...Foreign Direct Investment in India | The fast and steadily growing economy of India in majority of its sectors, has made India one of the most famous and popular destinations in the whole world, for Foreign Direct Investment. India's ever-expanding markets, liberalization of trade policies, development in technology and telecommunication, and loosening of diverse foreign investment restrictions, have further collectively made India, the apple of investors' eye, for most productive, profitable, and secure foreign investment. According to a recent survey by the United Nations Conference on Trade and Development (UNCTAD), India has conspicuously emerged out as the second most popular and preferable destination in the entire world, after China, for highly profitable foreign direct investment. In recent years, bulk of the foreign direct investment in indian business sectors of infrastructure, telecommunication, information technology, computer hardware and software, and hospitality services, have been made by investors of countries like US, UK, Mauritius, Singapore, and many others. Global Jurix, one of the leading full-fledged legal organizations of India with global repute, has been helping companies, business corporations, organizations, and other potential investors of countries all around the world, in making foreign direct investment in indian business sectors, in various ways described in the section below. | FDI - Inbound and Outbound | The Foreign Direct Investment...
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...SYMBIOSIS CENTRE FOR MANAGEMENT STUDIES Theme: - “Issues and Challenges in Retail Sector and Foreign Direct Investment India and across the World” FDI AND RETAIL TOGETHER: An Overview By Rakesh Soni (11bbl114@nirmauni.ac.in) PH. NO- 8690976530 Peeyush Purohit (11bbl091@nirmauni.ac.in) PH. NO- 7597907007 INSTITUTE OF LAW NIRMA UNIVERSITY AHMEDABAD INTRODUCTION INDIAN RETAIL MARKET Retailing can be defined as a business activity, which offers products or services in small quantities to ultimate consumers, at a place where consumers prefer to buy. India is one of the largest emerging markets, with a population of over one billion. India is one of the largest economies in the world in terms of purchasing power and has a strong middle class base of 300 million. Around 70 per cent of the total households in India (188 million) reside in the rural areas, where mostly traditional retail outlets, commonly called “kirana” stores exist. These are unorganized, operated by single person and runs on the basis of consumer familiarity with the owner. However, recently organized retailing has become more popular in big cities in India and most of the metropolitan cities and other big cities are flooded by modern organized retail stores. India’s growing retail boom is a success story. With strong fundamentals developing in the Indian economy in the liberalized environment since 1991 with changes in income levels, lifestyles, taste & habits...
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...methodology 9 Analysis 11 Case study: Tata’s Croma 16 Findings 20 FDI in Retail in India 21 Growth drivers in India for retail sector 22 Discussion 23 FDI in INDIA SECTOR WISE 23 Conclusion 25 Bibliography 27 Introduction Foreign Direct Investment (FDI) is fund flow (inflow/outflow) between the countries wherein one gains benefit from their investment whereas another can exploit the opportunity to enhance the productivity and find out better position through performance. Foreign Direct Investment (FDI) is the flow of funds between countries wherein one country reaps benefits from the investments and the other can make the most of the opportunity to improve the productivity and stabilize their position through performance. The Dictionary of Economics has defined FDI as investment in an overseas country through the acquisition of a company there of an operation on a new site. In other words, the capital inflows from abroad that is invested in to improve the production capability of the economy. Two forms of FDI: * Inward FDI * Outward FDI FDI is an important factor for growth and development in both developed and developing countries. FDI has seen a spectacular growth in the last two decades globally. Policies are formulated in order to accelerate inward flows. FDI provides good opportunities and benefits for both the host and home countries in terms of investments. The “home” countries benefit from the markets opened by industrial growth and...
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...7 million in sales. By 2012, the company served more than 200 million customers each week, employed 2.2 million associates worldwide, in more than 10,000 stores in 27 countries. After waiting years to open a “Superstore” in India, ambitious plans to expand in the country have seized to continue. India, the world’s largest retailer, has a difficult time with the regulations of the country as well as finding a foreign chain to help invest in the country’s $400 billion retail sector (Pasricha, 2013). Walmart has said it would end its joint venture with Bharti Enterprise Limited amid continued difficulties navigating regulations on foreign investments. To continue the organizational success Walmart has achieved, the organization will need to continue to research several key factors. These factors include: India’s restrictive rules on foreign firm operations, the target market blunder, Walmart’s past efforts to penetrate the retail industry in India, and any challenges encountered in partnership with Bharti. Walmart ceases operations in India because of failed partnership and restrictive government regulations on foreign investments. Walmart’s Ethics Walmart set its business foundation on values and ethics that leads the company. The values that direct the company and leadership are three fundamental beliefs, which are respect, exceptional service to customers, and striving for excellence. Walmart’s guiding principles are put in position to assist employees to make informed...
