fdi in multibrand retailing

Topics: Retailing, Investment, India Pages: 13 (3702 words) Published: January 13, 2014

SUBMITTED BY: PRERNA TEKCHANDANI

CONTENT

1. Introduction
FDI in multi-brand retail
What is FDI
2. Review of literature
3. Objectives of the study
4. Chapterization
Chapter One : FDI in Indian Multibrand Retail – Rationale
Chapter Two : Effect of FDI In Multi Brand Retail For Different Stakeholders Chapter Three: FDI – Challenges
Chapter Four: FDI-Opportunities ( Benefits )
Chapter Five : With Eye on Multi-Brand Retail, FDI Chases Agricultural Services 5. conclusion
6. Research methodology

INTRODUCTION

A. WHAT IS FDI ( FOREIGN DIRECT INVESTMENT ) ?

Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.

Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra company loans". In a narrow sense, foreign direct investment refers just to building new facilities. The numerical FDI figures based on varied definitions are not easily comparable.

B. FDI IN MULTI-BRAND RETAIL

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$ 50 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. As of 2013, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population). Until 2011, Indian central government denied foreign direct investment (FDI) in multi-brand 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 single-brand stores welcoming anyone in the world to innovate in Indian retail market with 100% ownership, but imposed the requirement that the single brand retailer source 30 percent of its goods from India. Indian government continues the hold on retail reforms for multi-brand stores. In June 2012, IKEA announced it had applied for permission to invest $1.9 billion in India and set up 25 retail stores. An analyst from Fitch Group stated that the 30 percent requirement was likely to significantly delay if not prevent most single brand majors from Europe, USA and Japan from opening stores and creating associated jobs in India. On 14 September 2012, the government of India announced the opening of FDI in multi-brand retail, subject to approvals by individual states. This decision welcomed by economists and the markets, but caused protests and an upheaval in India's central government's political coalition...
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