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FDI in Multi-Brand Retailing in India

FDI in multi-brand retailing allows foreign companies to own up to 51% of multi-brand retail businesses in India. While this could boost investment and modernize India's retail sector, there are concerns it may hurt local farmers, retailers and consumers. Supporters argue it will improve infrastructure and supply chains to benefit farmers and consumers, while critics argue it could squeeze out local competition and farmers may not receive fair prices. The document outlines the pros and cons of allowing FDI in multi-brand retailing in India and suggests the government ensure farmers' harvests are protected.

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Varun Sachdeva
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61 views10 pages

FDI in Multi-Brand Retailing in India

FDI in multi-brand retailing allows foreign companies to own up to 51% of multi-brand retail businesses in India. While this could boost investment and modernize India's retail sector, there are concerns it may hurt local farmers, retailers and consumers. Supporters argue it will improve infrastructure and supply chains to benefit farmers and consumers, while critics argue it could squeeze out local competition and farmers may not receive fair prices. The document outlines the pros and cons of allowing FDI in multi-brand retailing in India and suggests the government ensure farmers' harvests are protected.

Uploaded by

Varun Sachdeva
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

FDI IN MULTI-BRAND RETAILING

BY: ANKIT RANJAN KRITIKA VASUDEVA

INTRODUCTION
FDI (Foreign Direct Investment) :
An investment abroad, usually where the company being invested in, is controlled by the foreign corporation is known as FDI.

Retailing:
The sale of goods or commodities in small quantities directly to consumers is termed as retailing.

Multi-Brand:
In multi-brand a single retailer come up with the number of new brands in the market to capture the market.

RETAILING IN INDIA
Retailing in India is one of the pillars of its economy and accounts for about 15% of its GDP
GDP
Retail 15%

Others 85%

One of the top five retail markets in the world by economic value.

In January 2012, India approved reforms for single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership.

PROPOSED FDI POLICY IN RETAILING


The Government may approve 51 per cent FDI in multi-brand retail Increasing the foreign investment (FDI) ceiling to 100 per cent from the present 51 per cent in single-brand retail

PROS AND CONS


PROS
Development of retail sector in the form of much organised way. In present only 10% of retail industry in India is organised. Foreign Direct Investment (FDI) in multi-brand retail is a move which will allay industry's concern over policy paralysis. Attracting the foreign investor. Development of supply chain and infrastructure in retail as supply chain is the backbone of retailing. Farmers will get better price even letting the consumers pay affordable price.

CONS
Farmers do not get promised price even if foreign players enter the market or for that matter large retailers. Organic food sector is actually squeezed to extremes by modern retailers even today. Government will have to manage closure of local business due to entry of FDI multi brand retailers hence interim market loss of produce for farmers Trend in the west is of small format convenience stores.

PROS
They will invest in back-end infrastructure that will help reduce wastage of farm produce, improve the livelihood of farmers, lower prices of products and ease supply-side inflation. It will help to moderate the high level of food inflation in India.

CONS
Nutritional Value of food will dip. Power requirement for the country will go up and farm power may be diverted to such stores as well leaving a greater deficit for agriculture. Acquisition of Indian retailers by foreign players and prevention of monopolies/oligopolies. Country of small independent entrepreneurs will be forced to take up jobs.

THE SECTORS WHERE FDI IS NOT ALLOWED IN INDIA


i)Retail Trading (except single brand product retailing) ii) Atomic Energy iii) Lottery Business

iv) Gambling and Betting


v) Business of Chit Fund vi) Nidhi Company vii) Agricultural (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisciculture and cultivation of vegetables, mushrooms, etc. under controlled conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations)

viii) Housing and Real Estate business (except development of townships, construction of residential/commercial premises, roads or bridges to the extent specified ix) Trading in Transferable Development Rights (TDRs). x ) Manufacture of cigars , cheroots, cigarillos and cigarettes , of tobacco or of tobacco substitutes.

SUGGESTIONS
The government can choose to pass on this liability to the private players, but at all costs the harvest produce of the farmers must not suffer. The government through FCI and other instruments available to it can purchase all the goods from farmers and sell it to FDI stores when they start operations in the country.

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