1. FOREIGN DIRECT INVESTMENT IN RETAIL
SECTOR
BY SOP 5
ARJUN B RAJ
ANISHA RAJAN
DHANYA
JILS ANTONY
LINO JACOB
SACHIN BENNY

2. INTRODUCTION
Foreign direct investment: a firm invests directly in
foreign facilities
A firm that engages in FDI becomes a multinational
enterprise
Companies invest in foreign countries in order to gain
control over the market and thereby increase sales
Investment in foreign securities, bonds and other non-
voting portfolio investments do not form FDI

3. FORMS OF FDI
Purchasing of assets in a foreign country
New investment in property, plant and equipment
Participation in a joint venture with a local partner
Transfer of many types of assets like human resource,
systems, etc
Through trading in equity

4. ADVANTAGES OF FOREIGN
INVESTMENT
Economic growth
Trade
Employment and skill levels
Technology diffusion and knowledge transfer

5. DISADVANTAGES OF FOREIGN
INVESTMENT
Adverse effects on competition
Make the host country lost the control over domestic
policy
The defense of a country has faced risks
Entail high travel and communications expense
When stream of FDI is negatively affected it will always
affect the backward section of country
A company may lose out on its ownership to an overseas
company
Inflation is increased
Local market is affected badly

6. FDI IN INDIA

7. BEFORE INDEPENDENCE
Debtor country
Investment areas
Foreigners owned buildings
Industrial development got initiated by foreign capital
Well built transportation system and huge irrigation projects

8. AFTER INDEPENDENCE
1950-1980 - Strong centralized planning and government
ownership
Excessive regulation
GDP was low(3.5%)
In 1980 economic reforms were set in motion
24 July 1991, Govt announced a new industrial policy
Liberalization, Privatization and Globalization
Third most favored industrial destination

9. Cheaper raw materials, Low cost of production and
Easy marketing of goods
Huge inflow in service sector
10% in 1990-1994
Grown to 21% in 2008-2009
Majority going to few sectors
50% of the total FDI inflows comes from 4 sectors

10. Drugs & Pharmaceuticals and Sea Transport
Infrastructure
Higher infrastructure – Higher FDI
Unequal distribution

13. Sector FDI Inflows(rs.million) % to total FDI inflow
Service sector 972347.08 21.94
Computer s/w & h/w 416028.96 9.39
Telecommunication 381822.18 8.61
Housing & real estate 329754.77 7.44
Construction 269912.97 6.09
Power 198161.08 4.47
Automobile 190964.51 4.31
Metallurgy 127780.45 2.88
Petroleum & natural gas 111962.43 2.53
Chemicals other than 101846.04 2.30
fertilizers

14. country FDI inflows Percentage to total inflows
(Amt in million rupees)
Mauritius 19,30,339.13 43.55
Singapore 3,96,145.07 8.94
USA 3,39,505.90 7.66
UK 2,42,682.23 5.47
Netherlands 1,86,136.46 4.20
Japan 1,50,816.01 3.40
Cyprus 1,39,203.78 3.14

15. Maharashtra 511150 23.63
Gujarat 188370 8.71
Rajasthan 30330 1.40
orissa 82290 3.80
Tamil nadu 250720 11.59
Karnataka 241380 11.16
Andra pradesh 137450 6.35
Kerala 15520 0.72
Uttar pradesh 50430 2.33
Haryana 38700 1.79
Himachal pradesh 11740 0.54
Punjab 24340 1.12
Chandigarh 2413 0.10
Uttarakhand 1256 0.05
J&k 84 0
Madhya pradesh 99040 4.58
Chattisgarh 6363 0.25
Orissa 82290 3.80

16. SUGGESTIONS
To expedite the process of Disinvestments and
Privatization
Special law for infrastructure
Develop special economic zones
Direct FDI to backward states

17. INTRODUCTION TO MODERN RETAIL

18. FDI in Retail Industry
 51% FDI in multi brand retail.
 100% FDI in single brand retail from already existing 51%.
 a minimum of $100 million by the foreign investments.
 50% of total to be invested in backend infrastructure.
 30% of the products to be procured from small scale
industries.

19. Factors for 100% FDI in single brand retail
 Products should be sold under same brand name
internationally.
Products retailing will cover only those products that are
branded during manufacturing.
Foreign investor should be the owner of the brand.

20. Advantages
India- 2nd most preferable destination for foreign investors
after china
 create 10m jobs and billions of dollar in investment during the
next 3 years.
 Jobs in the agro and food processing industries.
 It would help Indian retailers to get much needed funds for
business expansion.