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...Detailed Analysis FDI Good or Bad for India Who will benefit in India if FDI is allowed in Multi Brand this is Kirana Business Few days back the Union Cabinet of India overcame years of indecision to allow up to 51% FDI in multi-brand retail. Government also increased the FDI limit in single-brand retail to 100% from 51% Government says it will benefit India. Traders fear the move. Opposition parties oppose the move as they know they will benefit if they support the traders. No one is touching the real issues and accepting the truth that today or tomorrow FDI, big global corporations will enter into India directly or indirectly. Today world is becoming a global village. Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provision of the Foreign Exchange Management Act (FEMA) 1999. The foreign investors are free to invest in India, except few sectors/activities, where prior approval from the RBI or Foreign Investment Promotion Board (‘FIPB’) is required. In franchising and commission agents’ services, FDI (unless otherwise prohibited) is allowed with the approval of the Reserve Bank of India under the Foreign Exchange Management Act. Examples of Such Business - Pizza Hut or Nike or Spencer 100% FDI is allowed in wholesale trading. Wholesalers do the business with the Retailers. Wholesalers never do business with Consumers. Few days back central government of India, Congress Government announced the cabinet...
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...FDI IN RETAIL: BENEFICIAL OR DETRIMENTAL AND IT’S FUTURE AFFECT ON INDIAN ECONOMY BY HARJOT KAUR PARMAR (UGC NET, MBA, PGDM, BBA,) ABSTRACT FDI is a type of investment that involves the injection of foreign funds into an enterprise that operates in a different country of origin from the investor. Regardless of today’s crisis, India is considered as one of the most superlative place by foreign investors because of its increasing young population and rising disposable income among the middle class society, that is why large corporations like walmart are showing keen interest in initiating there retail operations in India. But mass round of discussions and debate has started after Government decision on 14 September 2012 allowing FDI in aviation up to 49%, in the broadcast sector up to 74%, in multi-brand retail up to 51% and in single-brand retail up to 100% with high level of disagreement and resistance from the opposition who believe that entry of Big Corporations in retail sector will badly effect the crores of retail shopkeepers and vendors resulting in depart of kirana stores, Whereas government is in favor and believe that it will generate large scale of employment, benefit both farmers as well as consumers and will help in reducing inflation. This research paper aim is to find why foreign investors are attracted towards India, find arguments in favor and against of FDI and what will be its effect on Indian economy in future, whether FDI will be favorable...
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...Analytical study on Foreign Direct Investment in Indian Retail Sector * Dr. A. Vinayagamoorthy,Ph.D., ** C. Sankar * Associate Professor, Department of Commerce, Periyar University, Salem-11. Tamil Nadu.E-Mail: avm_2007@yahoo.com ** Ph.D. Research Scholar, Department of Commerce, Periyar University, Salem-11. Tamil Nadu. E-Mail: sankar_4577@yahoo.com; sankarzee.c@gmail.com; Mobile No. (0)9566997631 Abstract FDI is a tool for economic growth through its strengthening of domestic capital, productivity and employment. FDI also plays a vital role in the up gradation of technology, skills and managerial capabilities in various sectors of the economy. The present paper attempts to analyze significance of the FDI Inflows in Indian retail sector since 1991 and relating the growth of retail sector FDI in generation of employment in terms of skilled and unskilled. Supporters of FDI in retail trade talk of how ultimately the consumer is benefited by both price reductions and improved selection, brought about by the technology and know-how of foreign players in the market. This in turn can lead to greater output and domestic consumption. Introduction The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, recently identified India as the ‘second most attractive retail destination’ globally from among thirty emergent markets. It has made India the cause of a good...
