Final fdi in retail ppt Presentation Transcript

1. FDI inRetail Sector

2. FDI in Retail Policy Perspectives.Retail Sector An Overview.FDI Policy in Retail -
Opportunities & Challenges.Emerging Human Resource Challenges.What lies ahead
?Issues for Discussion
3. FDIInRetailPolicyPerspective
4. An investment is.. The commitment of money or capital to purchase financial
instruments or assets in order to gain profitable returns.
5. An investment becomes foreign investment when..Foreign Investment through
Investment done by citizens and government of one country (home country) invest in
industries of another country (host country).Foreign Direct InvestmentsForeign
Institutional Investors
6. FDI Routes Automatic RouteGovernmentNo permission required Approval /License
required.
7. FDI Policy Initiatives1991- FDI allowed selectively up to 51% in priority
sectors.1997-FDI allowed up to 100% in sectors like mining, manufacturing.
8. 2000-06 FDI allowed up to 100% in specified sectors.FDI limits increased.Procedures
further simplifiedThe top 3 Indian Regions attracting the highest FDI. Mumbai, Delhi and
Karnataka. Account for nearly 62% of the total FDI.
9. Modes of FDI
10. Introduction to Modern Retail
11. FDI Policy in Indian Retail Sector
12. Why Global Retailers Look Up to India?Incentives attract FDI.Market size and
potential are sufficient inducers. Tax breaks, import duty exemptions, land and power
subsidies, and other enticements.
13. Comparison of FDI Inflow.
15. RetailIndustry : An Overview
16. Indian Retail SectorGRDI Position : 3rdSize : $ 400 billionGrowth Rate : 13%GDP
contribution : 12%Major sector : Food and GroceryEmployment : 2nd largest industry
(35.06 million)Types: Organized ( 5%) Unorganized ( 95%)
17. Emerging TrendsCorporates are increasingly coming into this sector.Demand of
branded goods on a large scale.Demand of new and varied products.High quality product
is preferred .Varied window display.E-tailers increase the presence.
18. Major Indian Retailers : Categories
19. Segmentation
20. One of the world's largest industries exceeding US$ 9 trillion.Dominated by
developed countries.47 global fortune companies & 25 of Asia's top 200 companies are
retailers.US, EU & Japan constitute 80% of world retail sales.Retail Sector at Global
Level
21. Retailtrade in Europe employs 15% of the Europeanworkforce (3 million firms and
13 million workers). The worlds population is poised to expand 50% by 2050. The world
currently comprises of 78% poor, 11% middle income and 11% rich.
22. Contribution Of Retail Industry to GDP of Various Economies
24. OrganisedvsUnorganised Retail at Global Level
25. Emerging Concepts
26. Opportunity Analysis and Strategies in Retail Globally
27. India Vs. China
28. FDIPolicy in retailopportunities
29. What Are Global Retailers Saying?
30. DemographicsINDIAA large emerging market .Increase in disposable income of a
family. 70 mn Indians salary of $18,000.Rise to 140 mn by 2011.Consumer spending
power increased by 75% in last 3 years.The per capita income in 20092010 has more
than doubled to US$ 849 from US$ 348 in 200001.
31. Characteristics of Indian MarketSource: McKinsey&Company
32. Consumer Class ShiftIncrease in consumer class.Consumer class will grow from 50
million at present to 583 million by 2025.With more than 23 million people taking their
place among the worlds wealthiest citizens.
33. Consumer BehaviourWide demographics -- average age of 25 yrs.Brand
consciousness.60 % of population below age of 30. Awareness through World Wide
Web.Changing consumer mindset.Focus shifting from low price to convenience, value
and a superior shopping experience.Small Basket Size Shaping of Consumption
34. Consumption BoomSource: McKinsey&Company
36. Easy CreditEasy consumer credit.EMI & loan via credit cards -- easy for Indian
consumers to afford expensive products.For instance, Casas Bahias- Brazil. Note: BOP
C.K.Prahalad.
37. Employment GenerationEmployment generation.Second-largest employer after
agriculture.Retail trade employing 35.06 million.Wholesale trade generating an
additional employment of 5.48 million.Additional 1.6 mn jobs .
38. Better use of resources and goods.Wastage andTechnologyTechnology Storage
problems will be resolved.Efficient logistics, production, and distribution
channels.Digital records.
39. Infrastructure
40. Rural MarketRural market.Robust Consumption.70% Indian households. 2/5 of the
countrys total consumption pie.Accounts to 45% of GDP.
41. Fiscal GrowthFDI in Retail sector will resolve problems regarding foreign exchange
in India.Evergreen NeedThe life-long basic needs will keep on driving the Retail
Industry.
42. Let the liberalisation be in steps rather than being a leap.
43. FDI PolicyinRETAILCHALLENGES
44. Challenges
45. Major challenge faced by Organized retail sector: In Retail, over 70 per cent of the
labor force in both sectors combined (organized and unorganized) is either illiterate or
educated below the primary level.Labor LawsLack of Skilled Workforce
46. A strong competition from mom and pop shops:-Easily accessible &
approachable.Provide services like Free home delivery and goods on credit.They change
consumer focus.COMPETITION
48. Problem of Real Estate
49. Organized Retail Formats in India
51. Market power is in hands of unorganized retail.Potential of Indian Market is US$ 200
billion whereas India is just earning its 3%.Market Power
52. Absence of Developed supply chain
53. ShrinkageIn India every year there is pilferage of US$ 65 billion whereas in USA it is
just 1-2%.Lack of Logistic Infrastructure Due to lack of proper storage infrastructure
post-harvest losses of farm produce is Rs. 1 trillion cr. annually.
