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Foreign Direct Investment

Foreign direct investment (FDI) is a

measure of foreign ownership of domestic

productive asset such as factories, land andorganizations.

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Benefits of Foreign Direct Investment

Economic Development

Transfer of Technologies

Creation of new jobs Increased competition

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Routes of entrance

Automatic Route

Government approval route

Franchise agreement Cash and carry wholesale agreement

Strategic licensing agreement

Manufacturing and wholly

owned subsidiary

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FDI inflows: India's top 10 sectors

Services sector (Financial and non-financial)

Computer (software & hardware)

Telecommunications (radio paging, cellular mobile

, basic telephone services)

Housing and real estate

Construction (including roads & highways)

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Cont..

Automobile industry

Power

Metallu

rgical Indu

stries Petroleum & Natural Gas

Chemicals (other than fertilisers)

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FDI is not permitted in the following

industrial sectors

Arms and ammunition.

Atomic Energy.

Railway Transport.

Coal and lignite.

Mining of iron, manganese, chrome, gypsum, sulphur, gold,diamonds, copper, zinc.

Gambling and Betting

Lottery Business

Atomic Energy

Agriculture (with certain exceptions) and Plantations (Otherthan Tea plantations

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RETAILING IN INDIA

Organized Retailing

corporate-backed hypermarkets

retail chains

privately owned large retail businessesU norganized Retailing

the local kirana shops

owner manned general stores

 paan/beedi shopsconvenience stores

hand cart and pavement vendors

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Different forms through which retailing

is done in India

Single Brand Retail Shops

Complete range of all productsunder one brand name

Focus on brand name

Examples-nike,samsung,Liberty

Apart from these,there areconvergence retail outlets wherealmost all kind of products areavailable eg big bazaar

Multi-brand retail shops

All brands are available for a

single product

type.customer have a widerrange of choice

Focus on nature of the

product

Example-Max shoppers stop

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FDI Policy with Regard to Retailing in

India

FDI up to 100% for cash and carry wholesale

trading and export trading allowed under the

automatic route.

FDI up to 51 % with prior Government

approval (i.e. FIPB) for retail trade of Single

Brand products

FDI is not permitted in Multi Brand Retailing

in India.

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Prospected changes in FDI Policy for

Retail Sector In India

India will allow FDI of upto 51 percent in

multi-brand sector

Single brand retailers such asA

pple and Ikeacan own 100 percent of their Indian stores up

from the previous cap of 51 percent

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Drivers in the bill

Retailers will have to source at least 30% of their goodsfrom small and medium sized Indian suppliers

All retail stores can open up their operations having

population over 1 million out of 7935 cities and townsin India ,55 cities satisfy such criteria

multi-brand retailers must be invested of US$ 100millions.

Opening of retail competition (policy) will be within theparameters of state laws and regulations

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Ethics related to FDI in retailing

Current Independent stores will be compelled toclose

Lower prizes become Monoply and later on raise

prize India doesnt need foreign retailers

Work will be done by Indians and profit will go toforeigners

East India company entered as traders and tookover politically

Govt. hasnt built consensus

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Benefits of FDI in retailing

More organisation in the sector

Healthy competition will be boosted and their will becheck on prizes

Create transparency in the system

Intermediaries and mandi system will beenvicted,hence directly benefitting the farmers andproducers

Quality control and control over leakage and wastage

Help in building up the infrastructure Sustainable development and many other economic

issues will be focused upon

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Conclusion

I believe that the reforms of 51 % FDI in multi-brand retail should be given a green signals assoon as possible, subject to the above discussedbill drivers

The period for which we delay these reforms willbe loss for the govt. only, since the majority of public is in favor of this reform

Instead poking the political game in the economicreforms issues like these, all the political partiesshould work in symbiosis not only for their selfishbenefits, but for the welfare of the public at large