FDI in india

Role of fdi in Indian economy

FDI- investment in a foreign country through the acquisition of a local company or the establishment there of an operation on a new (Greenfield) site.
FDI has enabled India to achieve a certain degree of stability, growth and development

First FDI reforms launched in 1998-99

FDI are permitted through:
Financial collaborations Private equity Capital markets Joint ventures

FDI Inflows in india

Amount of FDI inflows (In US$ million)
4500 4000 3500 3000 2500 2000 1500 1000 500 0

Amount of FDI inflows (In US$ million)

FDI: prohibited sectors

Retail Trading (except single brand product retailing) Lottery Business including Government /private lottery, online lotteries, etc. Gambling and Betting including casinos etc. Chit funds Nidhi company

FDI: prohibited sectors

Trading in Transferable Development Rights (TDRs)
Real Estate Business Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes Activities / sectors not open to private sector investment e.g. Atomic Energy and Railway Transport (other than Mass Rapid Transport Systems).

FDI Permitted Sectors

Sector Agriculture Tea Plantation Mining Petroleum & Natural Gas Defense Telecom % of FDI 100 100 100 100 Entry Route Automatic Government Automatic Automatic

26 74

Government Automatic upto 49% Government from 49% to 74% Automatic Automatic

Ecommerce Trading: Cash & Carry Wholesale

100 100

FDI in retail sector

Unorganized retail sector: 98%; Org. Retail: 2%
Unorganized contributes 14% to the GDP(US$ 1.8 tn) and absorbs 7% of labour force Hence the question of FDI is of primal importance Divergent views on the issue:
US evidence no collapse in existing employment opportunity UK Competition Commission- mass scale job loss with entry of hypermarkets

FDI in retail sector

India signatory to World Trade Organizations General Agreement on Trade in Services - opening up of the retail trade sector to foreign investment
Retail - A sale to the ultimate consumer

Franchising route
Current FDI Policy will not make any difference Prefer if Government liberalize rules for maximizing their royalty and franchise fees rely on innovative structuring of franchise arrangements to maximize their returns

FDI in retail sector

Partnership
key is finding a partner which is reliable and knows domestic market well

FDI in Multi Brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof Single Brand
Only single brand products would be sold (i.e., retail of goods of multi-brand even if produced by the same manufacturer would not be allowed) Products should be sold under the same brand internationally,

FDI in retail sector

Single Brand
single-brand product retail would only cover products which are branded during manufacturing and Any addition to product categories to be sold under single-brand would require fresh approval from the government

FDI: new perspective

GoI added an element of social benefit to its latest plan
First investment in the back-end supply chain and infrastructure Firms must have already created jobs for rural India Interests of consumers at large in relation to the interests of retailers must be considered At stake is the stability of the vital pillars of the economyretailing, agriculture, and manufacturing socioeconomic equilibrium