Fdi 1
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Foreign direct investment in India's retail sector has grown significantly in recent years. Major global retailers like Walmart, Carrefour and Tesco have established operations in India through cash-and-carry stores or joint ventures. FDI policy now allows 100% FDI in single-brand retail and 51% in multi-brand retail. Retail giants like Reliance, Future Group and Tata have expanded rapidly across India in response to growing consumer demand and opportunities from foreign investment. The retail sector is divided into organized and unorganized segments, and is undergoing rapid changes with large-scale modern retail transforming consumer shopping habits.
![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]](https://image.slidesharecdn.com/fdi1-111204073443-phpapp01/85/Fdi-1-27-320.jpg)
Fdi 1
- 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.