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FDI in Indian Retail Sector

FDI in Indian Retail Sector. FDI- An Introduction. Refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.

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FDI in Indian Retail Sector

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  1. FDI in Indian Retail Sector

  2. FDI- An Introduction • Refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor. • It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital. • It usually involves participation in management, joint-venture, transfer of technology and expertise. • A measure of foreign ownership of productive assets.

  3. Retail Sector in India • One of the pillars of Indian Economy: contributes 13% of GDP. • Over 12 million outlets operate in the country • India has the highest number of outlets per person (7 per thousand) • Indian retail space per capita is lowest at 2 sq.ft/ person. • Only 4% outlets are bigger than 500 sq ft • Over 90% trade is conducted through independent local stores

  4. Organized & Unorganized Retail

  5. FDI in Retail Sector • FDI in single-brand retailing was permitted in 2006, up to 51 per cent of ownership. • 57 proposals out of 94 were approved. • FDI inflow of US$196.46 million under the category of single brand retailing was received. • Retail stocks rose by as much as 5%.

  6. Effects of 100% FDI in Single Brand

  7. FDI in Multi Brand

  8. Why Indian Market? • Growth in working population • Rising disposable incomes • Changing consumer lifestyles • Development of rural markets • Reduce dependency on Chinese exports

  9. Need for FDI in Retail Sector • Increased Efficiency • Efficient and tested management practices • Economies of scale • Adoption of global best practices • Adoption of modern technology • The organized model adopted by organized retailers may be adopted by other players gradually, leading to overall efficient system. • Would lead to stability in prices by eliminating hoarding and speculations.

  10. FDI- Good or Bad?

  11. Challenges

  12. “The” Challenge • 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.

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