21. FDI policy does not allow foreign companies to open multi-brand
retail stores
Global retailers have opted for the cash-and-carry route to
establish their presence.
India currently allows 100 per cent foreign direct investment in
single-brand retail and 100 per cent in the cash-and-carry
segment, and 51 in multi brand

22. WAL-MART STORES
Branded as Walmart since 2008 and Wal-Mart before then, is an
American multinational corporation
The biggest private employer and is the largest retailer in the world.
8,500 stores in 15 countries, under 55 different names.
In Mexico as WALMEX, in the U K as ASDA, in Japan as SEIYUu, ndia
as BEST PRICE.
Walmart's investments outside North America have had mixed results,
its operations in the U K, S A and China are highly successful,ventures
in Germany and S K were unsuccessful

23. In 2007, Bharti Retail and Walmart set up a JV company, Bharti
Walmart, to run supply chain and sourcing for Bharti's Easy Day
stores. Walmart also runs 14 wholesale cash-and-carry stores
called Best Price in India

24. CARREFOUR
An international hyper market chain from France.
It is one of the largest hypermarket chains
The second largest in revenue
Third largest in profit after Wal-Mart and Tesco.
Most stores being of smaller size than hypermarket or even
supermarket

25. French retailer Carrefour, which has been rather silent after its first
cash and carry outlet opened in India (in Delhi) in December 2010, has
a second store (in Jaipur) in the country now.
India is the only country in Asia where Carrefour has cash and carry
outlets. The €90 billion group has around 150 cash and carry outlets,
all — save the one in India — located outside Asia.

26. TESCO
Is a global grocery and general merchandise retailer
headquartered in United Kingdom
It is the third-largest retailer in the world measured by revenues
Second-largest measured by profits (after Wal-Mart).
It has stores in 14 countries across Asia, Europe and North
America and is the grocery market leader in the UK, Malaysia,
the Republic of Ireland and Thailand.

27. Tesco has had a limited presence in India with a service centre
in Bangalore, and outsourcing.
However, in 2008 Tesco announced their intention to invest an
initial £60m ($115m) to open a wholesale cash-and-carry business
based in Mumbai with the assistance of the Tata Group]

28. METRO
Is not keen on opening multi-brand retail stores
In india 8 stores now
Metro is looking at opening as many as 50 cash and carry stores
across the country in the next four to five years.
Metro is likely to spend around Rs 3,500 crore over this period
on expansion, considering that its per store investment works
out to around Rs 60 crore to Rs 70 crore.

29. PANTALOON RETAIL:
It is headquartered in Mumbai
450 stores across the country employing more than 18,000
people.
It can boast of launching the first hypermarket Big Bazaar in
India in 2001
Future Groups-Formats: Big Bazaar, Food Bazaar, Pantaloons,
Central, Fashion Station, Brand Factory, Depot, aLL, E-Zone etc.

30. K RAHEJA GROUP
Shopper’s Stop, India’s first departmental store in 2001.
They have signed a 50:50 joint venture with the Nuance Group for
Airport Retailing
TATA GROUP
Trent - one of the subsidiaries of tata group
westside a lifestyle retail chain
Star India Bazaar - a hypermarket with a large assortment of
products at the lowest prices
Trent plans to open 27 more stores across its retail formats adding
1.5 mn sq ft of space in the next 12 DLF malls

31. RPG GROUP:
One of the first entrants into organised food & grocery retail with
Foodworld stores in 1996 and then formed an alliance with Dairy
farm International and launched health & glow) outlets.
RPG has Spencer’s Hyper, Super, Daily and Express formats and
Music World stores across the country.

32. BHARTI-WALMART
They have signed a 50:50 percent joint venture agreement with
Walmart. Wal-Mart will do the cash & carry while Bharti will do
the front-end.
RELIANCE
India’s most ambitious retail plans are by reliance, with
investments to the tune of Rs. 30,000 cr.
There are already more than 300 Reliance Fresh stores and the
first Reliance Mart Hypermart.
Reliance MART, Reliance SUPER, Reliance FRESH, Reliance
Footprint, Reliance Digital, Reliance Jewellery, Reliance
Trends

33. AV BIRLA GROUP
They own brands like Louis Phillipe, Van Heusen, Allen Solly,
Peter England,
The acquisition of Trinethra (food & grocery) chain in the south
has moved their tally to 400 stores in the country.
Their “More” range supermarkets are slated to open at India

34. The retail industry is divided into organised and unorganised
sectors.
Rapid change with is being planned by several Indian
and multinational companies in the next 5 years.
Modern techniques for farmers

35. How Beneficial Is Foreign Direct
Investment for Developing Countries?
FDI provides an inflow of foreign capital and funds
Foreign investment increases local productivity growth
Regard it as the private capital inflow of choice
The case for free capital flows
FDI allows the transfer of technology
Recipients of FDI often gain employee training
Contribute to corporate tax revenues in the host country
FDI versus other flows

36. CONCLUSION
Both economic theory and recent empirical evidence
suggest that FDI has a beneficial impact on developing
host countries. But recent work also points to some
potential risks. Policy recommendations for developing
countries should focus on improving the investment
climate for all kinds of capital, domestic as well as
foreign.