Retailing in India: Recent Trends and Upcoming Challenges -Aspects of Indian Economy

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2011
RETAILING IN INDIA: RECENT TRENDS AND UPCOMING CHALLENGES -ASPECTS OF INDIAN ECONOMY

AUTHOR: SURBHI PAREEK CO-AUTHOR: KAUSTUBH PRAKASH
6/2/2011

Submission of paper On “Challenges and Suggestions for FDI in Multi brand retailing in India” By: Surbhi Pareek & Kaustubh Prakash

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Contents
1. Introduction…………………………………………………………. 2. Present economic scenario……………………………………. 3. A conflicting view 3.1 Expert Interpretation-Arguments in Against… 3.2 3.2Expert Interpretations- Arguments in Favor…. 4. Challenges and threats 4.1 Threats to Existing retailers…………………………….. 4.2 Threats to Foreign investors……………………………. 4.3 Threats to Economy……………………………………….. 5. The crawling advantages……………………………………… 6. Suggestions………………………………………………………… 7. Conclusion………………………………………………………….. 8. Research methodology………………………………………… 9. References…………………………………………………………….

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Retailing in India: Recent trends and Upcoming Challenges. Introduction “A good investment climate is central to growth and poverty reduction. A vibrant private sector create jobs, provides the goods and the services needed to improve the living standards, and contribute taxes necessary for public investment in health, education, and other services. But too often governments stunt the size of those contributions by creating unjustified risks, costs, and barriers to competitions” 1 Francois Bourguignon, Senior Vice President and Chief Economist, World Bank

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http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTW DR2005/0,,menuPK:47 768 1~pagePK:64167702~piPK:64167676~theSitePK:477665,00.html

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What is Foreign Direct Investment?
According to International Monetary Fund, FDI is defined as “Investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor. The investor’s purpose being to have effective voice in the management of the enterprise”.2

What is Multi-Brand Retailing?
Definition of Retailing It is defined as all activities involved in selling goods or services directly to the final consumer for their personal, non-business use via shops, market, door-to-door selling, and mail-order or over the internet where the buyer intends to consume the product.3 Multi brand retailing The marketing of two or more similar and competing products, by the same firm under different and unrelated brands. While these brands eat into each others' sales (see cannibalism), multi-brand strategy does have some advantages as a means of (1) obtaining greater shelf space and leaving little for competitors' products, 2 3

International Monetary Fund, Balance of Payments Manual, Washington, DC, 1977, pg.408 www.icmis.net/infoms/icoqm10/ICOQM10CD/pdf/P412-Final.pdf

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(2) Saturating a market by filling all price and quality gaps, (3) Catering to brand-switchers users who like to experiment with different brands, and (4) Keeping the firm's managers on their toes by generating internal competition.4 The retailing sector in India has undergone a significant transformation. Traditionally, Indian retail sector has been characterized by the presence of a large number of small unorganized retailers. However, in the past decade there has been development of organized retailing, which has encouraged large private sector players to invest in this sector. With high GDP growth, increased consumerism and liberalization, India has been portrayed as an attractive destination for FDI in retailing. However, at present India currently allows 51% FDI in single-brand retail and 100% in cash-and-carry stores that can only sell to other retailers and businesses. The objective of our study is to analyze the current retail scenario in India, investigate the controversial views of the various stakeholders and evaluate the likely challenges and threats of FDI in Multi -Brand Retailing to organize and unorganized domestic retailers and the country’s economy from entry of foreign...
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