64934718 disadvantages of fdi in retail

7/29/2019 64934718 Disadvantages of FDI in Retail

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Isha Varma

Anu MoudgilSIIB


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Some Facts about FDI in Retail

Thailand : FDI entered in 1997

In 5 years, 60% of the then owned storesshut down

Britain : FDI in between 81-99

No of independent shops fell by 50%

Do we expect any better results in India

??


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FDI will bring in NEW JOBS

US: 85% of Retail is Organised

Walmart : 400 bn $ Turnover in US

In 2005,

400 bn $ = Total Value of Indian Retail Industry( 4.4% organised Retail)

2.1 Million Jobs in Walmart = 400 Million Jobs in India

21,00,000 = 40,00,00,00021 Lakh > 40 Crore

Is It. ??????


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Penetration of top 20 InternationalRetailers

Norway 99%

Sweden 94%

Switzerland 88%

France 81%

UK 64%

Portugal 57%

If foreign retailers could capture 20 % ofindianRetail Market , something about 8 Million jobs willbe lost. Their level of efficiency mean they needless and less of people for each 1000 crores ofTurnover - Business Line April 2005


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FDI in Retail Inflation

??Inflation = fn (...) of

Crude PriceExcess Liquidity (Stimulus

Package)No unload (hoarding by Govt. )

Fragmented and lengthy value chain


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Benefits to Farmers

Elimination of Middle Men : Increased Marginsto Farmers.


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Walmart in US

Every farmer has access to Computer

High levels of Commodity Trading

Condition of US farmers should be much

prosperous. Isnt it.. ?????? US -- Direct Support to Farmers

Why is US year after year giving indirectsubsidies to farmers ?

Acc to a UNCTAD Report if the green boxsubsidy is removed, the US Agriculture willcollapse !!


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Inviting Trouble for theFarmers

Contract farming-imposed on farmers-strictadherence to quality & schedule.

Possible with Upsets in weather &

infrastructural constraints? Decline in their number as companies tend to

delist suppliers who do not come up to

expectations. Premium from customers for improved quality

and rejects to the farmers lowering theirearnings.


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Modernizing what SupplyChain?

Source: NSS Report, Household consumer expenditure in India


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Reduce Middlemen : EfficientSupply Chain

Who are the intermediaries ????transporterssmall traders

Should we eliminate people who are bringing socialdevelopment to the country. Should they lose jobs ????

Who will be the intermediaries in new system.. ??

Big CorporatesBrand AmbassadorLarge PowerCNBC Report says Retail wants to increase advertisement expen

close to 1BN $, once the new norms are approved


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re ese re a c a ns rea y o eat back end ?

Mark Ashman, CEO Hypercity says I am hoping

whatever finally comes out is clear. We wouldlike to see the front end and the brand

belonging to us..&

Certainly other players that we are

in talk with also want the same


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Will imports from India by Wal-Mart go up?

Wal-Mart emphasizes the amount that it sourcesfrom India, as a reason it should be allowed tobuild stores.

70% imports from China.A massive entry point of China's largely state-

owned consumer goods.

Wal-Mart could upset the import balance byimporting massively from China rather thanusing local production.

Manufacturing job losses.


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Predatory Strategy

According to FICCI study, total turnover of the organizedand unorganized retail trade in India is less than theturnover of Wal-mart.

With its incredibly deep pockets Wal-Mart will be able tosustain losses in its Indian operations for many years tillits immediate competition is wiped out.

MONOPOLY!!!


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Results

High Real Estate Prices

Land Acquisition : Displacement of people.

Limited jobs in manufacturing.

Cannot provide employment to semi-literatepeople Form majority of population

Pushing families below the poverty line.

Creation of Monopolies.

The main purpose defeated if focus is on frontline instead of back end.

64934718 disadvantages of fdi in retail

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