* FDI in Retail in India
* 2. Let’s get the Basics Right….• ‘Retail’ as a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale), A sale to the ultimate consumer - Interface between the producer and the individual consumer buying for personal consumption• Organized retailing - Trading activities undertaken by licensed retailers, those who are registered for sales tax, income tax, etc., these include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses• Unorganized retailing - Traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores etc.• FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity of the economy * 3. How FDI can come in India?1. Franchise Agreements :• Easiest track & FDI is allowed with the approval of the RBI under the FEMA• Pizza Hut, Mango, Nike, Marks & Spencer and many more2. Cash And Carry Wholesale Trading -• 100% FDI is allowed in wholesale trading• Wholesaler deals only with smaller retailers and not Consumers• Metro AG was the first global player to enter India through this route3. Strategic Licensing Agreements• Foreign brands give exclusive licences and distribution rights to Indian companies & through these rights, Indian companies can either sell it through their own stores, or enter into shop-in-shop arrangements or distribute the brands to franchisees• Mango an agreement with Piramyd, Mumbai4. Manufacturing and Wholly Owned Subsidiaries• Foreign brands that have wholly-owned subsidiaries in manufacturing are treated as Indian companies and are, therefore, allowed to do retail• For instance, Nike entered through an exclusive licensing agreement with Sierra Enterprises but now has a wholly owned subsidiary, Nike India Pvt ltd * 4. FDI in Retail - Some quick Facts• Indian retail sector is highly fragmented with 97 % of its...
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