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Foreign Direct Investment in retailing.


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Foreign Direct Investment in retailing By Peer Mohamed. S Shyam Sunder. P Sri Sai Ram Institute Of Management Studies Chennai- 44 “The minds of the Indian consumers is changing along with their lifestyle” Evolution Of Indian Retail Exclusive Brand Outlets Hyper/Super Markets
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Slide 1

Remote Direct Investment in retailing By Peer Mohamed. S Shyam Sunder. P Sri Sai Ram Institute Of Management Studies Chennai-44

Slide 2

“The psyches of the Indian purchasers is changing alongside their lifestyle”

Slide 3

Evolution Of Indian Retail Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls PDS Outlets Khadi Stores Cooperatives Convenience Stores Mom and Pop/Kiranas Modern Format Shopping Experience/Efficiency Weekly Markets Village Fairs Melas Govt.Supported Low expenses Pervasive Reach Neighborhood/Convenience stores Rural Reach Source of excitement

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Categories of Indian Retail Corporate Houses Tata : Tata Trent, westside, Landmark RPG bunch: Spencers daily,Health and Glow, music world and so on ITC : Wills Life Style Dedicated brand outlets Nike, Reebok, Zodiac and so forth Multi-brand outlets Vasanth & co, Viveks and so forth Manufacturers/Exporters Pantaloons, Bata, Weekender

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Unorganized Retailers Typically little Retailers Evasion of charges No observing of work laws Organized Retailers Typically Large Retailers Must pay Tax High level of work instrument Differentiation Organized Retailers 2% Unorganized Retailers 98%

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Growing Middle Class Indian white collar class has grown 57 mn by 2001-02 since 1995-96. It is relied upon to cross 92 mn by 2005-06 & 153 mn by 2009-10. The more youthful populace made an interpretation of into higher penchant to spend. This development in white collar class will fuel the development in retail.

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Pitfalls in Indian retail Low residential rivalry Lack of presentation to worldwide best practices Low section hindrances for disorderly retailers Moderate passage obstructions for sorted out retailers Wide contrast in medications of little & substantial retailers

Slide 8

Entry of FDI in retail India permitted to possess up to 49% of retail ventures –time edge of 3-5 years India has positioned no.1 in 2005 worldwide retail advancement, record discharged by AT Kearney as of late Giants, for example, Wal-Mart and Tesco are sharp in growing their business in India Entry of FDI through joint endeavors with nearby players

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Benefits from FDI in retail Improve rivalry Best practices in retailing More decision for the clients Global business sector for Indian makers Employment opportunity Better framework and client Facilities

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Standing difficulties Government Regulations Lack of prepared labor Availability of value land Logistical bolster Competition of neighborhood players The organization does not suit country India Purchasing examples not extremely favorable

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Case Study: Chinese Retailing FDI allowed in 1992. 40 outside retailers have secured support Retail deals have grown@13.5% CAGR since FDI was allowed FDI at first limited to 6 noteworthy urban communities (counting Beijing, Shanghai and Guangzhou) and SEZs Foreign possession at first confined to 49% US$ 22 bn of FDI pulled in, 3.6% of aggregate FDI In 2003, FDI in wholesale and retail was US$ 1.1 bn (Around 30% of our aggregate FDI in 2003) Current limitations on FDI will be eliminated more than 5 years as state of WTO section

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FDI in retail permitted China after FDI 375 300 225 150 75 9 2 7 8 0 8 5 9 0 9 1 9 3 9 4 9 5 9 6 9 7 9 8 9 0 1 0 2 Years Retail deals developed @ 19.6% CAGR for the following 4 years after the presentation of FDI in 1992

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Lessons from china FDI enhances the whole size of the business Retailing in China has developed at a compound rate of 15% for each annum after FDI inflow Local players can survive and even beat remote rivalry Employment development Evolution of cutting edge positions

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Conclusion

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