Impact of Foreign Direct Investment

7/31/2019 Impact of Foreign Direct Investment

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Impact of Foreign Direct Investment (FDI) on Indian Economy

Definition

Foreign direct investment (FDI) or foreign investment refers to the net inflows of investment to

acquire a lasting management interest (10 percent or more of voting stock) in an enterpriseoperating in an economy other than that of the investor. It is the sum of equity capital,other long-term capital, and short-term capital as shown in the balance of payments. It usually involvesparticipation in management, joint-venture, transfer of technology and expertise. There are twotypes of FDI: inward foreign direct investment and outward foreign direct investment, resultingin a netFDI inflow(positive or negative) and stock of foreign direct investment, which is thecumulative number for a given period. Direct investment excludes investment through purchaseof shares. FDI is one example of international factor movement.

Types

A foreign direct investor may be classified in any sector of the economy and could be any one ofthe following:

an individual; a group of related individuals; an incorporated or unincorporated entity; a public company or private company; a group of related enterprises; a government body; an estate (law), trust or other social institution; or any combination of the above.

The foreign direct investor may acquire voting power of an enterprise in an economy throughany of the following methods:

by incorporating a wholly owned subsidiary or company by acquiring shares in an associated enterprise through a merger or an acquisition of an unrelated enterprise participating in an equity joint venture with another investor or enterprise

Foreign direct investment incentives may take the following forms:

low corporate tax and income tax rates

tax holidays other types of tax concessions preferential tariffs special economic zones EPZExport Processing Zones Bonded Warehouses Maquiladoras


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investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation subsidies job training & employment subsidies

infrastructure subsidies R&D support derogation from regulations (usually for very large projects)

Foreign Direct Investments in India

Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projectedIndia as the second most important FDI destination (after China) for transnational corporationsduring 2010-2012. As per the data, the sectors which attracted higher inflows were services,telecommunication, construction activities and computer software and hardware. Mauritius,Singapore, the US and the UK were among the leading sources of FDI.

FDI in 2010 was $24.2 billion, a significant decrease from both 2008 and 2009. Foreign directinvestment in August 2010 dipped by about 60% to aprox. $34 billion, the lowest in 2010 fiscal,industry department data released showed. In the first two months of 2010-11 fiscal, FDI inflowinto India was at an all-time high of $7.78 billion up 77% from $4.4 billion during thecorresponding period in the previous year.

The worlds largest retailer WalMart has termed Indias decision to allow 51% FDI in multi-brand retail as a firstimportant step and said it will study the finer details of the new policy todetermine the impact on its ability to do business in Indi

Impact on 51% FDI on India

The decision to hold back FDI in multi-brand retail will have a strong impact on the domesticand foreign investor sentiment, another chamber, the Confederation of Indian Industry (CII), saidin a release. We firmly hope that this would not be a rollback and a quick consensus isreached, CII Director General Chandrajit Banerjee said.

Describing the volte face as a case of missed opportunity, Assocham Secretary General D SRawat said, It will send a very negative message to foreign investors.

Rawat said FDI in multi-brand retail could have created over 10 million jobs in three years,

curbed wastage of farm products and benefited farmers through better prices for their produce.

FICCI urged the government to move ahead with this progressive reform and proposed solutionslike considering a maximum of 49 per cent FDI in multi-brand retail and increasing thepercentage of sourcing from the small scale sector, which was proposed to be fixed at aminimum 30 per cent.


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The government was forced to put its decision to allow FDI in multi-brand retail on hold in viewof stiff opposition from UPA ally Trinamool Congress and other political parties.

Impact in Tamil Nadu

Chennai, Nov 27: Opposing the government policy of allowing 51 percent FDI in multi-brandretail sector in India Tamil Nadu Chief Minister J Jayalalithaa on Sunday (today) said that shewould not allow multi-brand global palyer to set up hyper markets in Tamil Nadu.

Jayalalithaa further said that government should reverse its ill advised move as it willmonopolise the market, exploit farmers and consumers.

I am constrained to state that my government will not allow the multi brand global players aspermitted under the new policy to set up their hyper markets in Tamil Nadu, Jayalalithaadeclared.

The government new FDI retail policy to allow 51% foreign direct investment (FDI) in multi-brand retail segment will permit worlds top retail giant like Walmart, Carrefour and Tesco to setup market in the country. Earlier, such retailers were not allowed to coduct retail business inIndia.

Current Indian Market Situation

Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP.The Indian retail market is estimated to be US$ 450 billion and one of the top five retail marketsin the world by economic value.

Organised retailing, absent in most rural and small towns of India in 2010, refers to tradingactivities undertaken by licensed retailers, that is, those who are registered for sales tax, incometax, etc. These include the publicly-traded supermarkets, corporate-backed hypermarkets andretail chains, and also the privately owned large retail businesses. Unorganised retailing, on theother hand, refers to the traditional formats of low-cost retailing, for example, the local mom andpop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart andpavement vendors, etc.

Supermarkets and similar organized retail accounted for just 4% of the market in 2008. Untilrecently, regulations prevented most of the foreign investment in retailing. Some retails facedcomplying with over thirty regulations such as signboard licences and anti -hoarding

measures before they could open doors. There are taxes for moving goods to states, from states,and even within states in some cases. However, the Indian government has been opening theretail market and simplifying regulations. In November 2011, Indian central governmentannounced major reforms paving way for giants such as Walmart, Carrefour and Tesco, as wellsingle brand majors such as IKEA, Nike, and Apple to enter one of the fastest growing retailmarket of 1.2 billion people. This announcement immediately caused intense activism both inopposition and in supportwithin India. On 7 December 2011, Indian government conceding tothe opposition, announced it is suspending the retail reforms till it reaches a consensus.


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Most Indian shopping takes place in open markets or millions of small, independent grocery andretail shops. Shoppers typically stand outside the retail shop, ask for what they want, and cannotpick or examine a product from the shelf. Access to the shelf or product storage area is limited.Once the shopper requests the food staple or household product they are looking for, theshopkeeper goes to the container or shelf or to the back of the store, brings it out and offers it for

sale to the shopper. Often the shopkeeper may substitute the product, claiming that it is similar orequivalent to the product the consumer is asking for. The product typically has no price label inthese small retail shops; although some products do have a manufactured suggested retail price(MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and householdproducts arbitrarily, and two consumers may pay different prices for the same product on thesame day. Price is sometimes negotiated between the shopper and shopkeeper. The shoppers donot have time to examine the product label, and do not have a choice to make an informeddecision between competitive products.

