2. • FDI IN RETAIL – POLICY PERSPECTIVES.
• RETAIL SECTOR – AN OVERVIEW.
• FDI POLICY IN RETAIL - OPPORTUNITIES & CHALLENGES.
• EMERGING HUMAN RESOURCE CHALLENGES.
• WHAT LIES AHEAD ?

4. THE COMMITMENT OF MONEY OR
CAPITAL TO PURCHASE FINANCIAL
INSTRUMENTS OR ASSETS IN ORDER TO
GAIN PROFITABLE RETURNS.

5. FOREIGN
INVESTMENT DONE BY CITIZENS AND INVESTMENT
GOVERNMENT OF ONE COUNTRY (HOME THROUGH
COUNTRY) INVEST IN INDUSTRIES OF
ANOTHER COUNTRY (HOST COUNTRY).
FOREIGN FOREIGN
DIRECT INSTITUTIONAL
INVESTMENTS INVESTORS

6. AUTOMATIC ROUTE GOVERNMENT
NO PERMISSION APPROVAL /LICENSE
REQUIRED REQUIRED.
GENERAL RULE : NO PRIOR PERMISSION BY EXCEPTION : PRIOR GOVERNMENT
REQUIRED. INFORM RESERVE BANK APPROVAL NEEDED. DECISION
WITHIN 30 DAYS OF INFLOW/ISSUE OF GENERALLY WITHIN 4-6 WEEKS.
SHARES.

7. PORTFOLIO INVESTMENT
INVESTMENT THAT DOES NOT INVOLVE OBTAINING A DEGREE OF
CONTROL IN A COMPANY.
FOREIGN DIRECT INVESTMENT
PURCHASE OF PHYSICAL ASSETS OR A SIGNIFICANT AMOUNT OF THE
OWNERSHIP (STOCK) OF A COMPANY IN ANOTHER COUNTRY TO GAIN
A MEASURE OF MANAGEMENT CONTROL.

8. • 1991- FDI ALLOWED SELECTIVELY UP TO 51% IN
PRIORITY SECTORS.
• 1997-FDI ALLOWED UP TO 100% IN SECTORS LIKE
MINING, MANUFACTURING.

9. FDI EQUITY LIMIT- FDI REQUIRING PRIOR
AUTOMATIC ROUTE APPROVAL
 INSURANCE – 26%  DEFENSE PRODUCTION – 26%
 DOMESTIC AIRLINES – 49%  FM BROADCASTING - 20%
 NEWS AND CURRENT AFFAIRS-
 TELECOM SERVICES- FOREIGN 26%
EQUITY 74%  BROADCASTING- CABLE, UP-
 PRIVATE SECTOR BANKS- 74% LINKING – 49%
 TRADING- WHOLESALE CASH
 MINING OF DIAMONDS AND AND CARRY, EXPORT TRADING,
PRECIOUS STONES- 74% ETC., -100%
 EXPLORATION AND MINING OF  TEA PLANTATION – 100%
COAL AND LIGNITE FOR CAPTIVE  DEVELOPMENT OF AIRPORTS-
100%
CONSUMPTION- 74%  COURIER SERVICES- 100%

10. • 2000-06 FDI ALLOWED UP TO 100% IN SPECIFIED SECTORS.
 FDI LIMITS INCREASED.
 PROCEDURES FURTHER SIMPLIFIED
• THE TOP 3 INDIAN REGIONS ATTRACTING THE HIGHEST FDI.
 MUMBAI, DELHI AND KARNATAKA.
 ACCOUNT FOR NEARLY 62% OF THE TOTAL FDI.

