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Guided by : Dr Bishnupriya MishraPresented by : Siddharth Ray
FDI IN INDIAN RETAIL SECTOR A - S.W.O.T ANALYSIS
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 .
It usually involves participation in management , joint venture ,transfer of technology and expertise.
FDI can be used as one measure of growing economic globalization.
What is FDI?
SINGLE BRAND RETAIL : It implies that a retail store with foreign investment can only sell one brand.Eg. Nokia , Reebok and Adidas.MULTI BRAND RETAIL :Retail store can sell multiple brands under one roof.Global retailers like Wal – Mart , Carrefour and Tesco can open stores offering a wide range of household items and grocery directly to consumers in the same way as the “ Kirana” stores..
Single and Multiple Brand Retail
Retail industry – Second largest employer ( with an
estimated 35 million people engaged by the industry). The Union Cabinet on 24th Nov 2011 proposed to
increase FDI in multi brand to 51%.However government was put to hold after strong opposition from several political parties , including NDA and Trinamool Congress. New policy will allow multi brand foreign retailers
to set up shop only in cities with a population of more than 10 lakhs as per the 2011 census.( there are 53 such cities) The single brand retail FDI limit was increased
from 51% to 100%
Present shape of FDI in retail in India
French MNC Retailer
Inside Walmart (USA)
British MNC Retailer
(A)STRENGTHS of FDI Policy(i) Fast growing economy(ii)Employment opportunities will increase both directly
and indirectly(iii)Farmers get better prices for their products through
improvement of value added food chain(iv)It will also greatly contribute to large scale
investments in the real estate sector(v)Large domestic market with an increasing middle
class and potential customers with purchasing power(vi)The consumer get a better product at cheaper
price ,so consumers get value for their money(vii)Presence of big industrial houses can absorb losses
S.W.O.T ANALYSIS
(B) WEAKNESS of FDI policy(i) Will mainly cater to high-end consumers placed
in metros and will not deliver mass consumption goods for customers in villages and small towns
(ii)Lack of trained and educated forces(iii)Lack of Competition(iv)More prices as compared to specialized shops(v)The volume of sales in Indian retailing is very
low(vi)Retail chain are yet to settle down with proper
merchandise mix for the mall outlets(vii)Small size outlets are also one of the
weaknesses in the Indian retailing, 96% of the outlets are lesser than 500 sq. ft.
(C) OPPORTUNITIES of FDI policy(i) FDI can become one of the largest industries in
terms of numbers of employees and establishments
(ii) It will enhance the financial condition of farmers(iii)Improve the competition(iv)Result in increasing retailer’s efficiency(v) Foreign capital inflows(vi)Will bring along with it better technology and
branding with latest managerial skills(vii)Quality improvement with cost reduction(viii) Increase the exporting capacity(ix)In the next 5 years India’s organized retail is
expected to grow thrice due to changing life style, increase in income and favorable demographic outline
(D) THREATS of FDI policy(i) Threat to the survival of small retailers like
‘local kirana’ or ‘mom n pop’ store(ii)Work will be done by Indians and profits will
go to foreigners(iii)Difficult to target all segments of society(iv)Lack of uniform tax system for organized
retailing(v)Problem of car parking in urban areas is
serious concern(vi)Sector is unable to employ retail staff on
contract basis(vii)The unorganized sector has dominance over
the organized sector because of low investment needs
FDI in retail is going to attract many foreign players but the GOI must welcome them with a talented pool of Human resources
Protection must be given to small and medium retailers as retailing is their source of livelihood
The government must properly discuss about the pros and cons of allowing 51% FDI in multi brand retail with a law in place to control unfair competition
FDI will control inflation rate since it will prevent the farm wastage which at present is around 30%-40% of total produce
Conclusion