Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP.

[1][2] 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 market in the world, with 1.2 billion people.[3][4] india's retailing industry is 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.[5] 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.[6] n 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.[7] IKEA announced in January that it is putting on hold its plan to open stores in India because of the 30 percent requirement.[8] Fitch believes that the 30 percent requirement is 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.

What does 51% FDI in multi-brand retail mean?

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What are the pre-conditions:

Minimum investment of $100 million. 50% of the investment is to be in backend infrastructure development. 30% of all raw material has be procured from India's small and medium industries. Permission to set up malls only in cities with a minimum population of 10 lakh. Government has the first right to procure material from the farmers. Products should be sold under the same brand internationally. Foreign investor should be the owner of the brand.

Present Condition: Farmers get only 10 to 15% of the price we pay. 3-4 middlemen in between farmers and customers. Huge post produce losses for farmers due to inadequate facilities. A poorly managed food supply infrastructure.

Why do we need it: We are tthe second highest producer of fruits and vegetables in the world but still we are not able to utilise is properly because of inadequate infrastructure facilities. It will reduce pre-harvest wastage/losses and thus help control food inflation. It will create 1.5 million more jobs in 5 years. Apart from the huge number of indirect employment. It will increase competition which is always beneficial for the customer. It will remove the middleman from the equation. It will reduce costs which in turn will reduce prices.

What about the problems: There will be no problems. We already have local players like Reliance Fresh and Big Bazaar. They have done wonderfully well. Local traders are still trading as they were. Why not allow foreign players? They will bring with them human/monetary/knowledge capital which are very important for a developing country like India. Just bringing proper storage places will go a long way in solving the wastage problem. China, Brazil, Argentina, Singapore, Chile, Thailand, Russia and Indonesia all allow 100% and their economies have benefited from this move. India is only allowing 51% and that too with a lot of checks. We don't have to worry about monopoly because the Competition Commission of India can handle all anti competitive practices including predatory pricing. In India, cities with population of more than 10 lakh are just 53 in number. This means that any negative impact will not have huge repercussions. Kirana store walas in majority of other cities cities will be totally unaffected. It's a small but steady step on the path of liberalization. It will decrease unorganized labour sector and bring them all under organised labour. This will it will be easier to enforce labour laws and also check its implementation. A lot of jobs will be created. Ofcourse a few will be lost as well but that number will not

be very high. There will be a reorganization of the job structure rather than a reduction. It is true that the government can also provide all the infrastructure facilities that the companies will provide but true governance means less government role and more freedom to the society. Why should it be a problem if companies improve infrastructure facilities in return of a gain? Thus we can see that the FDI rule is for the greater good of the society. Oppose it at your own risk. (points fr GD on this)
Reliance & other present corporate is too small comparing to Walmart & other Foreign company. No Competition possible, Middleman delete means delete of entire Mediator between traders & farmers. What about wall mart ? Foreign Middleman require Indian Middle man not require ?? Can u calculate MIDDLEMAN In india ?? They all have their employment or livelihood on this Retail. more than 4 - 5 crore Retailer is going to effect due to this decision. No new business generate after FDI come in india. They will share retailers business. If only 30 % present business of retailer goes to Foreign company than it will be net loss of 30 % profit directly. 1 lacs earning reduce to 70 thousand

agreed!! the mediators between the producers and the consumers has always been a problem to both the producers and the consumers: lower prices to the producers and higher prices to the consumers.

agree that there are a lot of middlemen. Some of them will be affected. The income they used to get by exploiting the farmers will not longer be there. Walmart will build malls and storage spaces. They will employ a LOT of people. Honest work. Barack Obama can say whatever he wants to. All countries are different. Policies have different effects on their economy. I have also mentioned in the post that most countries allow 100% but we are allowing only 51% and that too with checks.

1)

Wal mart : Big Middle man who is going to eliminate all the middle man.. 70 % Chinese goods sale in India. So in a simple words, Wal mart is a middle man between Chinese Manufacturer & Indian Customer. Manufacturing to Retailer all are going to suffer. 2) What about Our Nation Father - "Gandhiji" who advice to use "Swadeshi Goods" ? Have u any idea why he suggests so ? It generate self employment. Here we are going to eliminate all employment & After new Big Company come & he will give us a job !! Good Thinking of Indian Govt and some of their supporters 3) Whatever Barack Obama saying is of course for his nation, but a good example for us. After two decade experience, facing trouble of unemployment & want to come out from this trouble. 4) Storage: Where is 24 hours electricity supply in INDIA ?? Wal mart will bring ELECTRICITY FROM China !! 5) Farmer : 96 % farmers having land less than 2 acre in India. Now, Foreign Retailer Company come to India and Contract with this farmers having less than 2 acre land and Purchase "A" "B", "C" & "D" grade Goods from this farmers. Contract with small farmers not possible at all. Wal Mart is going to purchase only "A" Grade goods. Can any one explain that why this company come to INDIA ? For profit or For Loss ? Contract purchasing, Farmers benefit a another joke. 6) Consumer: If competition than consumer got benefit but a retailer having investment of

2 - 3 lacs can compete with this company ? In Indian Retail Market, already competition there. If more competition than Result will be "SHUTTER" down. 7) Govt has already taken decision & if they not roll back than Wal mart not require 10 year to collapse retailer. After couple of years, Indian Prime minister will also use twitter & say whatever he want to say to our Indian Citizen. Let hope he will not say whatever Barack Obama said in america after two decade of this policy. Govt. taken a decision, they will follow, I have no problem. You favor govt policy, I have no problem as I am not a "RETAIL" trader or Middle man who is going to effect or having business loss in future.