11.  INCREASE INVESTMENT LEVEL AND THEREBY INCOME & EMPLOYMENT
 INCREASE TAX REVENUE OF GOVERNMENT
 FACILITATES TRANSFER OF TECHNOLOGY
 ENCOURAGE MANAGERIAL REVOLUTION THROUGH PROFESSIONAL
MANAGEMENT
 INCREASE EXPORTS AND REDUCE IMPORT REQUIREMENTS
 INCREASE COMPETITION AND BREAK DOMESTIC MONOPOLIES
 IMPROVES QUALITY AND REDUCES COST OF INPUTS

12.  Flow to high profit areas rather than main concern areas
 Through their power and flexibility, MNC can undermine
economic autonomy and control
 Sometimes interferes in the national politics
 Sometimes engage in unfair and unethical trade practices
 Sometimes result in minimizing / eliminating competition
and create monopolies or oligopolistic structures

13. SUPER
GOVERNMENT MARKET
KIRANA STORES STORES HYPER
CONVENIENCE
MARKET
STORE MALLS
WEEKLY BRAND
MARKET OUTLETS
BARTER VILLAGE
SYSTEM MELAS

14. SINGLE
BRAND
RETAILING
• 51%
CASH AND
CARRY
MODEL
• 100%

15.  INCENTIVES ATTRACT FDI.
 HUGE MARKET SIZE AND POTENTIAL ARE SUFFICIENT
INDUCERS.
 TAX BREAKS, IMPORT DUTY EXEMPTIONS, LAND AND
POWER SUBSIDIES, AND OTHER ENTICEMENTS.

16. FDI INFLOWS FROM
FDI INFLOWS FROM
AUGUST 1991 TO
2000-2010 CROSSED
APRIL 2010 WERE
$300 BILLION
$134.6 BILLION.

19. GLOBAL RETAIL DEVELOPMENT
INDEX POSITION : 3RD
SIZE : $ 400 BILLION
GROWTH RATE : 13%
GDP CONTRIBUTION : 12%
MAJOR SECTOR : FOOD AND GROCERY
EMPLOYMENT : 2ND LARGEST
INDUSTRY (35.06 MILLION)
TYPES:
ORGANIZED ( 5%)
UNORGANIZED ( 95%)

20.  INDIA HAS LARGEST NUMBER OF RETAIL TRADERS.
 INDIA HAS 1,25,00,000 RETAILS OUTLETS.
 RETAIL TRADE CONTRIBUTES 10 -11% OF GDP.
 TOTAL TURNOVER OF RETAIL SECTOR IS 8,75,000 CRORES.
 AFTER AGRICULTURE, RETAIL PROVIDES EMPLOYMENT TO
MAX NUMBER OF PERSONS ( 4 CRORES)

21. • CORPORATES ARE INCREASINGLY COMING INTO
THIS SECTOR.
• DEMAND OF BRANDED GOODS ON A LARGE SCALE.
• DEMAND OF NEW AND VARIED PRODUCTS.
• HIGH QUALITY PRODUCT IS PREFERRED .
• VARIED WINDOW DISPLAY.
• E-TAILERS INCREASE THE PRESENCE.

22. FORMAT DESCRIPTION RETAILERS
HYPERMARKETS OFFERING BASKET OF PRODUCT SPENCERS, BIG BAZAAR
CASH AND CARRY BULK-BUYING REQUIREMENT BHARTI-WAL-MART
DEPARTMENTAL STORES LARGE LAYOUT, WIDE MERCHANDISE MIX LIFESTYLE , GLOBUS
SUPERMARKETS HOUSEHOLD PRODUCT AS WELL AS FOOD APNA BAZAAR , FOOD
AS INTEGRAL PART OF THE SERVICE BAZAAR
SHOP-IN-SHOP SHOPS LOCATED IN SHOPPING MALLS NAVRAS ( BIG BAZAAR)
SPECIALTY STORES FOCUS ON INDIVIDUAL PRODUCT TYPE BRAND FACTORY
CATEGORY KILLERS PARTICULAR SEGMENT THE LOFT
DISCOUNT STORES BRANDED PRODUCT AT DISCOUNTED SUBHIKSHA, LEVI’S
PRICES OUTLET
CONVENIENCE STORES SMALL RETAIL STORES IN AND OUT

23. RETAIL SEGMENT PERCENTAGE HOLDING MAJOR RETAILERS
IN SECTOR
FOOD AND GROCERY 63% RELIANCE FRESH, CAFÉ
BRIO, FOOD BAZAAR
CLOTHING, TEXTILE 9% WESTSIDE, SHOPPERS
AND FASHION STOP, GLOBUS
JEWELLERY 5% TANISHQ
CATERING SERVICES 5% IRCTC
CONSUMER DURABLE 4% VIVEKS, VIJAY SALES,
CROMA
PHARMACEUTICALS 4% PIRAMAL GROUP
ENTERTAINMENT 3% BOWLING CO.,
FURNISHING, UTENSILS 3% HOMETOWN, TANGENT
CONCEPT
MOBILE HANDSETS 2% THE MOBILE STORE,

