fdi issues in retail

1. FDI issues in Retail

2. what is FDI?

3. An investment is.. The commitment of money or capital to purchase financial instruments or assets in order to gain profitable returns.

4. An investment becomes foreign investment when.. Foreign Investment through Investment done by citizens and government of one country (home country) invest in industries of another country (host country). Foreign Direct Investments Foreign Institutional Investors

5. FDI Routes Automatic Route Government No permission required Approval /License required.

7. Dominated by developed countries.

8. 47 global fortune companies & 25 of Asia's top 200 companies are retailers.

11. Indian Retail Industry Organized retail: trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. Un-Organized retail: traditional formats of low-cost retailing, for example, the local Kirana shops, owner operated general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.

12. Major Indian Retailers : Categories

13. Segmentation

15. Indian market is very large market

16. Retail is the topmost growing market in India

17. The environmental and political factors are not that much bad in India.

19. Accounts for 14% of countries GDP

21. 51% FDI in single brand retail

23. Slowly the local shops will start closing down.

24. These shops will capture the trade.

26. Between 1970-80 in Europe about 4 lakhs Retail shops were closed.

27. Competition shall be limited to Big Retail Houses

28. In the year 2000 Five Big Fast food companies captured following percent market share :Country % Share Norway 99 Switzerland 88 Sweden 94 UK 64 Portugal 57

30. Big companies have seen growth of 40%

31. There was adverse impact on 60000 small shopkeepers.

32. The Prime Minister of Thailand agreed that there was adverse impact on retail trade.

34. Huge spread of retail chain stores

35. Monopoly in the customer market and can be converted into cartel of global players.

37. In food retail, farmers (the producers right at the tip of the back end chain) being left at the mercy of the foreign investorsInflation cannot be checked: The point is that inflation cannot be checked as consumers would still have to bear the cost

38. WHO ARE WE LETTING IN? Annual turnover $ 400 bn 18 lakh rs. crores Annual turnover $ 130 bn 5.85 lakh rs. crores

39. Annual turnover $ 100 bn 4.5 lakh rs. crores Annual turnover $ 96 bn 4.2 lakh rs. crores

40. Cont…. These are some of the ferocious, predatory companies in the world. Their practices in the market are ruthless and designed to wipe out competition. Their resources are enormous. They can invest and lose money for years till then lakh of local retailers will be wiped out.

41. Comparison between Wal-mart and Indian retail industry The annual turnover of Wal-Mart (Sales in 2010 were $409 billion) is higher than the size of Indian retail industry (estimated at about $370 billion) and almost 100times more than the turnover of HUL (India's largest FMCG company). The size of any Wal-Mart store is much higher than the size of any existing shopping mall in India. Wal-Mart has over 8500 stores (over 95 million square meters) where as none of India's large format store (Shoppers' Stop, Westside, Lifestyle) have more than 250.

42. Cont…. New stores opened annually by Wal-Mart are about 600, much higher than all organized Indian retailers put together. Wal-Mart has around 40,000 suppliers throughout the world and more than 700,000 SKU's on its web site, a number that cannot be compared. Daily customers are about 18 million (almost equivalent to Mumbai's entire population). Time between each Barbie Sale at Wal-Mart is just two seconds (same rate at which babies are produced in India!) None of the Indian organized retailer has ventured overseas where as Wal-Mart is now in 15 countries and will expand to 21 countries in two years.

45. To increase liquidity by the way of foreign exchange reserves

46. Modernize the supply chain