54. CorruptionIn terms of corruption India stands at 85th position. Because of paper
work, corruption is present along the entire supply chain. Additional IntermediariesIn
India, there are additional 2-3 intermediaries as compared to USA. They dominate the
value chain.They flout mandi norms & their pricing lacks transparency.
55. Technology Hurdle India is still in developing stage in installing and managing an
effective IT system especially in rural areas which hampers the overall growth of
organized retail sector.
56. Banks are reluctant to finance retailers because of falling demand of organized
retailers in India as it has witnessed failure of many stores like Spencer's, Subhiksha,
etc.Problem in Raising Funds
57. Taxation laws in India favors only small retail businesses.Implementation of non-
uniform VAT across states.Octroi and entry tax in some states.Taxation & Stringent
Approvals
58. No Automatic Approval for FDI- Only 51% FDI is allowed to one brand shops in
Indian retail sector.Complications in issuance of licenses like a hypermarket in Mumbai
must apply for 29 unique licenses & then when it has to come up with second store it has
to apply for same 29 licenses all over again.
59. Inflation Effect on Indian Retail Industry
60. EMERGINGHUMANRESOURCECHALLENGES
61. Present ScenarioIndian retail sector :Employs 8% (35 million)of the working
population.Could yield 12 to 15 million retail jobs in the coming five years.Out of which
organized segment is about 0.3 million.Retail sector grew at 9.4% on real terms & 15.4%
on nominal terms.
62. Value Chain & Core ProcessesBack End OperationsFront End OperationsStore
OperationsMerchandisingLogistics & DistributionsMarketingProcurement/
PurchaseCorporate Services
63. Functional Distribution of Employment in Retail
64. Distribution of Human Resource by Education Level
65. Profile RequiredMBA Graduates with 5-10years of ExperienceGraduates with 2-
5years of ExperienceGraduates/ 12th Pass/ 10th PassGraduates/ 12th Pass/ 10th Pass
66. Skill Requirements &Skill Gaps
67. Associates& Executives
69. Senior Manager & Manager
71. Factors Leading to Difference in Skill Intensity Across Retail
SegmentsComplexity/Technical Nature of ProductLevel of Customer InvolvementStore
CharacteristicsNature of Supply ChainChanges in the Product Nature/ TypePrice
Segment(Luxury, Mass market etc.Intensity of Skill Requirement
72. IssuesDemandCommunication Skills Multi TaskingSupplyLimited Retail Training
Opportunities Higher Level Skills
73. Current Training/Education Infrastructure The Retailers Association of India (RAI) -
Diploma and Degree Programs in Retailing - Bharti Retail and Vishal Retail - 5,000
trained persons
74. Projected Industry Size
75. Skill PyramidLevel 4Level 3Level 2Level 1
76. What lies ahead?
77. NSSO Concerns On Opening Up Of FDIEmployment. Unfair competition.Under-
developed organized retail sector.
78. FDI can be a powerful catalyst to spur competition in the retail industry.It can bring
about:Supply Chain ImprovementInvestment in TechnologyManpower and Skill
developmentEfficient Small and Medium Scale IndustriesIncrease in exportsFDI In
Retail- A Policy Perspective, - FICCI and ICICI
79. Future Investments
80. Major Retail Players Entering Into India
81. Benefits Envisaged To Agriculture Through The Opening Of FDIInvestment into
warehouse and cold storage chain will result in significant efficiency on supply
chain.Farmers benefited through direct marketing and contract farming programme.
Improves farm production through modern techniques.Increasing availability of low
interest credit for farmers.
82. Future Predictions In the last four year, the consumer spending in India climbed up to
75%. By the year 2013, the organized sector is also expected to grow at a CAGR of
40%.The total number of shopping malls is expected to expand at a CAGR of over 18.9
per cent by 2015.
83. RecommendationsThe initial cap on investment could be pegged at 49%.FDI should
be leveraged to create back-end infrastructure.FDI will be a powerful driver to curb
inflation.
84. ?????To develop our rural sector ,should conditionalitys be put on the FDI funded
chains relating to employment?For example, should we stipulate that at least 35% of the
jobs in the retail outlets should be reserved for the rural youth?
85. Urban migrationOpportunity to urban and rural unemployedAlternative incentive
schemes
86. Road MapIndustry experts predict that the next phase of growth in the retail sector
will emerge from the rural markets. By 2012 the rural retail market is projected to have a
total of more than 50 per cent market share. Apparel, along with food and grocery, will
lead organised retailing in India.(RNCOS)
87. What additional steps should be taken to protect small retailers? Should an exclusive
legal and regulatory framework be established to protect their interests??????
88. National legal framework cannot be effective.Hamper growth in retail sector.
Incentives directly to benefit small retailers.
89. Restrict the number of stores that can be operated in a city. Allow access to the small
retailers to the stores through special windows.Recommendations
90. Thank You