24. • ONE OF THE WORLD'S LARGEST INDUSTRIES
EXCEEDING US$ 9 TRILLION.
• DOMINATED BY DEVELOPED COUNTRIES.
• 47 GLOBAL FORTUNE COMPANIES & 25 OF ASIA'S
TOP 200 COMPANIES ARE RETAILERS.
• US, EU & JAPAN CONSTITUTE 80% OF WORLD
RETAIL SALES.

25. • RETAIL TRADE IN EUROPE EMPLOYS 15% OF
THE EUROPEAN WORKFORCE (3 MILLION FIRMS AND 13
MILLION WORKERS).
• THE WORLD’S POPULATION IS POISED TO EXPAND 50%
BY 2050. THE WORLD CURRENTLY COMPRISES OF 78%
POOR, 11% MIDDLE INCOME AND 11% RICH.

26. CONTRIBUTION RESPECTIVE
TO GDP
12% India
6% Brazil
14% Japan
8% China
20% USA

27. US FRANCE UK GERMANY US
SALES: $374.5 SALES: $130 SALES: $102.6 SALES: $101 SALES: $77.3
BN BN BILLION BILLION BN
EARNINGS: EARNINGS: EARNINGS: EARNINGS: EARNINGS:
$12.9 $5.2 BILLION $5.5 BILLION $1.5 BILLION $4.2 BILLION
BILLION
STORES: STORES: STORES:
STORES: 87,422 3,729 2,221
WORLDWIDE WORLDWIDE STORES:
6,800
2,258
WORLDWIDE

28. US
Taiwan
Malaysia
Thailand Organised
Indonesia
Unorganised
China
India
0 20 40 60 80 100
US TAIWAN MALAYSIA THAILAND INDONESIA CHINA INDIA
UNORGANISED 15% 19% 45% 60% 70% 80% 95%
ORGANISED 85% 81% 55% 40% 30% 20% 5%

30. INDIA CHINA
FOCUS ON SERVICES FOCUS ON INDUSTRY
HIGH LABOR COST LOW LABOR COST
HOME GROWN CAPITAL FDI
OLD TECHNOLOGY ADAPTABILITY TO LATEST
TECHNOLOGY
DEMOCRATIC GOVERNMENT COMMUNIST GOVERNMENT

33. INDIA
• A LARGE EMERGING MARKET .
 INCREASE IN DISPOSABLE INCOME OF A FAMILY.
 70 MN INDIANS – SALARY OF $18,000.
 RISE TO 140 MN BY 2011.
 CONSUMER SPENDING POWER INCREASED BY
75% IN LAST 3 YEARS.
 THE PER CAPITA INCOME IN 2009–2010 HAS
MORE THAN DOUBLED TO US$ 849 FROM US$ 348
IN 2000–01.

34. • INCREASE IN CONSUMER CLASS.
 CONSUMER CLASS WILL GROW UPPER CLASS
FROM 50 MILLION AT PRESENT TO
MIDDLE CLASS
583 MILLION BY 2025.
 WITH MORE THAN 23 MILLION
LOWER CLASS
PEOPLE TAKING THEIR PLACE
AMONG THE WORLD’S WEALTHIEST
CITIZENS.

35. • WIDE DEMOGRAPHICS -- AVERAGE AGE OF 25 YRS.
• BRAND CONSCIOUSNESS.
 60 % OF POPULATION BELOW AGE OF 30.
 AWARENESS THROUGH WORLD WIDE WEB.
• CHANGING CONSUMER MINDSET.
 FOCUS SHIFTING FROM LOW PRICE TO
CONVENIENCE, VALUE AND A SUPERIOR SHOPPING
EXPERIENCE.
• SMALL BASKET SIZE SHAPING OF CONSUMPTION.

37. • Employment generation.
 Second-largest employer after ADDITIONAL
1.6 MN JOBS
agriculture.
 Retail trade employing 35.06 million.
 Wholesale trade generating an additional
employment of 5.48 million.