Indias retail and logistics industry, organized and unorganized in combination, employs about40 million Indians (3.3% of Indian population). The typical Indian retail shops are very small.

Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft(46 m2) in size. India has about 11 shop outlets for every 1000 people. Vast majority of theunorganized retail shops in India employ family members, do not have the scale to procure ortransport products at high volume wholesale level, have limited to no quality control or fake-versus-authentic product screening technology and have no training on safe and hygienic storage,packaging or logistics. The unorganized retail shops source their products from a chain ofmiddlemen who mark up the product as it moves from farmer or producer to the consumer. Theunorganized retail shops typically offer no after-sales support or service. Finally, mosttransactions at unorganized retail shops are done with cash, with all sales being final.

Between 2000 to 2010, consumers in select Indian cities have gradually begun to experience thequality, choice, convenience and benefits of organized retail industry.

Growth over 1997-2010

India in 1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, itrequired government approval. The approval requirement was relaxed, and automatic permissionwas granted in 2006. Between 2000 to 2010, Indian retail attracted about $1.8 billion in foreigndirect investment, representing a very small 1.5% of total investment flow into India.

Single brand retailing attracted 94 proposals between 2006 and 2010, of which 57 were approvedand implemented. For a country of 1.2 billion people, this is a very small number. Some claim

one of the primary restraint inhibiting better participation was that India required single brandretailers to limit their ownership in Indian outlets to 51%. China in contrast allows 100%ownership by foreign companies in both single brand and multi-brand retail presence.

Indian retail has experienced limited growth, and its spoilage of food harvest is amongst thehighest in the world, because of very limited integrated cold-chain and other infrastructure. Indiahas only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons.However, 80 percent of this storage is used only for potatoes. The remaining infrastructure


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capacity is less than 1% of the annual farm output of India, and grossly inadequate during peakharvest seasons. This leads to about 30% losses in certain perishable agricultural output in India,on average, every year.

Indian laws already allow foreign direct investment in cold-chain infrastructure to the extent of

100 percent. There has been no interest in foreign direct investment in cold storage infrastructurebuild out. Experts claim that cold storage infrastructure will become economically viable onlywhen there is strong and contractually-binding demand from organized retail. The risk of coldstoring perishable food, without an assured way to move and sell it, puts the economic viabilityof expensive cold storage in doubt. In the absence of organized retail competition and with a banon foreign direct investment in multi-brand retailers, foreign direct investments are unlikely tobegin in cold storage and farm logistics infrastructure.

Until 2010, intermediaries and middlemen in India have dominated the value chain. Due to anumber of intermediaries involved in the traditional Indian retail chain, norms are flouted andpricing lacks transparency. Small Indian farmers realize only 1/3rd of the total price paid by the

final Indian consumer, as against 2/3rd by farmers in nations with a higher share of organizedretail. The 60%+ margins for middlemen and traditional retail shops have limited growth andprevented innovation in Indian retail industry.

India has had years of debate and discussions on the risks and prudence of allowing innovationand competition within its retail industry. Numerous economists repeatedly recommended to theGovernment of India that legal restrictions on organized retail must be removed, and the retailindustry in India must be opened to competition. For example, in an invited address to the Indianparliament in December 2010, Jagdish Bhagwati, Professor of Economics and Law at theColumbia University analysed the relationship between growth and poverty reduction, thenurged the Indian parliament to extend economic reforms by freeing up of the retail sector, further

liberalisation of trade in all sectors, and introducing labor market reforms. Such reformsProfessor Bhagwati argued will accelerate economic growth and make a sustainable difference inthe life of Indias poorest.

A 2007 report noted that an increasing number of people in India are turning to the servicessector for employment due to the relative low compensation offered by the traditional agricultureand manufacturing sectors. The organized retail market is growing at 35 percent annually whilegrowth of unorganized retail sector is pegged at 6 percent.

The Retail Business in India is currently at the point of inflection. As of 2008, rapid change withinvestments to the tune of US $ 25 billion were being planned by several Indian andmultinational companies in the next 5 years. It is a huge industry in terms of size and accordingto India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organisedretail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) inthe next 5 years.

India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for thethird consecutive year, maintaining its position as the most attractive market for retailinvestment. The Indian economy has registered a growth of 8% for 2007. The predictions for


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2008 is 7.9%. The enormous growth of the retail industry has created a huge demand for realestate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300malls are estimated to be operational in the country.

Growth after 2011

Before 2011, India had prevented innovation and organized competition in its consumer retailindustry. Several studies claim that the lack of infrastructure and competitive retail industry is akey cause of Indias persistently high inflation. Furthermore, because of unorganized retail, in anation where malnutrition remains a serious problem, food waste is rife. Well over 30% of foodstaples and perishable goods produced in India spoils because poor infrastructure and small retailoutlets prevent hygienic storage and movement of the goods from the farmer to the consumer.

One report estimates the 2011 Indian retail market as generating sales of about $470 billion ayear, of which a miniscule $27 billion comes from organized retail such as supermarkets, chainstores with centralized operations and shops in malls. The opening of retail industry to free

market competition, some claim will enable rapid growth in retail sector of Indian economy.Others believe the growth of Indian retail industry will take time, with organized retail possiblyneeding a decade to grow to a 25% share. A 25% market share, given the expected growth ofIndian retail industry through 2021, is estimated to be over $250 billion a year: a revenue equalto the 2009 revenue share from Japan for the worlds 250 largest retailers.

The Economist forecasts that Indian retail will nearly double in economic value, expanding byabout $400 billion by 2020. The projected increase alone is equivalent to the current retailmarket size of France.

In 2011, food accounted for 70% of indian retail, but was under-represented by organized retail.

A.T. Kearney estimates Indias organized retail had a 31% share in clothing and apparel, whilethe home supplies retail was growing between 20% to 30% per year. These data correspond toretail prospects prior to November announcement of the retail reform.