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...Effect on Local Businesses in Retailing Sector (India) Contents Abstract 1 Introduction 2 Literature Review 2 Effect of MNC’s into Indian Retail Market 5 Advantages 5 Disadvantages 7 Hypothesis 8 Conceptual Model 8 Conclusion 10 References 10 Abstract Globalization paved the way for entrepreneurs to expand their wings beyond their respective counties. MNCs exploit the business opportunities in other countries based on the FDI policies in those countries. This has both advantages and disadvantages to the target country. The MNCs have their impact on the economy and people of countries in which they operate business. This paper focuses on the impact of MNCs on local businesses in retail sector in India. The report review existing literature which provides insights into FDI policies in India, the level of FDI allowed by Indian government with respect to single –brand and multi-brand foreign companies, the advantages, opportunities, risks, threats and disadvantages of allowing MNCs into retailing sector in India. Introduction Retailing is the business taking up by individuals or families in India. Generally mom and pop kind of businesses operate in retail sector. The retail sector has tremendous growth in India. Moreover retailing is a profitable business in India. Since India is the country with huge population, naturally it is the correct destination to foreign investors to get profits from the market. India has been traditionally depending on the small...
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...Effect of FDI on Bilateral Trade Abstract Contemporary literature refers to trade and Foreign Direct Investment (FDI) as alternative strategies. The debate is mainly between two notions: (1) that FDI displaces trade, and (2) that FDI and trade complement each other. Literature on FDI talks about the effect of foreign investments on trade. Lipsey (2002) mentions that outward FDI may decrease or increase (or have no effect on) exports of home country. These effects depend largely on the competitiveness of the host country and the motives behind investment by the home country in the host country. This paper is aimed at studying the effect of FDI on bilateral trade as well as effect at the aggregate level especially in the developed-developing nation paradigm. Introduction Literature suggests that there are a number of motives on which FDI takes place across nations. Most of the firms in the developed countries will go for foreign investment once they fulfill their domestic market and they in order to grow will go to foreign market. In this case the main motive of a firm is to tap new markets. This entry of one firm in to a foreign market will create a bandwagon effect thorough which their competitors will also enter that market. Again, when the competition sets in the foreign market, companies will be forced to take cost reduction measures to achieve higher profits will look for other destinations which have lower cost of production and thus the motive will become efficiency...
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...Multi Brand Retail 1. Overview of the industry: Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 500 billion and one of the top five retail markets in the world by economic value. Comprising of organized and unorganized sectors, Indian retail industry is one of the fastest growing industries in India. The organised retail trade accounts for merely 8-10% of the total retail. According to the 10th Annual Global Retail Development Index (GRDI) of A.T. Kearney, India is having a very strong growth fundamental base. India's retail market is expected to grow at 7% over the next 10 years, reaching a size of US$ 850 billion by 2020. Traditional retail is expected to grow at 5% and reach a size of US$ 650 billion (76%), while organized retail is expected to grow at 25% and reach a size of US$ 200 billion by 2020. The Government of India had been considering opening up the Multi Brand Retail Trade (MBRT) sector to FDI for some time. They had released a discussion paper in 2010 on the topic and had extensively gathered public, academic and industry views on the issue. In November 2011, the Government came out with its proposal for the new FDI policy. However, unable to achieve political consensus on the issue, they had to shelve their plans for the enactment of the policy. Finally the Government decided to pass the new FDI policy on MBRT in September 2012. 2. Growth over last few...
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...Introduction Retailing in India is one of the pillars of its economy and accounts for 14 to 15% of its GDP The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people India's retailing industry is essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4% of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians. Until 2011, Indian central government denied foreign direct investment (FDI) in multibrand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process. In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus. In January 2012, India approved reforms for...
