Fdi in Retail Sector

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What is FDI?
Foreign Direct Investment is the investment which is done in productive assets and participation in the management of the company as the stake holders by a company which is based in one country, into a company based in another country. Recently the cabinet said OK for 51% FDI in multi-brand retail sector & 100% FDI in single brand. Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provision of the Foreign Exchange Management Act (FEMA) 1999. RBI also issues notifications which contains the Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2000 and had been amended many times. The Ministry of Commerce and Industry, Government of India is the nodal agency for motoring and reviewing the FDI policy on continued basis.

Ways of investment?
The investing company may make its overseas investment in a number of ways - Joint Ventures, merger, Franchising, Sourcing of Supplies from small-scale sector, Cash and Carry whole sale trading, Non-Store Formats, Strategic Licensing Agreements, either by setting up a subsidiary or associate company in the foreign country, by acquiring shares of an overseas company.
The foreign retail chains will need to make very expensive real estate investments which may or may not be feasible in the long run.

Who are the target group for FDI?
The people who prefer going to shopping malls instead of kirana shops constitute not a sizable percentage and who belong to affluent, upper middle and middle class. As such there is no immediate threat to the kirana shops or small venders, as they have their own share of customers with whom they share a special relationship.

Why only India?
India has a population of nearly 1.2 billion, and many countries feel it as most alluring and thriving retail destination. Liberalization of trade policy and loosening of barriers and restrictions to the foreign investment in the retail

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