Indian Retail Market

Indian market has high complexities in terms of a wide geographic spread and distinct consumerpreferences varying by each region necessitating a need for localization even within thegeographic zones. India has highest number of outlets per person (7 per thousand) Indian retailspace per capita at 2 sq ft (0.19 m

2)/ person is lowest in the world Indian retail density of 6

percent is highest in the world. 1.8 million households in India have an annual income of over 45

lakh (US$91,260).

Delving further into consumer buying habits, purchase decisions can be separated into twocategories: status-oriented and indulgence-oriented. CTVs/LCDs, refrigerators, washingmachines, dishwashers, microwave ovens and DVD players fall in the status category.Indulgence-oriented products include plasma TVs, state-of-the-art home theatre systems, iPods,high-end digital cameras, camcorders, and gaming consoles. Consumers in the status categorybuy because they need to maintain a position in their social group. Indulgence-oriented buying


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happens with those who want to enjoy life better with products that meet their requirements.When it comes to the festival shopping season, it is primarily the status-oriented segment thatcontributes largely to the retailers cash register.

While India presents a large market opportunity given the number and increasing purchasing

power of consumers, there are significant challenges as well given that over 90% of trade isconducted through independent local stores. Challenges include: Geographically dispersedpopulation, small ticket sizes, complex distribution network, little use of IT systems, limitationsof mass media and existence of counterfeit goods.

Major Indian Retailers

Indian apparel retailers are increasing their brand presence overseas, particularly in developedmarkets. While most have identified a gap in countries in West Asia and Africa, some majors arealso looking at the US and Europe. Arvind Brands, Madura Garments, Spykar Lifestyle andRoyal Classic Polo are busy chalking out foreign expansion plans through the distribution route

and standalone stores as well. Another denim wear brand, Spykar, which is now moving towardsbecoming a casualwear lifestyle brand, has launched its store in Melbourne recently. It plans toopen three stores in London by 2008-end.

The low-intensity entry of the diversified Mahindra Group into retail is unique because it plansto focus on lifestyle products. The Mahindra Group is the fourth largest Indian business group toenter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and BhartiEnterprises Ltd. The other three groups are focusing either on perishables and groceries, or arange of products, or both.

REI AGRO LTD Retail: 6TEN and 6TEN kirana stores

Future Groups-Formats: Big Bazaar, Food Bazaar, Pantaloons, Central, Fashion Station,Brand Factory, Depot, aLL, E-Zone etc. Raymond Ltd.: Textiles, The Raymond Shop, Park Avenue, Park Avenue Woman, Parx,

Colourplus, Neck Ties & More, Shirts & More etc. Fabindia: Textiles, Home furnishings, handloom apparel, jewellery RP-Sanjiv Goenka Group Retail-Formats: Spencers Hyper, Spencers Daily, Music

World, Au Bon Pain (Internaional bakery cafeteria), Beverly Hills Polo Club The Tata Group-Formats: Westside, Star India Bazaar, Steeljunction, Landmark, Titan

Industries with World of Titans showrooms, Tanishq outlets, Croma. Reliance Retail-Formats: Reliance MART, Reliance SUPER, Reliance FRESH, Reliance

Footprint, Reliance Living, Reliance Digital, Reliance Jewellery, Reliance Trends,Reliance Autozone, iStore

Reliance ADAG Retail-Format: Reliance World K Raheja Corp Group-Formats: Shoppers Stop, Crossword, Hyper City, Inorbit Mall Nilgiris-Formats: Nilgiris supermarket chain Marks & Spencer: Clothing, lifestyle products, etc. Lifestyle International-Lifestyle, Home Centre, Max, Fun City and International

Franchise brand stores. Pyramid Retail-Formats: Pyramid Megastore, TruMart


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Next retail India Ltd (Consumer Electronics Vivek Limited Retail Formats: Viveks, Jainsons, Viveks Service Centre, Viveks Safe

Deposit Lockers PGC Retail -T-Mart India, Switcher , Respect India , Grand India Bazaar ,etc., Subhiksha-Formats: Subhiksha supermarket pharmacy and telecom discount chain.

Trinethra- Formats: Fabmall supermarket chain and Fabcity hypermarket chain Vishal Retail Group-Formats: Vishal Mega Mart BPCL-Formats: In & Out German Metro Cash & Carry Shoprite Holdings-Formats: Shoprite Hyper Paritala stores bazar: honey shine stores Aditya Birla GroupMore Outlets Kapas- Cotton garment outlets Nmart Retails with 71 operating Stores till now and total 153 Stores in India and 1 to

open in Dubai Shortly. (Expected to be 150 by the end of Aug-2012)(www.nmart.co.in)

Entry of MNC

The worlds largest retailer by sales, Wal-Mart Stores Inc and Sunil Mittals Bharti Enterpriseshave entered into a joint venture agreement and they are planning to open 10 to 15 cash-and-carry facilities over seven years. The first of the stores, which will sell groceries, consumerappliances and fruits and vegetables to retailers and small businesses, is slated to open in northIndia by the end of 2008.

Carrefour, the worlds second largest retailer by sales, is planning to setup two business entitiesin the country one for its cash-and-carry business and the other a master franchisee which willlend its banner, technical services and know how to an Indian company for direct-to-consumer

retail.

The worlds fifth largest retailer by sales, Costco Wholesale Corp (Costco) known for itswarehouse club model is also interested in coming to India and waiting for the right opportunity.

Opposition to the retailers plans have argued that livelihoods of small scale and rural vendorswould be threatened. However, studies have found that only a limited number of small vendorswill be affected and that the benefits of market expansion far outweigh the impact of the newstores.

Tesco Plc., plans to set up shop in India with a wholesale cash-and-carry business and will helpIndian conglomerate Tata group to grow its hypermarket business

Challenges

A McKinsey study claims retail productivity in India is very low compared to international peermeasures. For example, the labor productivity in Indian retail was just 6% of the laborproductivity in United States in 2010. Indias labor productivity in food retailing is about 5%


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compared to Brazils 14%; while Indias labor productivity in non-food retailing is about 8%compared to Polands 25%.

Total retail employment in India, both organized and unorganized, account for about 6% ofIndian labor work force currentlymost of which is unorganized. This about a third of levels in

United States and Europe; and about half of levels in other emerging economies. A completeexpansion of retail sector to levels and productivity similar to other emerging economies anddeveloped economies such as the United States would create over 50 million jobs in India.Training and development of labor and management for higher retail productivity is expected tobe a challenge.