38. • TECHNOLOGY  BETTER USE OF RESOURCES
AND GOODS.
 WASTAGE AND STORAGE PROBLEMS WILL BE
RESOLVED.
 EFFICIENT LOGISTICS, PRODUCTION, AND
DISTRIBUTION CHANNELS.
 DIGITAL RECORDS.

40. • RURAL MARKET.
 ROBUST CONSUMPTION.
 70% INDIAN HOUSEHOLDS.
 2/5 OF THE COUNTRY’S TOTAL
CONSUMPTION PIE.
 ACCOUNTS TO 45% OF GDP.

41. • FDI IN RETAIL SECTOR WILL RESOLVE
PROBLEMS REGARDING FOREIGN EXCHANGE
IN INDIA.
• THE LIFE-LONG BASIC NEEDS WILL
KEEP ON DRIVING THE RETAIL
INDUSTRY.

43. • MAJOR CHALLENGE FACED BY ORGANIZED RETAIL SECTOR: IN
RETAIL, OVER 70 PER CENT OF THE LABOR FORCE IN BOTH
SECTORS COMBINED (ORGANIZED AND UNORGANIZED) IS EITHER
ILLITERATE OR EDUCATED BELOW THE PRIMARY LEVEL.
• LABOR LAWS

44. • A STRONG COMPETITION FROM MOM AND POP SHOPS:-
 EASILY ACCESSIBLE & APPROACHABLE.
 PROVIDE SERVICES LIKE FREE HOME DELIVERY AND
GOODS ON CREDIT.
 THEY CHANGE CONSUMER FOCUS.

45. • PANTALOONS • TESCO
GLOBAL
• RELIANCE
INDIAN
• WALMART
• BHARTI RETAIL • METRO
• RPG • CARREFOUR
• LIFESTYLE • B&Q
• K RAHEJA • TARGET
• SUBHIKSHA
• PIRAMYD
• TRENT
• VISHAL GROUP
• BIG BAZAAR
• WESTSIDE

46. CLUSTERING
OF OUTLETS.
HIGHEST
STAMP DUTY.

47. FORMAT AVERAGE SIZE
CONVENIENCE STORES 800 SQ. FEET
DISCOUNT STORES 1000 SQ. FEET
CATEGORY KILLERS 8000 SQ. FEET
SPECIALTY STORES SINGLE-CATEGORY
SHOP-IN-SHOP WITHIN LARGE MALLS

48. FORMAT AVERAGE SIZE
SUPERMARKET LARGE IN SIZE
TYPICAL IN LAYOUT
DEPARTMENT STORES 10,000 – 60,000 SQ. FEET
CASH AND CARRY 75,000 SQ. FEET
HYPERMARKETS 50,000 – 1,00,000 SQ. FEET

49. • MARKET POWER IS IN HANDS OF UNORGANIZED RETAIL.
UNORGANIZED •95%
ORGANIZED •5%
• POTENTIAL OF INDIAN MARKET IS US$ 200 BILLION
WHEREAS INDIA IS JUST EARNING ITS 3%.

50. SHRINKAGE
LACK OF
LOGISTIC
INFRA.
CORRUPTION
ADDITIONAL
INTERMEDIARIES
TECHNOLOGY HURDLES

51. IN INDIA EVERY YEAR THERE IS PILFERAGE OF US$ 65 BILLION
WHEREAS IN USA IT IS JUST 1-2%.
DUE TO LACK OF PROPER STORAGE INFRASTRUCTURE POST-
HARVEST LOSSES OF FARM PRODUCE IS RS. 1 TRILLION CR.
ANNUALLY.

52. IN TERMS OF CORRUPTION INDIA STANDS AT 85TH
POSITION. BECAUSE OF PAPER WORK, CORRUPTION IS
PRESENT ALONG THE ENTIRE SUPPLY CHAIN.
IN INDIA, THERE ARE ADDITIONAL 2-3
INTERMEDIARIES AS COMPARED TO USA.
i. THEY DOMINATE THE VALUE CHAIN.
ii. THEY FLOUT MANDI NORMS & THEIR PRICING
LACKS TRANSPARENCY.

