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    FDI in Retail Sector in India

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    Kanavdeep Singh
    This document discusses FDI in Indian retail and provides arguments for and against allowing foreign investment. It begins with an overview of the Indian retail landscape, noting that 98% is unorganized. Concerns raised about FDI include its effects on unorganized retailers, job losses, increased poverty, lack of employment opportunities for semiliterate Indians, and creation of monopolies through predatory pricing. A case study of Thailand shows widespread closure of small retailers after foreign capital entry. Alternatives to FDI suggested include improving domestic retail infrastructure and providing bank financing for local retailers.

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    FDI in Retail Sector in India

    Uploaded by

    Kanavdeep Singh
    186 views20 pages
    This document discusses FDI in Indian retail and provides arguments for and against allowing foreign investment. It begins with an overview of the Indian retail landscape, noting that 98% is unorganized. Concerns raised about FDI include its effects on unorganized retailers, job losses, increased poverty, lack of employment opportunities for semiliterate Indians, and creation of monopolies through predatory pricing. A case study of Thailand shows widespread closure of small retailers after foreign capital entry. Alternatives to FDI suggested include improving domestic retail infrastructure and providing bank financing for local retailers.

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    This document discusses FDI in Indian retail and provides arguments for and against allowing foreign investment. It begins with an overview of the Indian retail landscape, noting that 98% is unorganized. Concerns raised about FDI include its effects on unorganized retailers, job losses, increased poverty, lack of employment opportunities for semiliterate Indians, and creation of monopolies through predatory pricing. A case study of Thailand shows widespread closure of small retailers after foreign capital entry. Alternatives to FDI suggested include improving domestic retail infrastructure and providing bank financing for local retailers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    186 views20 pages

    FDI in Retail Sector in India

    Uploaded by

    Kanavdeep Singh
    This document discusses FDI in Indian retail and provides arguments for and against allowing foreign investment. It begins with an overview of the Indian retail landscape, noting that 98% is unorganized. Concerns raised about FDI include its effects on unorganized retailers, job losses, increased poverty, lack of employment opportunities for semiliterate Indians, and creation of monopolies through predatory pricing. A case study of Thailand shows widespread closure of small retailers after foreign capital entry. Alternatives to FDI suggested include improving domestic retail infrastructure and providing bank financing for local retailers.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 20

    Agenda

    What is FDI? Indian retail : An overview Retail Scenario in India

    Why No FDI in Indian retailing


    Case study : Retail in Thailand

    Is Wal-Mart good for India?


    Alternative Options
    2

    WHAT IS FDI?
    Movement of capital across national frontiers in a manner that grants the investor control over the acquired asset.

    Indian Retail : An Overview


    Historic/Rural Reach Traditional/Pervasive Reach Government Supported Modern Formats/ International

    Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas
    Source of Entertainment Neighborhood Stores/Convenience Availability/ Low Costs / Distribution Shopping Experience/Efficiency

    Unorganized Retail 98%

    Forced employment sector

    Retail Scenario in India

    14% of National GDP

    Fragmented

    Employment to 7% of workforce
    5

    Affects unorganized players Increasing Poverty

    Drawback s of FDI

    Kind of employment
    Promotion of cartels and monopoly creation. Increase in real estate prices. Absence of proper regulations would lead to unfair trade practices. Predatory Pricing
    6

    Effects on unorganized players


    Form a majority of Indian Retail business
    Contribution to National Income Employment to ~ 3.98 million people

    FDI will affect


    Sales Employment

    Increasing Poverty
    Dislocation of millions from their occupation.
    Pushing families below the poverty line.

    Employment in Retailing
    Limited jobs in manufacturing. Cannot provide employment to semiliterate people
    Form majority of population

    Creation of Monopolies
    Supermarkets will typically sell everything,
    vegetables to the latest electronic gadgets, at extremely low prices

    foreign company will buy big from India and abroad and be able to sell low

    Real Estate Prices


    Sky rocketing real estate prices
    Increase in space requirements Growth of organized sector Requires an additional 220 million sqft by 201011

    Melas

    Wal-mart

    Predatory Pricing
    Given their economies of scale and huge resources Establishment of monopoly Turn into buying low and selling high.

    Problems in terms of:


    -- volume, quality and delivery -- depressed prices due to cutthroat competition

    Retailing In Thailand Good or Bad?

    Entry of foreign capital


    increased share of organized retailing to 40%

    Widespread closure of small and traditional retail outlets Increase in poverty Government forced to enact new laws.

    Is Wal-Mart good for India?

    What Wal-Mart can do?


    35 Indian towns with Population over 1 million
    Average size & Average Performance Wal-mart stores

    Total FDI 20% retail trade => Rs.800 billion / 43,540 persons Displacement = 8 million
    Displace 4,32,000 persons
    Average Turnover Rs 81000 million Employees - 10195

    What other alternatives does India have?

    General Recommendations

    Food Retail

    Availability of bank finance

    Creation of infrastructure

    Improvement of manufacturing sector

    Quality regulation

    Establishment of National Commission

    Government intervention

    Setup of Cooperative Stores

    Regulations for foreign players

    Conclusion
    FDI in retail is fundamentally different from Greenfield foreign investment in manufacturing.

    Negative effects of Foreign retailers:


    Job loss Establishment of monopolies Disruption of supply chains So do we still need FDI in Indian Retail?

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