To become a truly flourishing industry, retailing in India needs to cross the following hurdles:

Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses.

Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options Intrinsic complexity of retailing rapid price changes, constant threat of product

obsolescence and low margins.

In November 2011, the Indian government announced relaxation of some rules and the openingof retail market to competition.

Indian Retail Reform

Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brandIndian retail, forbidding foreign groups from any ownership in supermarkets, convenience storesor any retail outlets, to sell multiple products from different brands directly to Indian consumers.

The government of Manmohan Singh, prime minister, announced on 24 November 2011 thefollowing:

India will allow foreign groups to own up to 51 per cent in multi -brand retailers, assupermarkets are known in India, in the most radical pro-liberalisation reform passed byan Indian cabinet in years;

single brand retailers, such as Apple and Ikea, can own 100 percent of their Indian stores,up from the previous cap of 51 percent;

both multi-brand and single brand stores in India will have to source nearly a third oftheir goods from small and medium-sized Indian suppliers;

all multi-brand and single brand stores in India must confine their operations to 53-oddcities with a population over one million, out of some 7935 towns and cities in India. It isexpected that these stores will now have full access to over 200 million urban consumersin India;


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multi-brand retailers must have a minimum investment of US$100 million with at leasthalf of the amount invested in back end infrastructure, including cold chains,refrigeration, transportation, packing, sorting and processing to considerably reduce thepost harvest losses and bring remunerative prices to farmers;

the opening of retail competition will be within Indias federal structure of government.In other words, the policy is an enabling legal framework for India. The states of Indiahave the prerogative to accept it and implement it, or they can decide to not implement itif they so choose. Actual implementation of policy will be within the parameters of statelaws and regulations.

The opening of retail industry to global competition is expected to spur a retail rush to India. Ithas the potential to transform not only the retailing landscape but also the nations ailinginfrastructure.

A Wall Street Journal article claims that fresh investments in Indian organized retail willgenerate 10 million new jobs between 2012-2014, and about five to six million of them in

logistics alone; even though the retail market is being opened to just 53 cities out of about 8000towns and cities in India.

It is expected to help tame stubbornly high inflation but is likely to be vehemently opposed bymillions of small retailers, who see large foreign chains as a threat. The need to control foodprice inflationaveraging double-digit rises over several yearsprompted the government toopen the sector, analysts claim. Hitherto Indias food supplies have been controlled by tens ofmillions of middlemen (less than 5% of Indian population). Traders add huge mark-ups to farmprices, while offering little by way of technical support to help farmers boost their productivity,packaging technology, pushing up retail prices significantly. Analysts said allowing in bigforeign retailers would provide an impetus for them to set up modern supply chains, with

refrigerated vans, cold storage and more efficient logistics. I think foreign chains can also bringin humongous logistical benefits and capital, Chandrajit Banerjee, director-general,Confederation of Indian Industry, told Reuters. The biggest beneficiary would be the smallfarmers who will be able to improve their productivity by selling directly to large organisedplayers, Mr Banerjee said.

Indian retail reforms on hold

According to Bloomberg, on 3 December 2011, the Chief Minister of the Indian state of WestBengal, Mamata Banerjee, who is against the policy and whose Trinamool Congress brings 19votes to the ruling Congress party-led coalition, claimed that Indias government may put the

FDI retail reforms on hold until it reaches consensus within the ruling coalition. Reuters reportsthat this risked a possible dilution of the policy rather than a change of heart.

India Today claimed that the resistance to Indian retail reforms is primarily because it has beenbadly sold, even though it can help fix the exploitation of Indian farmers by the decades-oldarhtiya and mandi monopoly system. India Today claims the policy is good for the smallIndian farmer and the Indian consumer.


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Pratap Mehta, president of the Centre for Policy Research, claimed any U-turn or postponementof retail reforms will cause an immense loss of face to the Congress-led central government ofManmohan Singh. The mom-and-pop farmers of India support these reforms. The consumers ofIndia want the reforms. The government has already annoyed those who oppose change andinnovation in retail. By putting retail reforms on hold, the government will additionally alienate

much larger segment of Indias population supporting FDI. So they will now have the worst ofboth worlds, claims Mehta.

Deepak Parekh, Ashok Ganguly and other economic policy leaders of India, on 4 December2011, called placing investment and innovation in retail on hold for the sake of vested interestsas unfair and detrimental to vast majority in India. They urged farmers, consumers and thecommon people to raise their voice against this false drama of apprehension against investmentand modernising trade in organised retailing. They called upon Indians to come out and stronglysupport progressive measures and reforms with the same spirit and gusto with which we take theliberties to criticize policies or issues we do not appreciate.

Several newspapers claimed on 6 December 2011 that India parliament is expected to shelveretail reforms while the ruling Congress party seeks consensus from the opposition and theCongress partys own coalition partners. Suspension of retail reforms on 7 December 2011would be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it isweak and ineffective in implementing its ideas.

Anand Sharma, Indias Commerce and Industry Minister, after a meeting of all political partieson 7 December 2011 said, The decision to allow foreign direct investment in retail is suspendedtill consensus is reached with all stakeholders.

Social Impact and Controversy with Retail Reforms

The November 2011 retail reforms in India have sparked intense activism, both in opposition andin support of the reforms.

Controversy over Indian retail reforms

A horticultural produce retail market in Kolkata, India; produce loss in these retail formats isvery high for perishables

Critics of the Indian retail reforms announcement are making one or more of the followingpoints:

Independent stores will close, leading to massive job losses. Walmart employs very fewpeople in the United States. If allowed to expand in India as much as Walmart hasexpanded in the United States, few thousand jobs may be created but millions will belost.

Walmart will lower prices to dump goods, get competition out of the way, become amonopoly, then raise prices. We have seen this in the case of the soft drinks industry.Pepsi and Coke came in and wiped out all the domestic brands.


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India doesnt need foreign retailers, since homegrown companies and traditional marketsmay be able to do the job.

Work will be done by Indians, profits will go to foreigners. Remember East India Company. It entered India as a trader and then took over

politically.

There will be sterile homogeneity and Indian cities will look like cities anywhere else. The government hasnt built consensus.