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...Introduction Businesses are increasingly looking to expand into farther flung overseas markets like India, expecting to achieve rates of growth which are rarely achieved in saturated and depressed Western markets. However, it is important that businesses consider carefully the different types of expansion models available to them and are prepared to take a flexible approach to their international expansion strategy, taking account of local legal restrictions and fast changing consumer habits and expectations. As this briefing note explains, the choice of a corporate expansion model or an arm's length expansion model such as franchising can have a direct impact on a business's ability to engage in e-commerce within the local market. India is a case in point, where, despite the recent growth in online sales, the Indian Government has reaffirmed its policy on e-commerce in the retail sector, which restricts foreign brands from participating in local e-commerce if they hold shares in the Indian operating company. The Need for a Consistent Approach to Multi-Channel Retailing Historically, the majority of brands expanding internationally have been preoccupied with the "bricks and mortar" channel of distribution, based upon an assumption that the target local market is less technologically mature. This may have been a fair assumption as recently as three to five years ago, and it is still holds true in an increasingly limited number of countries. However, improvements in access...
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...India is in the midst of a retail boom. The sector witnessed significant transformation in the past decade from small-unorganized family-owned retail formats to organized retailing. Indian business houses and manufacturers are setting up retail formats while real estate companies and venture capitalist are investing in retail infrastructure. Many international brands have entered the market. With the growth in organized retailing, unorganized retailers are fast changing their business models. However, retailing is one of the few sectors where foreign direct investment (FDI) is not allowed at present. FDI in retail industry means that foreign companies in certain categories can sell products through their own retail shop in the country. At present, foreign direct investment (FDI) in pure retailing is not permitted under Indian law. Government of India has allowed FDI in retail of specific brand of products. Following this, foreign companies in certain categories can sell products through their own retail shops in the country. Concerns regarding Allowing FDI in Retail Sector It would lead to unfair competition and ultimately result in large-scale exit of domestic retailers, especially the small family managed outlets, leading to large scale displacement of persons employed in the retail sector. Further, as the manufacturing sector has not been growing fast enough, the persons displaced from the retail sector would not be absorbed there. Another concern is that the Indian...
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...for What is FDI in retail? Retail battle: It’s finally about politics and numbers, not FDI FDI in retail: Why it works for everyone FDI fineprint: Easing FDI doesn’t ease problems plaguing retail 04 06 08 The verdict FDI in retail: Why the politicians are illogical, and have got it wrong Don’t pity the kirana guy, he knows how to fight back Economy, not kirana shops, is biggest loser in retail FDI debate Why the kirana dukan doesn’t care about Big Brother 11 13 15 17 All sides of the debate GOVERNMENT FDI in retail ‘distinct and different’: Sharma Out on a limb: Govt says FDI in retail will ‘immensely benefit farmers’ Reader debate: Is FDI in retail bane or boon? PUBLIC India Inc appeals political parties to support FDI in retail India Inc divided over FDI in multi-brand retail INDUSTRY FDI in retail: Opposition, allies term it anti-people Will not allow Parliament to function until FDI in retail is withdrawn: NDA OPPOSITION Why some farmers are relieved to be dealing with Wal-Mart Farmers Retail FDI: The merits are over-hyped, say academics Academics Cong meets over FDI in retail: Is a rollback on the cards? Will FDI last? FDI nod given, global retailers wait for more clarity The world is waiting FDI in retail What is ? Retail battle: It’s finally about politics and numbers, not FDI he Congress is hell-bent on pushing through its proposal for foreign direct investment (FDI) in retail. It says the move would...
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...FDI in India’s retail sector: Is it win-win game? By: Sharad Pandey Foreign Direct Investment (FDI) is defined as cross-border investment, where investment is made by a foreign country or organization in another country’s domestic market. The issue of FDI has been a debatable topic in India for years now, since government started promoting it. But is it really going to help the Indian economy? Yes, it will, as it will help farmers. In fact, farmers are not the only ones who will benefit from it, society as a whole will be a beneficiary. For the past few years opposition governments have, and are still opposing FDI in India’s retail sector. Watching political parties switch position on the issue of FDI in the retail sector is a bit interesting, and a drama to watch. It is interesting to note that, when BJP was in power, they came up with the idea of allowing FDI in the retail sector, but was opposed by ”Congress'’, which was then serving as opposition political party. When Congress came to power few years ago, it wanted to adopt a policy of allowing FDI into India’s retail sector, but this policy has met stiff resistance from the BJP. The changing position of the Country’s top political parties suggests that both the parties know that FDI it is good for the country. Each political party wants the policy to be effectuated under its leadership so that most of the benefits...
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