An Overview of Foreign Direct Investment in India
FDI IN THE RETAIL SECTOR IN INDIA – An Overview
Introduction
FDI – Literally expanded to Foreign Direct Investment (in retail) is an economic policy which would allow foreign players in the particular sector to invest in the Indian market or Indian enterprise or economy in order to acquire management interest on behalf of the investor/ing party. Such major parties like Walmart Stores Inc, Carrefour etc would be able to own up to 51% of retail stores here or 100% of single-brand stores (FDI in ‘Single brand’ retail implies that a retail store with foreign investment can only sell one brand. For example, if Adidas were to obtain permission to retail its flagship brand in India, those retail outlets could only sell products under the Adidas brand and not the Reebok brand, for which separate permission is required).However, 100% direct investment in single brand outlets comes at a price – The government, as a measure of protection, has said foreign retailers would have to source 30 percent of their goods from small industries.
As such, the government is considering safety valves for calibrating FDI in the sector. For example: * A large sum of the investment would be required to be spent on long term investments building up infrastructure , creating a sound logistics system, and setting up business units so as to make sure that they show and support long term growth for our country. * At least 50% of the job positions would have to be filled up by local rural; youth and some of the produce would come from local farmers. * To protect the interest of small retailers, an exclusive regulatory framework to ensure that the retailing giants do not resort to predatory pricing or acquire monopolistic tendencies.
Advantages to India & Indian Players
51% FDI will accelerate retail market growth, providing more employment opportunities
With FDI in the retail sector, the number of employment opportunities with increase tremendously. Jobs at various
Introduction
FDI – Literally expanded to Foreign Direct Investment (in retail) is an economic policy which would allow foreign players in the particular sector to invest in the Indian market or Indian enterprise or economy in order to acquire management interest on behalf of the investor/ing party. Such major parties like Walmart Stores Inc, Carrefour etc would be able to own up to 51% of retail stores here or 100% of single-brand stores (FDI in ‘Single brand’ retail implies that a retail store with foreign investment can only sell one brand. For example, if Adidas were to obtain permission to retail its flagship brand in India, those retail outlets could only sell products under the Adidas brand and not the Reebok brand, for which separate permission is required).However, 100% direct investment in single brand outlets comes at a price – The government, as a measure of protection, has said foreign retailers would have to source 30 percent of their goods from small industries.
As such, the government is considering safety valves for calibrating FDI in the sector. For example: * A large sum of the investment would be required to be spent on long term investments building up infrastructure , creating a sound logistics system, and setting up business units so as to make sure that they show and support long term growth for our country. * At least 50% of the job positions would have to be filled up by local rural; youth and some of the produce would come from local farmers. * To protect the interest of small retailers, an exclusive regulatory framework to ensure that the retailing giants do not resort to predatory pricing or acquire monopolistic tendencies.
Advantages to India & Indian Players
51% FDI will accelerate retail market growth, providing more employment opportunities
With FDI in the retail sector, the number of employment opportunities with increase tremendously. Jobs at various
References: http://www.hindustantimes.com/India-news/NewDelhi/What-s-FDI-in-retail/Article1-775543.aspx http://www.india-briefing.com/news/foreign-direct-investment-indias-single-multibrand-retail-5232.html/ http://www.dnaindia.com/mumbai/report_will-fdi-help-indian-retail-market-grow-pune-speaks-up_1620277 http://indianwarriors.co.in/negative-effects-of-fdi-in-retail-sector-on-india/