2)

Walmart will spend money on more Walmarts if they earn money. Isn't that the point of business? Its a company. They have shareholders. Profit goes there. The Indian company which will team up with Walmart will also give money to its shareholders. So we can'y say money will go out of the country. Even if it does, what's the problem? Haven't we been doing the same with our BPOs?

Challenges
A McKinsey study claims retail productivity in India is very low compared to international peer measures. For example, the labor productivity in Indian retail was just 6% of the labor productivity in United States in 2010. India's labor productivity in food retailing is about 5% compared to Brazil's 14%; while India's labor productivity in non-food retailing is about 8% compared to Poland's 25%.[33] Total retail employment in India, both organized and unorganized, account for about 6% of Indian labor work force currently - most of which is unorganized. This about a third of levels in United States and Europe; and about half of levels in other emerging economies. A complete expansion of retail sector to levels and productivity similar to other emerging economies and developed economies such as the United States would create over 50 million jobs in India. Training and development of labor and management for higher retail productivity is expected to be a challenge. To become a truly flourishing industry, retailing in India needs to cross the following hurdles:[34] Automatic approval is not allowed for foreign investment in retail. Regulations restricting real estate purchases, and cumbersome local laws. Taxation, which favours small retail businesses. Absence of developed supply chain and integrated IT management. Lack of trained work force. Low skill level for retailing management. Lack of Retailing Courses and study options

Intrinsic complexity of retailing rapid price changes, constant threat of product obsolescence and low margins.

In November 2011, the Indian government announced relaxation of some rules and the opening of retail market to competition.

CHALLENGES IN RETAIL: The industry is facing a severe shortage of talent, especially at the middle management level. Most Indian retail players are under serious pressure to make there supply chain more efficient in order to deliver the level of quality and service that consumer are demanding , Long intermediation chain would increase the cost by 15 per cent. The retailer does not have industry status yet making it difficult for retailers to raise finance from Bank to fund hs expansion plan; governments restrictions on the FDI are leading to an absence of foreign players resulting in to limited exposure to best practice. Indias retail sector remains off-limits to large international chains especially in multi-brand retailing. The first concern is the potential impact of large foreign firms on employment in the retail sector. A second related concern raised in the DIPPs report is that opening up FDI would lead to unfair competition and ultimately result in large-scale exit of incumbent domestic retailers, especially the small family-owned business. A third concern raised by domestic incumbent firms in the organized retail sector is that this sector is under-developed and in a nascent stage. Here we argue that the potential benefits from allowing large retailers to enter the Indian retail market may outweigh the costs. Evidence from the United States suggests that FDI in organized retail could help tackle inflation, particularly with wholesale prices. It is also expected that technical know-how from foreign firms, such as warehousing technologies and distribution systems, will lend itself to improving the supply chain in India and added benefit of improved distribution and warehousing channels may also come from enhanced exports. Indias experience between 1990-2010, particularly in the telecommunications and IT industries, showcases the various benefits of opening the door to large-scale investments in these sectors. Arguably, it is now the turn of retail. ISSUES FOR RESOLUTION: Should FDI in multi brand retail be permitted? If so, should a cap on investment be imposed? If so, what should this cap be? To develop the retail trade in food grains, other essential commodities and multi-brand retail in general; should FDI be leveraged for creating back-end infrastructure? To ensure that foreign investment makes a genuine contribution to the development of infrastructure and logistics, should it be stipulated that a percentage of the FDI coming in ( say 50% ) should be spent towards building up of back end infrastructure, logistics or agro processing?. It is necessary to encourage only genuine players in this sector and avoid a situation where retail outlets are run through working capital support from financial institutions. Should a minimum threshold limit for investment in backend infrastructure logistics be fixed? If so, what should this financial threshold be? To develop our rural sector, should conditional ties be put on the FDI funded chains relating to employment? For example, should we stipulate that at least 50% of the jobs in the retail outlets should be reserved for the rural youth? Similarly, to develop our SME sector through local sourcing, should we stipulate that a minimum percentage of manufactured products be sourced from the SME sector in India? As a part of a calibrated reform process, should foreign investment for such stores be initially allowed only in cities with population of more than 10 lakhs? As there may be difficulties faced with regard to availability of real-estate in such cities for setting up such ventures, should an area of 10 kms around the municipal/urban agglomeration limits of such cities be

included within the definition of the city? The FDI debate has opened up many issues which deserve proper attention of the policy makers before the retail sector is opened up to foreign investors. FDI in retail will have a much wider impact on the economy. Essentially, organised global retail chains will break the traditional symbiotic relationship that exists between small producers and small retailers. Also, in the new retailing format, due to unequal terms of trade in a monopsony like situation, small producers and suppliers are likely to suffer most. It is important to understand how retailing works in our economy, and what role it plays in the livesof its citizens, from a social as well as an economic perspective. India still predominantly houses the traditional formats of retailing, that is, the local kirana shop, paan/beedi shop, hardware stores, weekly haats, convenience stores, and bazaars, which together form the bulk. Most importantly, Indian retail is highly fragmented, with about 11 million outlets operating in the country and only 4% of them being larger than 500 square feet in size.

Cabinet has cleared the FDI policy that allows multi brand retail in India, and companies like Walmart and Carrefour can now partner with an Indian company and sell to consumers .

NEW DELHI: Walmart, world's largest retailer, had informed the Industry Ministry last year that it is comfortable with India allowing 49 per cent FDI in multi-brand retail, in view of "political sensitivity" in the country. The Union Cabinet in its decision of November 24, which has since been put on hold, permitted 51 per cent FDI in the multi-brand retail, well above expectations of the Walmartand its Indian joint venture partner - Bharti Group.