency. • Inflation may increase slightly.

• Stimulating infant industries and other supporting industries.

• Domestic firms may suffer if they are relatively uncompetitive.

• Implementation of IT in retail.

• Increased local sourcing.

• Provide better value to end customer.

• Improvement in quality of employment.

STRENGTHBoost economic development

Manpower to take the challengeHighest shop density

High growth rate in retail and wholesale

They can afford losses

WEAKNESSLow capital investment in retail

sectorLack of trained and educate

force Lack of competition

More prices as compared specialized shopsPoor infrastructure

Heavy wastage

Opportunity Hope of major employment

Improve the financial conditions of farmers

Improve to retailers efficiencyForeign capital inflows

Improve technology and brandingQuality improvement

Cost improvement

ThreatsKirana and retailers lose business

Fear of controllingJob losses in manufacturing sector

Harm the farmersProfit will go to foreigners

SWOT of Indian Retail Market

Conclusion

• FDI in retail sector may boost the socio economic development of the entire country if implemented wisely carefully while signing the agreements with the Foreign Investors.

Reference

• Research Journal:-

• Impact of Foreign Direct Investment on Indian economy- www.isca.in

• FDI in India and Its Impact –“A Critical Evaluation”(By Pradeep Kumar)

• Effects of Foreign Direct Investment (FDI) in the Indian Economy(By Sourangsu Banerji)

• FOREIGN DIRECT INVESTMENT IN RETAIL IN INDIA (By Dr. Gaurav Bisaria)- www.ijemr.net

• FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL SECTOR:ISSUES AND IMPLICATIONS(By Kulkarni Keerti, Kulkarni Ramakant & Kulkarni Gururaj A.)

• The Opportunities and Challenges of FDI in Retail in India (By Rajib Bhattacharyya)

• Foreign Direct Investment in India’s Retail Bazaar: Opportunities and Challenges(By Anusha Chari, T.C.A. Madhav Raghavan)

• Foreign Direct Investment in Indian Retail Sector Pros and Cons(K. R. Kaushik Dr. Kapil Kumar Bansal)