Fdi in Retail in India
| FDI In Retail in India | | | Under the Guidance ofMr. Ranjan ChaudhuriSubmitted ByRajkumar (80)Shristi Gupta (94)Swati Jain (112) | |
|
FDI in Retail in India: An Article
Abstract: As per the current regulatory regime, retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a ‘single-brand’; this condition being in addition to a few other conditions to be adhered to. That explains why we do not have a Harrods, or the cost leader Wal-Mart, or the awe-striking brands like Carrefour and Tesco in India.
India being a signatory to World Trade Organization’s General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. In 1997, FDI in cash and carry (wholesale) with 100 percent ownership was allowed under the Government approval route. It was brought under the automatic route in 2006. 51 percent investment in a single brand retail outlet was also permitted in 2006. FDI in Multi-Brand retailing is prohibited in India and the debate is still on whether or not it should be allowed and what are the pros and cons for the decision.
Literature review * Definition of Retail
‘Retail’:- a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale). ‘A sale to the ultimate consumer’[1]. Thus, retailing can be said to be the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. * Division of Retail Industry
The retail industry is mainly divided into:- 1) Organised and 2) Unorganised Retailing
Organised retailing refers to trading activities undertaken by
|
FDI in Retail in India: An Article
Abstract: As per the current regulatory regime, retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a ‘single-brand’; this condition being in addition to a few other conditions to be adhered to. That explains why we do not have a Harrods, or the cost leader Wal-Mart, or the awe-striking brands like Carrefour and Tesco in India.
India being a signatory to World Trade Organization’s General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. In 1997, FDI in cash and carry (wholesale) with 100 percent ownership was allowed under the Government approval route. It was brought under the automatic route in 2006. 51 percent investment in a single brand retail outlet was also permitted in 2006. FDI in Multi-Brand retailing is prohibited in India and the debate is still on whether or not it should be allowed and what are the pros and cons for the decision.
Literature review * Definition of Retail
‘Retail’:- a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale). ‘A sale to the ultimate consumer’[1]. Thus, retailing can be said to be the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. * Division of Retail Industry
The retail industry is mainly divided into:- 1) Organised and 2) Unorganised Retailing
Organised retailing refers to trading activities undertaken by
Bibliography: [4] Notification No. FEMA 20/2000-RB dated May 3, 2000 [5]FDI_Circular_02/2010, DIPP [6] http://siadipp.nic.in/policy/changes/pn3_2006.pdf [7] Mohan Guruswamy, Implications of FDI in Retail, (Dec 16 2010) http://www.scribd.com/doc/36888679 [8] Discussion Paper on FDI in Multi Brand Retail Trading, http://dipp.nic.in/DiscussionPapers/DP_FDI_Multi-BrandRetailTrading_06July2010.pdf [9] National Accounts Statistics, 2009