53. INDIA IS STILL IN DEVELOPING STAGE IN INSTALLING
AND MANAGING AN EFFECTIVE IT SYSTEM ESPECIALLY
IN RURAL AREAS WHICH HAMPERS THE OVERALL
GROWTH OF ORGANIZED RETAIL SECTOR.

54. BANKS ARE RELUCTANT TO FINANCE RETAILERS
BECAUSE OF FALLING DEMAND OF ORGANIZED
RETAILERS IN INDIA AS IT HAS WITNESSED FAILURE OF
MANY STORES LIKE SPENCER'S, SUBHIKSHA, ETC.

55. • TAXATION LAWS IN INDIA FAVORS ONLY SMALL RETAIL
BUSINESSES.
• IMPLEMENTATION OF NON-UNIFORM VAT ACROSS
STATES.
• OCTROI AND ENTRY TAX IN SOME STATES.

56. • NO AUTOMATIC APPROVAL FOR FDI : ONLY 51% FDI IS
ALLOWED TO ONE BRAND SHOPS IN INDIAN RETAIL SECTOR.
• COMPLICATIONS IN ISSUE OF LICENSES : LIKE A
HYPERMARKET IN MUMBAI MUST APPLY FOR 29 UNIQUE
LICENSES & THEN WHEN IT HAS TO COME UP WITH SECOND
STORE IT HAS TO APPLY FOR SAME 29 LICENSES ALL OVER
AGAIN.

57. DISTURBED
ECONOMIC STATUS.
CHALLENGE TO
GET MORE
CUSTOMERS AT
LOW COST.
LIQUIDITY
PRESSURE

59. • INDIAN RETAIL SECTOR :
 EMPLOYS 8% (35 MILLION)OF THE WORKING POPULATION.
 COULD YIELD 12 TO 15 MILLION RETAIL JOBS IN THE
COMING FIVE YEARS.
• OUT OF WHICH ORGANIZED SEGMENT IS ABOUT 0.3 MILLION.
• RETAIL SECTOR GREW AT 9.4% ON REAL TERMS & 15.4% ON
NOMINAL TERMS.

61. MBA GRADUATES WITH 5-
10YEARS OF EXPERIENCE
GRADUATES WITH 2-5YEARS
OF EXPERIENCE
GRADUATES/ 12TH PASS/
10TH PASS
GRADUATES/ 12TH PASS/
10TH PASS

62. • THE RETAILERS ASSOCIATION OF INDIA (RAI)
- DIPLOMA AND DEGREE PROGRAMS IN RETAILING
- BHARTI RETAIL AND VISHAL RETAIL
- 5,000 TRAINED PERSONS

65. • EMPLOYMENT.
• UNFAIR COMPETITION.
• UNDER-DEVELOPED ORGANIZED RETAIL SECTOR.

66. FDI CAN BE A POWERFUL CATALYST TO SPUR
COMPETITION IN THE RETAIL INDUSTRY.
IT CAN BRING ABOUT:
 SUPPLY CHAIN IMPROVEMENT
 INVESTMENT IN TECHNOLOGY
 MANPOWER AND SKILL DEVELOPMENT
 EFFICIENT SMALL AND MEDIUM SCALE INDUSTRIES
 INCREASE IN EXPORTS

67.  100% FDI IN SINGLE BRAND
RETAIL.
 51% FDI IN MULTI BRAND
RETAIL.

68.  THE RS18,673 BILLION (US$401BILLION) INDIAN RETAIL MARKET
IS ONLY 3 % OF GLOBAL RETAIL.
 OF THIS ONLY 6% IS ORGANISED RETAIL AS OF 2010.
 THE REST 94% REMAINS UNORGANIZED.
 BUT SURPRISINGLY, INDIAN RETAIL SECTOR ACCOUNTS FOR 22% OF
THE COUNTRY'S GROSS DOMESTIC PRODUCT(GDP) AND CONTRIBUTES
TO 8 % OF THE TOTAL EMPLOYMENT.
 HENCE, IF WE OPEN UP OUR RETAIL SECTOR, THEN OUR DESI
RETAILERS AND THE MILLIONS OF KIRANA STORES WILL GO OUT OF
BUSINESS.
 INDIANS WILL BE DRAINED OF ALL THEIR HARD EARNED MONEY
THROUGH CONSUMERISM.
 MONEY DRAINED OUT OF OUR COUNTRY.