Supporters claim none of these objections has merit. They claim:

Organized retail will need workers. Walmart employs 1.4 million people in United Statesalone. With United States population of about 300 million, and Indias population ofabout 1200 million, if Walmart-like retail companies were to expand in India as much astheir presence in the United States, and the staffing level in Indian stores kept at the samelevel as in the United States stores, Walmart alone would employ 5.6 million Indiancitizens. Walmart has a 6.5% market share of the total United States retail. Adjusted for

this market share, the expected jobs in future Indian organized retail would total over 85million. In addition, millions of additional jobs will be created during the building of andthe maintenance of retail stores, roads, cold storage centers, software industry, electroniccash registers and other retail supporting organizations. Instead of job losses, retailreforms are likely to be massive boost to Indian job availability.

KPMG one of the worlds largest audit companies finds that in China, theemployment in both retail and wholesale trade increased from 4% in 1992 to about 7% in2001, post China opening its retail to foreign and domestic innovation and competition.In absolute terms, China experienced the creation of 26 million new jobs within 9 years,post China announcing FDI retail reforms. Additionally, contrary to some concerns inChina, post retail reforms, the number of traditional small retailers also grew by 30%over 5 years.

India needs trillions of dollar to build its infrastructure, hospitals, housing and schools forits growing population. Indian economy is small, with limited surplus capital. Indiangovernment is already operating on budget deficits. It is simply not possible for Indianinvestors or Indian government to fund this expansion, job creation and growth at the rateIndia needs. Global investment capital through FDI is necessary. Beyond capital, Indianretail industry needs knowledge and global integration. Global retail leaders, some ofwhich are partly owned by people of Indian origin, can bring this knowledge. Globalintegration can potentially open export markets for Indian farmers and producers.Walmart, for example, expects to source and export some $1 billion worth of goods fromIndia every year, since it came into Indian wholesale retail market.

Walmart, Carrefour, Tesco, Target, Metro, Coop are some of over 350 global retailcompanies with annual sales over $1 billion. These retail companies have operated forover 30 years in numerous countries. They have not become monopolies. Competitionbetween Walmart-like retailers has kept food prices in check. Canada credits their verylow inflation rates to Walmart-effect. Anti-trust laws and state regulations, such as thosein Indian legal code, have prevented food monopolies from forming anywhere in theworld. Price inflation in these countries has been 5 to 10 times lower than price inflation


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in India. The current consumer price inflation in Europe and the United States is less than2%, compared to Indias double digit inflation.

The Pepsi and Coke example is meaningless in the context of Indian beverage market.More competition is lacking because of limited demand. Indian consumer has limitedinterest in soft drinks. Soft drinks represent less than 5% of Indian beverage market.

Indian consumer prefers milk-based, tea and coffee and these account for 90% of Indianbeverage market. In these markets, Coca Cola and Pepsi have plenty of competition. Thenext most important market in India is bottled water, that outsells combined soft drinksales of the Pepsi and Coca Cola. Bottled water, milk, coffee and tea market in India arebig markets, and have plenty of domestic brands, European brands like Nestle, as well asPepsi and Coca Cola. Organized retail too will have numerous brands and strongcompetition.

Comparing 21st century to 18th century is inappropriate. Conditions today are not sameas in the 18th century. India wasnt a democracy then, it is today. Global awareness andnews media were not the same in 18th century as today. Consider China today. It hasover 57 million square feet of retail space owned by foreigners, employing millions of

Chinese citizens. Yet, China hasnt become a vassal of imperialists. It enjoys respectfrom all global powers. Other Asian countries like Malaysia, Taiwan, Thailand andIndonesia see foreign retailers as catalysts of new technology and price reduction; andthey have benefitted immensely by welcoming FDI in retail. India too will benefit byintegrating with the world, rather than isolating itself.

With 51% FDI limit in multi-brand retailers, nearly half of any profits will remain inIndia. Any profits will be subject to taxes, and such taxes will reduce Indian governmentbudget deficit. Many years ago, China adopted the retail reform policy India hasannounced; China allowed FDI in its retail sector. It has taken FDI-financed retailers inChina between 5 to 10 years to post profits, in large part because of huge investmentsthey had to make initially. Like China, it is unlikely foreign retailers will earn any profitsin India for the first 5 to 10 years. Ultimately, retail companies must earn profits withhard work and by creating value.

States have a right to say no to retail FDI within their jurisdiction. States have the right toadd restrictions to the retail policy announced before they implement them. Thus, theycan place limits on number, market share, style, diversity, homogeneity and other factorsto suit their cultural preferences. Finally, in future, states can always introduceregulations and India can change the law to ensure the benefits of retail reforms reach thepoorest and weakest segments of Indian society, free and fair retail competition doesindeed lead to sharply lower inflation than current levels, small farmers get better prices,jobs created by organized retail pay well, and healthier food becomes available to morehouseholds.

Inbuilt inefficiencies and wastage in distribution and storage account for why, accordingto some estimates, as much as 40% of food production doesnt reach consumers. Fiftymillion children in India are malnourished. Food often rots at farms, in transit, or inantiquated state-run warehouses. Cost-conscious organized retail companies will avoidwaste and loss, making food available to the weakest and poorest segment of Indiansociety, while increasing the income of small farmers. Walmart, for example, since itsarrival in Indian wholesale retail market, has successfully introduced Direct FarmProject at Haider Nagar near Malerkotla in Punjab, where 110 farmers have been


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connected with Bharti Walmart for sourcing fresh vegetables directly, thereby reducingwaste and bringing fresher produce to Indian consumers.

Indian small shops employ workers without proper contracts, making them work longhours. Many unorganized small shops depend on child labour. A well-regulated retailsector will help curtail some of these abuses.

Organized retail has enabled a wide range of companies to start and flourish in othercountries. For example, in the United States, an organized retailer named Whole Foodshas rapidly grown to annual revenues of $9 billion by working closely with farmers,delighting customers and caring about the communities it has stores in.

