1. Foreign Direct Investment in Multi-
Brand Retailing in India
-B.V.Raghunandan, SVS College, Bantwal
Post-Graduate Department of
Management,
Sri Devi College, Kenjar, Mangalore
December 5, 2012

2. Classes of Foreign Investment
• Foreign Institutional Investment
• Foreign Direct Investment

3. Retailing: Brand Modes
• Single Brand : Also known as
vertical brands
- Single Line Format
- Multiple Locations
- Limited Investment
• Multi-Brand : Many brands
including private brands
- Limited Locations
- Huge Investment

4. Recent Government Move
• 51% FDI in Multiple Brand
Retailing
• 100% FDI in Single Brand
Retailing
• 30% Outsourcing Locally
from MSME units
• Brands need not be
Owned by the Parent, but
by any of the Subsidiaries
• In cities with a population
of not less than 10 lakh

5. The Widespread Opposition
• Political Parties are Dominated
by Mandis
• Fear of the Middlemen being
Removed
• Economic Issues are Adopted
when Political Ideologies
Whither Away
• Kiranawala is only an eye wash
argument

6. Consistency in Political Stand
• Party in Power Favours it
for Achievement
• Parties in Opposition Use
it to Create an Emotional
Hype
• Political Mileage is
Obtained
• Creation of a Mass
Hysteria
• Less Healthy Discussion
• Doomsday Attitude for
Every Change

7. Impact on Local Kiranawalla
• Near the Location of
the Customers
• Flexibility on the
Basis of
Requirements of
Customers
• No need to Scale up
the Model
• Low Employee and
Establishment Costs
• Customer Services
• Limited Suitability for
Large Retail Format

8. • Encouraging Contract
Need for FDI Forming
• Better Processing of
Agricultural Produce
• Networking with Local
Retailers
• Commercial Warehousing in
Rural Areas
• Better Dissemination of
Market Information
• Healthier Agricultural
Practices
• Better Seeds and Organic
Farming
• Better Agricultural Research
• Avoiding Wastages

9. Earlier Examples
• ITC’s E’Choupal
• Pepsi’s Contract Farming in Punjab
• EID Parry’s Farmers-Connect
• AMUL’s Success
• Nestle’s Dairy Development
• Private Dairies

10. Some of the Indian corporates in Linkage
with Agri value chain
• Adani Agrifresh : Apple value chain
• TATA CHEMICALS LTD : Extension Services
• ITC : Agri allied sector
• Jain irrigation : Water conservation
• Marico : Safflower value chain
• National Spot Exchange : Enhancing farm income
• Global Green Co Ltd : Value chain integration in Gherkin
• Chambal Fertilisers Ltd : Improving Agri Productivity

11. Some of the MNCs in Linkage with Agri
value chain
 ADM : Soybean value chain
 SAB MILLER : Barley value chain
 PEPSICO : Potato value chain
 BHARTI WALMART : Supply chain across diverse crops
 MONSANTO : Sustainable value chain in Maize
 SUMINTER INDIA ORGANICS : Sustainability in
organic farming
 FIELDFRESH FOODS LTD : Fruits & Vegetable value chain

12. • 3,500 small & marginal
farmers ( < 1Ha)
• 4000 Acres under contract
farming of baby corn
• Increase in farm output by
20%
• Technology transfer in
conservation of water,
chemical fertilisers and
pesticides
• Efficient weather insurance
• Modern post harvest facility
• Rural employment

13. ITC
 Marketing support
 Retail linkage
 Watershed development
•  Wasteland development
 Sustainable off-farm livelihood
IMPACT
 1.03 lac Ha wasteland
converted into green land
 Increase in farmer income by
>50%
 E-choupal covers 4 million
farmers with direct market
linkage
 Direct linkage with retailing
 Company with maximum impact
on farmers

14. PEPSICO INDIA
 Contract farming in special
variety of Potato for their
chips brand Lays
 Engaged with farmers in Bihar,
Gujarat, Karnataka,
Maharashtra
 PPP in R&D and Agriculture
extension
 Technical assistance on latest
cultivation practices
IMPACT
 11,000 farmers
 Increase in yields / net farm
income by 40%
 Price support against volatility

15. ADM- Soybean revolution in Maharashtra
 ADM has an oilseed process plant in
• Latur, a backward district in
Maharashtra with no soybean crop.
 ADM, initiated extension services in
this area.
 Agri advisory centres were set up
for a cluster of each 20 villages and
farmers were introduced to soybean
cultivation
 Women farmers were trained as
they work in fields.
 High yielding variety seeds were
produced through farmers with
linkage to Universities
 End to end technical guidance was
given to farmers

16. ADM- Soybean revolution in Maharashtra
IMPACT
2002 : 19,500 HA
2003 : 49,500 HA
2004 : 1,38,500 HA
2005 : 1,75,000 HA
2006 : 1,80,000 HA
2007: 1,86,000 HA
2008 : 2,05,000 HA
2009 : 2,26,000 HA
2010 : 2,43,000 HA
2011 : 2,74,000 HA
2012 : 3,03,000 HA

17. More crop per drop
 Maximise yields with
minimum water sources
 Develop models for
each crop.
 Saving on fertiliser and
judicious use of
micronutrients
Reduce cultivation costs
 Well administered R&D
to manage emerging
challenges

18. Interest of FDI
• Large Markets
• Stable Income Levels in
India
• Sourcing of Agricultural
Produce
• Festivals and Special
Occasions (Multi-etnic
and Multi-religious)
• Cash Based Transactions
• Diversified Consumption

19. Problems for the FDI
• Limited Working Hours
• Working Hours Unsuitable for Indian Customers
• Expensive Real Estate
• High Salary to the Employees
• High Establishment Expenses
• Unsuitable for Many Lines of Products
• Indian Corporate Retailers paint a sad Story
• Younger Demography

20. Focus
• Development of Infrastructure in Rural Areas
• Better Price for the Farmers
• Effective Utilisation of Grains in the Godowns of Central and State
Warehousing Corporation
• Better Processing Facilities
• Increasing the Storage Facilities
• Better Farming Practices
• Better Farmer Education using Modern Technology

21. THANK YOU