Fdi in retail

What is FDI

FDI refers to capital inflows from abroad that is invested in a foreign country.

Current Issues in FDI in Retail

• Government has decided to allow 51% FDI in Multi-brand retails.

• Government has decided to allow 100% FDI in Single-brand retails.

Present Condition:

• Farmers get only 10 to 15% of the price we pay.

• 3-4 middlemen in between farmers and customers.

• Huge post produce losses for farmers due to inadequate facilities.

• A poorly managed food supply infrastructure.

What are the pre-conditions:

• Minimum investment of $100 million.• 50% of the investment is to be in backend

infrastructure development.• 30% of all raw material has be procured from

India's small and medium industries.• Government has the first right to

procure material from the farmers.

• Permission to set up malls only in cities with a

minimum population of 10 lakhs.

• Only 53 cities qualify for FDI in multi-brand retail out of nearly 8000 towns and cities.

• Products should be sold under the same brand internationally.

• Foreign investor should be the owner of

the brand. 

Who are in Against of FDI

• Political Parties like: BJP, SP, BSP, DMK, Trinamool Congress, CPI,CPM etc.

• Unorganized Retail Sector

• Social Icon

Government Arguments & Reason for against the FDI

• Retail FDI will bring Jobs in India.

• Retail FDI will growth in Economy.

• Retail FDI will help Farmers.

• Retail FDI will help Local Industry.

• Retail FDI will lead to removal of middleman.

Retail FDI will bring Jobs in India

• Government Point: About 1.5 Million Jobs Will Be Created In The Front-end

alone In The Next 5 Years. 

Employment opportunities in agro-processing, marketing, logistics management and front-end retail.

• Opposition Point: Indian Retail Sector is already employing 40 Million Indians.

Overall jobs created are going to be very less as compared to jobs which will be lost.

Retail FDI will growth in Economy

• Government Point: New infrastructure will be build, thus real estate sector will grow consequently banking sector.

• Opposition Point: FDI will drain out the country’s share of revenue to foreign countries which may cause negative impact on India’s overall economy.

Retail FDI will help Farmers

• Government Point: FDI removes the 3-4 middlemen in between farmers and customers.

Growth of Agro-food processing Industry.

• Opposition Point: This will make our farmers produce for single buyers,

they will not have any other source to sell so they will have to accept whatever prices they are giving.

Retail FDI will help Local Industry.

• Government Point: 30% of all raw material has be procured from India's small and medium industries

• Opposition Point: Major buyers can source the product at cheaper rates

from outside India.

Some industries which are not able to compete shutting down businesses and unemployment.

Multi-brand Retail is good or Bad?

Effects on unorganized players

• Dislocation of millions from their occupation.

• The domestic organized retail sector might not be competitive enough to tackle international players and might loose its market share

Employment in Retailing

• Limited jobs in manufacturing.

• Cannot provide employment to semi-literate people.

• Many of the small business owners and workers from other functional areas may lose their jobs, as lots of people are into unorganized retail business such as small shops.

Conclusion

References

• http://www.imentor.co.in/blog/?p=82• http://www.moneylife.in/article/100-fdi-in-ret

ail-in-india-good-or-bad/21733.html• http://www.ndtv.com/article/india/fdi-in-retai

l-govt-places-full-page-ads-on-myth-and-reality-153274

• http://www.legallyindia.com/Blogs/Entry/what-does-51-fdi-in-multi-brand-retail-mean

• http://www.dnaindia.com/mumbai/report_will-fdi-help-indian-retail-market-grow-pune-speaks-up_1620277

• http://pib.nic.in/newsite/erelease.aspx?relid=77619

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