The claims that there is no consensus are without merit. About 10 years ago, whenopposition formed the central government, they had proposed retail reforms andsuggested India consider FDI in retail. Retail reforms discussions are not new. Morerecently, retail reforms announced evolved after a process of intense consultations andconsensus building initiative. In 2010, the Indian government circulated a discussionpaper on FDI retail reforms. On July 6 2011, another version of the discussion paper wascirculated by the central government of India. Comments from a wide cross-section of

Indian society including farmers associations, industry bodies, consumer forums,academics, traders associations, investors, economists were analyzed in depth before thematter was discussed by the Committee of Secretaries. By early August 2011, theconsensus from various segments of Indian society was overwhelming in favor of retailreforms. The reform outline was presented in Indias Rajya Sabha in August 2011. Theannounced reforms are the result of this consensus process. The current opposition is nothelping the consensus process, since consensus is not built by threats and disruption.Those who oppose current retail reforms should help build consensus with ideas andproposals, if they have any. The opposition parties currently disrupting the Indianparliament on retail reforms have not offered even one idea or a single proposal on howIndia can eliminate food spoilage, reduce inflation, improve food security, feed the poor,improve the incomes of small farmers.

Opposition to retail reforms

Within a week of retail reform announcement, Indian government has faced a political backlashagainst its decision to allow competition and 51% ownership of multi-brand organized retail inIndia.

Despite the fact that Salman Khurshid, Indias law minister, claiming that many oppositionparties, including the Bharatiya Janata Party, had privately encouraged the government to pushthrough the retail reform, the intense criticism now targets Congress-led coalition government,

and its decision to push through one of the biggest economic reforms in years for India.Opposition parties claim supermarket chains are ill-advised, unilateral and unwelcome.

The opposition claims the entry of organized retailers would lead to their dominance that woulddecimate local retailers and force millions of people out of work.

Mamata Banerjee, the chief minister of West Bengal and the leader of the Trinamool Congress,announced her opposition to retail reform, claiming Some people might support it, but I do not


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support it. You see America is America and India is India. One has to see what ones capacityis.

Other states whose Chief Ministers have either personally announced opposition or announcedreluctance to implement the retail reforms: Tamil Nadu, Uttar Pradesh, Bihar and Madhya

Pradesh.

Chief Ministers of many states have not made a personal statement in opposition or support ofIndia needing retail reforms. Gujarat, Kerala, Karnataka and Rajasthan are examples of thesestates. Both sides have made conflicting claims about the position of chief ministers from thesestates.

A Wall Street Journal article reports that in Uttar Pradesh, Uma Bharti, a senior leader of theopposition Bharatiya Janata Party (BJP), threatened to set fire to the first Wal-Mart storewhenever it opens; with her colleague Sushma Swaraj busy tweeting up a storm ofmisinformation about how Wal-Mart allegedly ruined the U.S. economy.

On 1 December 2011, an India-wide bandh (close all business in protest) was called bypolitical parties opposing the retail reform. While many organizations responded, the reach of theprotest was mixed. The Times of India, a national newspaper of India, claimed people appeareddivided over the bandh call and internal rivalry among trade associations led to a mixedresponse, leaving many stores open day-long and others opening for business as usual in thesecond half of the day. Even Purti Group, a network of stores owned and operated by NitinGadkari were open for business, ignoring the call for bandh. Gadkari is the president of BJP, thekey party currently organizing opposition to retail reform.

The Hindu, another widely circulated newspaper in India, claimed the oppositions call for a

nationwide shutdown on 1 December 2011, in protest of retail reform received a mixed response.Some states had strong support, while most did not. Even in states where opposition politicalparties are in power, many ignored the call for the shutdown. In Gujarat, Bihar, Delhi, AndhraPradesh, Haryana, Punjab and Assam the call evoked a partial response. While a number ofwholesale markets observed the shutdown, the newspaper claimed a majority of kirana stores andneighborhood small shopsfor whom apparently the trade bandh had been called remainedopen, ignoring the shutdown call. Conflicting claims were made by the organizers of thenationwide shutdown. Contrary to eyewitness reports, one Trader unions secretary generalclaimed traders across the country participated wholeheartedly in the strike.

The political parties opposing the retail reforms physically disrupted and forced Indiasparliament to adjourn again on Friday 2 December 2011. The Indian government refused to cavein, in its attempt to convince through dialogue that retail reforms are necessary to protect thefarmers and consumers. Indian parliament has been dysfunctional for the entire week ofNovember 28 2011 over the opposition to retail reforms.

Support for retail reforms


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In a pan-Indian survey conducted over the weekend of 3 December 2011, overwhelmingmajority of consumers and farmers in and around ten major cities across the country support theretail reforms. Over 90 per cent of consumers said FDI in retail will bring down prices and offera wider choice of goods. Nearly 78 per cent of farmers said they will get better prices for theirproduce from multi-format stores. Over 75 per cent of the traders claimed their marketing

resources will continue to be needed to push sales through multiple channels, but they may haveto accept lower margins for greater volumes.

Farmer groups

Various farmer associations in India have announced their support for the retail reforms. Forexample:

Shriram Gadhve of All India Vegetable Growers Association (AIVGA) claims hisorganization supports retail reform. He claimed that currently, it is the middlemencommission agents who benefit at the cost of farmers. He urged that the retail reform

must focus on rural areas and that farmers receive benefits. Gadhve claimed, A bettercold storage would help since this could help prevent the existing loss of 34% of fruitsand vegetables due to inefficient systems in place. AIVGA operates in nine statesincluding Maharashtra, Andhra Pradesh, West Bengal, Bihar, Chattisgarh, Punjab andHaryana with 2,200 farmer outfits as its members.

Bharat Krishak Samaj, a farmer association with more than 75,000 members says itsupports retail reform. Ajay Vir Jakhar, the chairman of Bharat Krishak Samaj, claimed amonopoly exists between the private guilds of middlemen, commission agents at thesabzi mandis (Indias wholesale markets for vegetables and farm produce) and the smallshopkeepers in the unorganized retail market. Given the perishable nature of food likefruit and vegetables, without the option of safe and reliable cold storage, the farmer is

compelled to sell his crop at whatever price he can get. He cannot wait for a better priceand is thus exploited by the current monopoly of middlemen. Jakhar asked that thegovernment make it mandatory for organized retailers to buy 75% of their producedirectly from farmers, bypassing the middlemen monopoly and Indias sabzi mandiauction system.

Consortium of Indian Farmers Associations (CIFA) announced its support for retailreform. Chengal Reddy, secretary general of CIFA claimed retail reform could do lots forIndian farmers. Reddy commented, India has 600 million farmers, 1,200 millionconsumers and 5 million traders. I fail to understand why political parties are taking ananti-farmer stand and worried about half a million brokers and small shopkeepers. CIFAmainly operates in Andhra Pradesh, Karnataka and Tamil Nadu; but has a growingmembers from rest of India, including Shetkari Sanghatana in Maharashtra, RajasthanKisan Union and Himachal Farmer Organisations.