69.  THE CURRENT FDI RELAXATION COMES WITH A
CONDITION : 30% OF SOURCING OF ALL PRODUCTS
HAS TO BE DONE FROM INDIAN SUPPLIERS/SMES.
 THIS RECOMMENDATION CAN CREATE MUCH
NEEDED EMPLOYMENT IN INDIA.

70.  FOOD WASTED IN FCI GODOWNS COULD HAVE FED 2500 LAKH
FAMILIES FOR 10 YEARS!!!
 A FRESH ESTIMATE FROM THE MINISTRY OF FOOD PROCESSING
SAYS A WHOPPING RS 58,000 CRORE WORTH OF AGRICULTURE
FOOD ITEMS GET WASTED IN THE COUNTRY EVERY YEAR.
 THAT’S ALMOST 50% OF THE TOTAL ANNUAL AGRICULTURAL
PRODUCE.
 HENCE, OUR COUNTRY’S SUPPLY CHAIN INFRASTRUCTURE IS
GROSSLY UNDER DEVELOPED.
 FDI IN RETAIL CAN RESULT INTO DEVELOPING “FARM-TO-FORK”
INFRASTRUCTURE CONSISTING OF INTEGRATED STORAGE, COLD
CHAIN AND TRANSPORT LINKS. A MUCH NEEDED REPAIR OF OUR
GROSSLY LEAKING DISTRIBUTION SYSTEM

71. SHOPPERS PANTALOON TIMEX INDIA
LIFESTYLE
STOP HAS WILL OPEN
PLANS TO RETAIL INDIA
PLANS TO ANOTHER 52
HAVE MORE (PRIL) PLANS
INVEST RS 250 STORES BY
THAN 50 TO INVEST US$
CRORE TO MARCH 2011
STORES 77.88 MILLION
OPEN 15 NEW TAKING ITS
ACROSS INDIA TO ADD UP TO
SUPERMARKETS TOTAL STORE
BY 2012–13. EXISTING 2.4
IN THE COMING COUNT TO 120
MILLION SQ FT
THREE YEARS. RETAIL SPACE. .

73. • INVESTMENT INTO WAREHOUSE AND COLD STORAGE
CHAIN WILL RESULT IN SIGNIFICANT EFFICIENCY ON
SUPPLY CHAIN.
• FARMERS BENEFITED THROUGH DIRECT MARKETING
AND CONTRACT FARMING PROGRAMME.
• IMPROVES FARM PRODUCTION THROUGH MODERN
TECHNIQUES.
• INCREASING AVAILABILITY OF LOW INTEREST CREDIT
FOR FARMERS.

74. Expected Growth
• IN THE LAST FOUR YEAR, THE
CAGR 1.3 CONSUMER SPENDING IN INDIA
1.4 10%
CLIMBED UP TO 75%.
1.2
• BY THE YEAR 2013, THE
1 0.83
ORGANIZED SECTOR IS ALSO
0.8
0.59 EXPECTED TO GROW AT A
0.6 CAGR* OF 40%.
0.35
0.4 • THE TOTAL NUMBER OF
0.2 SHOPPING MALLS IS EXPECTED
0 TO EXPAND AT A CAGR* OF
2008 2011 2013 2018 OVER 18.9 PER CENT BY 2015.
* CAGR – COMPOUND ANNUAL GROWTH RATE

75.  THE INITIAL CAP ON INVESTMENT COULD BE PEGGED AT 49%.
 FDI SHOULD BE LEVERAGED TO CREATE BACK-END INFRASTRUCTURE.
 FDI WILL BE A POWERFUL DRIVER TO CURB INFLATION.
 RESTRICT THE NUMBER OF STORES THAT CAN BE OPERATED IN A
CITY.
 ALLOW ACCESS TO THE SMALL RETAILERS TO THE STORES THROUGH
SPECIAL WINDOWS.

76.  OPERATIONAL EFFICIENCIES.
 BEST DEAL TO THE FINAL CUSTOMER.
 TRUE GLOBALIZATION.

78. OR

79. THANK YOU