FDI IN RETAIL SECTOR INDIA:BALANCE

BETWEEN EQUITY AND GROWTH

RETAILING: An Overview

One of the pillars of Indian Economy which accounts for 14% - 15% of its GDP.

INDIA is the fastest growing retail market in the world estimated 470 billion US$.

Welcome companies to Indian retail market with 100% ownership, but imposed requirement that retailers would have to source 30 percent of their goods from small industries in India.

Federal Government of India allowed 51% FDI in multi-brand retail in India.

Largest employer after agriculture- 8% of population. Highest Retail outlet density in the world- 12 MN Outlets.

SEGMENT-WISE RETAIL MARKET

FOOD AND GROCERY TEXTILE AND APPAREL CONSUMER DURABLES

MUSIC AND BOOKS JEWELLERY

WOODEN FURNITURE LEATHER FOOTWEAR

HANDICRAFTS FAST FOOD CHAINS

REAL ESTATE FUEL RETAILING

FDI DESTINATION-INDIA

Low share of organized retailing. Increase in disposable income and customer

aspiration. Increase in expenditure for luxury items. One of the three top emerging economies. 3rd largest GDP in the Asian content. Ranked 2nd most favored destination for FDI after

China. Ranked as 9th in the ranking of world economies. India offers prospects for growth and earning –

basically in all areas of business.

GROWTH IN INDIA

In 1997 India allowed FDI in cash and carry wholesale.

Within 2010,94 single brand retailing proposals came among which 57 were approved.

Allowed direct investment in cold-chain infrastructure to the extent of 100%.

Intermediaries are being removed. $27 billion comes from organized retail markets of

the total sales of $470 billion. Economist forecast that Indian retail will nearly

double itself in economic value.

WHY FDI?

Wastage and Storage problems will be resolved. Improve in quality of employment. Creation of around 10 million jobs. Control of Inflation. Huge amount of capital inflow in country. Growth of Infrastructure Upgradation of lifestyle and fashion. Safety and Quality standard will be high. Help farmers secure remunerative prices by reducing

middleman. Rupee will be appreciated. Tourism sector will develop.

REASONS FOR FDI OPPOSITION Foreign players would displace the organized

retailers because of their superior financial strength. The entry of large global retailers would kill local

shops and millions of jobs. Induce unfair trade practices like predatory pricing,

in the absence of proper regulatory guidelines. Increase in real estate prices and marginalize

domestic entrepreneurs.

FDI: INDIA & CHINA

FDI & ECONOMIC GROWTH

YEARECONOMIC GROWTH

2001 5.20%2002 3.80%2003 8.40%2004 8.30%2005 9.30%2006 9.30%2007 9.80%2008 4.90%2009 9.10%2010 8.80%

YEAR % average annual GDP

growth

1900-1950 1%

1950-1980 3.5%

1980-2002 6%

2002-2008 8%

WALMART:FOR ECONOMIC GROWTH

US-based retail giant Walmart today said investment by the company in India's retail sector will create jobs, expand business opportunities for farmers and spur community development.

"An investment by Walmart would generate retail and construction jobs, create back-end infrastructure, spur community development, and expand business opportunities for small and marginal farmers and local SMEs," Walmart Asia President and CEO Scott Price said in a statement.

The company can offer customers a wide assortment of great merchandise at low prices and help them save money so that they can live better, he added.

Hailing the government's step to allow 51 per cent FDI in multi-brand retail, Price said: "We look forward to working with the Government of India and state governments to understand the rules that exist for FDI, and we are committed to evolving and following them in a logical manner that benefits both the Indian customer and our business."

The company has plans to expand opportunities for farmers and help lower the cost of living for families in India, he added.

GOVERNMENT PROPOSAL FOR EQUITY AND GROWTH

CONCLUSION

India’s FDI has increased dramatically since the 1990s FDI does not have strong impact on economic growth in

India Changes in FDI do not strongly influence development of

this country because India’s FDI is small part of investments Higher rate of growth in the coming future• It is widely

acclaimed and recognized as an emerging global economic power

Attractive place for investments India has become a major destination for FDI, one of the

largest in the developing world Rupee is becoming stronger and stronger India’s international diplomacy has become meaningful.