Prakash Thakur, the chairman of the People for Environment Horticulture & Livelihoodof Himachal Pradesh, announcing his support for retail reforms claimed FDI is expectedto roll out produce storage centers that will increase market access, reduce the number ofmiddlemen and enhance returns to farmers. Highly perishable fruits like cherry, apricot,peaches and plums have a huge demand but are unable to tap the market fully because oflack of cold storage and transport infrastructure. Sales will boost with the opening up of


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retail. Even though India is the second-largest producer of fruits and vegetables in theworld, its storage infrastructure is grossly inadequate, claimed Thakur.

Sharad Joshi, founder of Shetkari Sangathana (farmers association), has announced hissupport for retail reforms. Joshi claims FDI will help the farm sector improve criticalinfrastructure and integrate farmer-consumer relationship. Today, the existing retail has

not been able to supply fresh vegetables to the consumers because they have not investedin the backward integration. When the farmers produce reaches the end consumerdirectly, the farmers will naturally be benefited. Joshi feels retail reform is just a first stepof needed agricultural reforms in India, and that the government should pursue additionalreforms.

Suryamurthy, in an article in The Telegraph, claims farmer groups across India do not supportstatus quo and seek retail reforms, because with the current retail system the farmer is beingexploited. For example, the article claims:

Indian farmers get only one third of the price consumers pay for food staples, the rest istaken as commissions and markups by middlemen and shopkeepers

For perishable horticulture produce, average price farmers receive is barely 12 to 15% ofthe final price consumer pays

Indian potato farmers sell their crop for Rs. 2 to 3 a kilogram, while the Indian consumerbuys the same potato for Rs. 12 to 20 a kilogram.

Economists and entrepreneurs

Many business groups in India are welcoming the transformation of a long-protected sector thathas left Indian shoppers bereft of the scale and variety of their counterparts in more developedmarkets.

B. Muthuraman, the president of the Confederation of Indian Industry, claimed the retail reformwould open enormous opportunities and lead to much-needed investment in cold chain,warehousing and contract farming.

Organized retailers will reduce waste by improving logistics, creating cold storage to preventfood spoilage, improve hygiene and product safety, reduce counterfeit trade and tax evasion onexpensive item purchases, and create dependable supply chains for secure supply of food staples,fruits and vegetables. They will increase choice and reduce Indias rampant infla tion by reducingwaste, spoilage and cutting out middlemen. Fresh investment in organized retail, the supportersof retail reform claim will generate 10 million new jobs by 2014, about five to six million ofthem in logistics alone.

Organized retail will offer the small Indian farmer more competing venues to sell his or herproducts, and increase income from less spoilage and waste. A Food and AgriculturalOrganization report claims that currently, in India, the small farmer faces significant losses post-harvest at the farm and because of poor roads, inadequate storage technologies, inefficient supplychains and farmers inability to bring the produce into retail markets dominated by small


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shopkeepers. These experts claim Indias post-harvest losses to exceed 25%, on average, everyyear for each farmer.

Unlike the current monopoly of middlemen buyer, retail reforms offer farmers access to morebuyers from organized retail. More buyers will compete for farmers produce leading to better

support for farmers and to better bids. With less spoilage of staples and agricultural produce,global retail companies can find and provide additional markets to Indian farmers. Walmart,since its arrival in Indias wholesale retail market, already sources and exports about $1 billionworth of Indian goods for its global customers.

Not only do these losses reduce food security in India, the study claims that poor farmers andothers loose income because of the waste and inefficient retail. Over US$50 billion of additionalincome can become available to Indian farmers by preventing post-harvest farm losses,improving transport, proper storage and retail. Organized retail is also expected to initiateinfrastructure development creating millions of rural and urban jobs for Indias growingpopulation. One study claims that if these post-harvest food staple losses could be eliminated

with better infrastructure and retail network in India, enough food would be saved every year tofeed 70 to 100 million people over the year.

Supporters of retail reform, The Economist claims, say it will increase competition and qualitywhile reducing prices helping to reduce Indias rampant inflation that is close to the doubledigits. These supporters claim that unorganized small shopkeepers will continue to existalongside large organized supermarkets, because for many Indians they will remain the mostaccessible and most convenient place to shop.

Chief Ministers of Indian states

Supporters of retail reform who have voiced the need to promote organized retail include ChiefMinisters of several states of India, several belonging to political parties that have no affiliationwith Congress-led central government of India. The list includes the Chief Ministers ofMaharashtra, Andhra Pradesh, Tamil Nadu and Gujarat. In a report submitted earlier in 2011,these Chief Ministers urged the Prime Minister to prioritize reforms to help promote organizedretail, shorten the retail path from farm to consumer, allow organized retail to buy direct fromfarmers at remunerative produce prices, and reduce farm to retail costs. Similarly, the ChiefMinister of Delhi has come out in support of the retail reform, as have the Chief Ministers of thetwo farming states of Haryana and Punjab in north India. The Chief Ministers of Haryana andPunjab claim that the announced retail reforms will immensely benefit farmers in their states.

The Chief Minister of the state of Maharashtra the state with the highest GDP in India andhome to its financial capital Mumbaihas also welcomed the retail reform.

Tarun Gogoi, the Chief Minister of Assam, an eastern state in India, announcing his support tothe retail reform, claimed this will go a long way in bringing about a sea change in ruraleconomy. The decision will boost agriculture and allied sectors, manufacturing, logistics,integrated cold chains, refrigerated transportation and food processing facilities in a big way.


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Criticising the BJP-organized opposition, Gogoi claimed that these parties who had just a fewyears ago dubbed opening up retail as good for India, are now singing a different tune.

