fdi in retail - myth or reality__

8/11/2019 FDI in Retail - Myth or Reality__

http://slidepdf.com/reader/full/fdi-in-retail-myth-or-reality 1/13

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 trancheof 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 areimplemented

• 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

• Supp ly chain and Food Inf lat ion .

• Trad it ional Food retai lers .

• Technology

• Econom ies o f Scale

• Jo int Ventu re

• Polit ical Challenges



NEED FOR FDI

• Foreign direct investment (FDI) in Indiahas played an important role in the

development of the Indian economy.

• FDI in India has in a lot of ways enabledIndia to achieve a certain degree offinancial stability, growth anddevelopment.



• 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 environmentfor investors.

• Many projects have been implemented in

areas like electricity generation, distributionand transmission, the development of roads

and highways, with opportunities for foreign

investors.



• In 2007, India received $34 billion in FDI, ahuge growth, less than the $134 billionthat flowed into China.

• Although the Chinese approval process is

complex, China continues to outshineIndia as a choice destination for foreigninvestors.

• Currently, FDI is allowed in financialservices, including the growing credit cardbusiness. 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 therestriction of investing 50% of their Investment on

Infrastructure.

• Farmers: Fiscal Deficit which is mostly caused bysubsidy 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 Industrywhich Consists Of GDP.

• Retail Industry: Allowing FDI in multi brand retail

would infuse the new blood into the industrythat 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 wouldnecessarily 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 thei

stock from MSMES, those having a capital

investment of not more than $1 million.

• Small retailers can be protected by restricted FDI fo

stores having floor size greater than 2000 sq.ft.

• Monopolies can be controlled by enforcement of

strict regulation.



Thank you

fdi in retail - myth or reality__

Documents