fdi in retail - myth or reality__
TRANSCRIPT
8/11/2019 FDI in Retail - Myth or Reality__
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FDI in Retail
Myth or Reality?
Swaati Singh - 22
Chinmayee - 36
Anusha Gupta - 09
Abhinav – 58
Vidya Jyoti - 45
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Regulations
• Up to 100% for cash and carry wholesale
trading and export trading allowed under the
automatic route.• Up to 51% with prior Government approval
for ‘Single Brand’ products.
• 50 % of the total FDI brought in first trancheof 100 million has to be invested in backend
infrastructure in 3 years.
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MYTHS & REALITIES
• Myth1: Organized retailing will demolish
unorganized retailing
Reality: No such evidence
• Myth2: Organized retailing will have adverse
impact on intermediaries
Reality: Yes this is true
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MYTHS & REALITIES
• Myth3: FDI will impact domestic manufacture
Reality: Yes, till the necessary reforms areimplemented
• Myth4: FDI will impact farmers
Reality: Yes, but in positive sense
• Myth5: FDI will benefit consumer
• Reality: Yes, will benefit with new experience
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Challenges
• Farmers
• Supp ly chain and Food Inf lat ion .
• Trad it ional Food retai lers .
• Technology
• Econom ies o f Scale
• Jo int Ventu re
• Polit ical Challenges
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NEED FOR FDI
• Foreign direct investment (FDI) in Indiahas played an important role in the
development of the Indian economy.
• FDI in India has in a lot of ways enabledIndia to achieve a certain degree offinancial stability, growth anddevelopment.
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• This money helps in focusing on the areas that
need an economic attention, and various
problems that challenge the country.
• In 1998-99, the Indian national government
announced a number of reforms designed to
encourage a favorable business environmentfor investors.
• Many projects have been implemented in
areas like electricity generation, distributionand transmission, the development of roads
and highways, with opportunities for foreign
investors.
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• In 2007, India received $34 billion in FDI, ahuge growth, less than the $134 billionthat flowed into China.
• Although the Chinese approval process is
complex, China continues to outshineIndia as a choice destination for foreigninvestors.
• Currently, FDI is allowed in financialservices, including the growing credit cardbusiness. These also include the non-
banking financial services sector .
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IMPACT OF FDI
• Forex- The Inflow Of Capital Would Increase The
Capital Reserve in the BOP which shows the ability
in terms of Foreign Exchange.
• Infrastructure: The Players are imposed with therestriction of investing 50% of their Investment on
Infrastructure.
• Farmers: Fiscal Deficit which is mostly caused bysubsidy given to farmers. Govt should be ensuring
that farmers are getting paid according to what
they are eligible.
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• Employment: More Employment created Either
directly or Indirectly. It would be generated in
agriculture , Manufacturing , Service Industrywhich Consists Of GDP.
• Retail Industry: Allowing FDI in multi brand retail
would infuse the new blood into the industrythat has potential. Foreign Players That Are
competition Oriented Would Implement New
Strategy.
Contd…
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• Clearance of the FIPB because in starting it
would come under the approval route.
• Minimum entry threshold of foreign investment
is pegged at $ 100 million.
•At least 50% of the amount invested wouldnecessarily be required to allocate in back end
infrastructure.
Future Prospects
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• Retail stores established by global giants will be permitted
only in the cities having population greater than 1 million
• Foreign entrants have to source at least 30 % of their stock
from MSMES, those having a capital investment of not
more than $1 million.
• Small retailers can be protected by restricted FDI for
stores having floor size greater than 2000 sq.ft.
• Monopolies can be controlled by enforcement of strict
regulation and where needed through the Competition
Commission of India
• Retail stores established by global giants will be
permitted only in the cities having population
greater than 1 million.
• Foreign entrants have to source at least 30 % of thei
stock from MSMES, those having a capital
investment of not more than $1 million.
• Small retailers can be protected by restricted FDI fo
stores having floor size greater than 2000 sq.ft.
• Monopolies can be controlled by enforcement of
strict regulation.
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Thank you