Current supermarkets

Existing Indian retail firms such as Spencers, Foodworld Supermarkets Ltd, Nilgiris andShopRite support retail reform and consider international competition as a blessing in disguise.They expect a flurry of joint ventures with global majors for expansion capital and opportunity togain expertise in supply chain management. Spencers Retail with 200 stores in India, and withretail of fresh vegetables and fruits accounting for 55 per cent of its business claims retail reformto be a win-win situation, as they already procure the farm products directly from the growerswithout the involvement of middlemen or traders. Spencers claims that there is scope for it toexpand its footprint in terms of store location as well as procuring farm products. Foodworld,which operates over 60 stores, plans to ramp up its presence to more than 200 locations. It hasalready tied up with Hong Kong-based Dairy Farm International. With the relaxation ininternational investments in Indian retail, Indias Foodworld expects its global relationship will

only get stronger. Competition and investment in retail will provide more benefits to consumersthrough lower prices, wider availability and significant improvement in supply chain logistics


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Three Advantages of FDI in Retail -

1. More investments in the end to end supply chain - For the Foreign Multi Brand retailers,

entering India later would be a significant disadvantage and they would try and introduce a lot ofinnovations hitherto not introduced. For one, they would invest heavily into end-to-end supplychains including world class cold storage facilities.

2. Low spillage and wastage - In India, the supply chain is considered highly inneffient due tothe huge wastage during the transportation. The global world class retailers would introducequality standards that are second to none and would lead to more farm produce reaching the endconsumer in a consumable condition. This would improve productivity of the entire system.

3. More options for the consumer - The consumer would get compelling options for doing theirshopping which would lead to a fulfilling consumer experience

Three disadvantages of FDI in Retail -

1. Existence of Indian biggies- Already multiple Indian corporates are well entrenched into theIndian Market with their organised multi brand retail offerings. Under this situation is an FDIinflux truly required? That is one of the biggest questions that is being asked.

2. Little incremental value - The critics of the move say that India as a country requiresdifferent fundamentals to survive and deliver value to the consumer. The last mile delivery of alot of goods happen to the consumer's home - the retailer goes to the consumer in India and notthe other way round, thus far in a lot of cases. Hence, the critics claim that there is little

incremental value by implementing FDI in retail rules.

3. Will Prices reduce for consumers - Not at all - Will there be a net gain for consumers interms of Price savings? Not at all. Not even the biggest supporters of FDI in retail claim that theconsumer will spend less from his/her pocket due to this FDI in retail influx.

Clearly, there is a lot more to this debate, and both sides claim to have a lot of positives. Wherewill the public opinion side with? What will the aam aadmi say? Let us know.


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Thursday, 20 September 2012

Pros And Cons Of FDI In Indian Retail

Trinamool Congress allow FDI (Retail) in the region of 51 per cent, diesel fiverupees per liter and in the years to just 6 discounted cylinder deadline PM quits inprotest (Pdiha full story and Every update to) request. Most state governments,particularly the non-Congress-ruled state in opposition to FDI in retail (Pdiha: theattitude of states).

Political parties and governments stance on the issue of profit - loss came on theground.. Sena as he closed the 20th of September to take part in India areproposed NDA.Parties other than the stance of the matter, 51 per cent of the retail market,foreign direct investment (FDI), the government's decision to allow the countryare the advantages and disadvantages? We are trying to answer this question.

1. Benefit farmers: farmers in the country's condition is not hidden from anyone.Their state of misery in the last few years, thousands of farmers adopted the pathof suicide in farming losses. Prime Minister Manmohan Singh has argued that FDI in

retail will benefit farmers directly. Brazil and Argentina aware that allowing FDI inthe retail sector, the economic benefits that would accrue to farmers hasincreased by 37 per cent.

2. Customers will find cheap things: FDI pro-South American countries - Brazil andArgentina illustrate that it allows those countries after FDI in retail prices ofnearly all things have fallen nearly 18 per cent.
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3. Will not groceries 'edge': stickler for foreign investment in retail market punditsclaim that organized retail outlets in the country (like Big Bazaar, V Mart andMore) After allowing the grocery business grew by 19 per cent . Experts also claimthat Bharti - Wal-Mart owns nearly 30 thousand grocery stores buy goods. Thereason is that these grocery owners get cheaper goods.

4. Get rid of middlemen: market intermediaries take the most advantage. Neitherfarmers nor any object that produces goods the final buyer (customer) is of no usein it. Middlemen at very affordable rates to customers ranging from farmers, theirproducts sell at twice or sometimes three times the price..

5. Villages will directly benefit: Proponents of FDI is that foreign capital will comefrom a huge plus that it will foreign capital in rural development. Some expertsclaim that the retail market in India to hit any foreign investor will invest U.S. $100 billion. Of this amount, 50 per cent of the U.S. $ 100 billion to $ 50 billionwill be spent on those places where you buy goods from companies. FDI in slide 5

further assess the potential damage.

6. Agriculture: Prime Minister Manmohan Singh claims that India's agriculturalsector for FDI 'boon' will be. But agricultural expert Dr Devinder Sharma said is nottrue.Federal government support in the U.S. because there are advantages to thefarmer. In 2008, the Farm Bill in the U.S. for the next 5 years, the agriculturalsector was the provision of U.S. $ 307 billion.

7. Price reduction: large retail outlets to market gradually monopoly (Monopli)take up. After the monopoly companies that sell their products at exorbitantrates. Opposing FDI in Africa and Asia, some analysts claim that the open market

price of commodities in supermarkets than 20 to 30 per cent were found.

8. Government said FDI will save grain to rot Companies proponents of FDI in theretail market to foreign companies investing millions tonnes scientificallymeasures will suffice for preservation. But opponents of FDI in the retail sector inthe country, the largest companies of the world asks farmers to grain storagefacilities for preservation are? Consider the fact that the government storage(storage) has already given permission to FDI in the region. But until now therehas been no foreign investment in the sector.

9. But agricultural expert Dr Devinder Sharma says that this assumption is

wrong.But in 2005 it fell to 4 per cent gain. So, where farmers are gaining. This isso because of the large retail stores come with the new kind of middleman. SinceFDI Quality Controller, Standrdaijr, certification agency, processor and packagingconsultant will come as new intermediaries.

10. Employment: According to an estimate retail economy in India of about 400billion US dollars. It 1. 2 crore retail traders employment to about 4 crore people.


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The fact to note here is that the wall-mart turnover of 420 billion dollars. But theCompany has given employment to only 21 million people.opponents of foreign investment in retail market that if wall-mart company likedied so little of the people are on business as India, as the total retail market, theCompany is what can be expected.

Documents

Impact of Foreign Direct Investment