FDI in Retail

1. By Manish Manghnani

2. What is FDI
• Direct investment into production or business
in a country by a company of another country
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3. FDI Retail
• 51% in multi-brand
• 100% in single brand
• New policy
• 30% Rule
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4. New Policy
• Invest $100 million
• Back-end infrastructure
• Population > 1 Million
• New supply chain system
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5. 30% Rule
• Source 30% of the value of the products from
small and medium industries in India
• 30% of the value of goods purchased, will be
done from India, preferably from MSMEs,
village and cottage industries, artisans and
craftsmen, in all sectors, where it is feasible
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6. Why FEASIBLE
• Global players started backing out
• Sourcing not possible
• Niche products
• Difficult to set up production unit
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7. Beneficiaries from FDI
• Indian farmers
• Indian consumers
• Partnership opportunity
• High availability of jobs
• Inflation control
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8. States against of FDI
• Gujarat - Small businessmen will be forced to
down their shutters now,'
• Uttar Pradesh - CM Akhilesh earlier said his party
may support FDI if convinced it'll help small
farmers, but papa Mulayam ruled against it.
• Madhya Pradesh - Move will hit small traders and
grocers. 'We won't implement it
• Bihar - Local retailers will be marginalized and
millions of jobs will be lost.
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9. Will affect 50 million merchants in India.
Profit distribution, investment ratios are not fixed.
An economically backward class person suffers
from price raise.
Retailer faces loss in business.
Market places are situated too far which increases
traveling expenses
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10. Will they be beneficiated??? Let’s see
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11. 10 million jobs in 3 years
• Commerce minister claimed
• 4 million direct and rest back-end logistics
Company No. of stores No. of
employees
Avg.
employees
Walmart 9826 21,00,000 214
Carrefour 15937 4,71,755 30
Metro 2131 2,83,280 133
Tesco 5380 4,92,714 92
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12. • Average of the above top 4 players is 117
• 40,00,000/117=34,188 stores needed
• 34,188/53=645 supermarkets per city
• Isn’t the number hard to digest
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13. Farmers
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14. Contract farming
Collection of
Agriculture products
To own factory
To own dept. Store
To customer
By Manish Manghnani

15. • Abolish middlemen
• Contract farming and no Mandi system
• Dependent on MNC’s
• MNC’s could force them to sell at low price
• Such problem already faced by farmers of
other part of world already
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16. Inflation Control
• Claimed by government
• Food prices still high
• Control over food chain
• Business method
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17. Our stand
• FDI will affect the traditional system of retail
• Unorganized retailing is the second most
employment provider and contributor to GDP
• Balance should be created between organized
and unorganized sector of retailing
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18. Thank You
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