FDI in retail

By Manish Manghnani

What is FDI

• Direct investment into production or business in a country by a company of another country

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FDI Retail

• 51% in multi-brand

• 100% in single brand

• New policy

• 30% Rule

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New Policy

• Invest $100 million

• Back-end infrastructure

• Population > 1 Million

• New supply chain system

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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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Why FEASIBLE

• Global players started backing out

• Sourcing not possible

• Niche products

• Difficult to set up production unit

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Beneficiaries from FDI

• Indian farmers

• Indian consumers

• Partnership opportunity

• High availability of jobs

• Inflation control

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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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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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Will they be beneficiated??? Let’s see

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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 9211

• 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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Farmers

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Contract farming

Collection of

Agriculture productsTo own factory

To own dept. Store

To customer

By Manish Manghnani

• 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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Inflation Control

• Claimed by government

• Food prices still high

• Control over food chain

• Business method

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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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Thank You

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