ORGANIZED RETAIL Table 4.3: Turnover in different segment (Rs. Crore) of retail INDIAN RETAIL MARKET (Rs.

Crore) Retail 2006 2007 Growth 2006 2007 Segments 2007 > 2006 (%) Clothing, 113,500 131,300 15.7 21,400 29,800 Textiles & Fashion Accessorie s Jewellery 60,200 69,400 15.3 1,680 2,300 Watches 3,950 4,400 11.4 1,800 2,150 Footwear 13,750 16,000 16.4 5,200 7,750 Health & 3,800 4,600 21.1 400 660 Beauty Care Services Pharmaceut 42,200 48,800 15.6 1,100 1,540 icals Consumer 48,100 57,500 19.5 5,000 7,100 Durables, Home Appliances /equipment s Mobile 21,650 27,200 25.6 1,740 2,700 handsets. Accessorie s& Services Furnishings 40,650 45,500 11.9 3,700 5,000 , Utensils, FurnitureHome & Office Food & 743,900 792,000 6.5 5,800 9,000 Grocery Out-of57,000 71,300 25.1 3,940 5,700 Home Food (Catering) Services Books, 13,300 16,400 23.3 1,680 2,200 Music & Gifts Entertainm 38,000 45,600 20.0 1,560 2,400 ent TOTAL 1,200,000 1,330,000 10.8 55,000 78,300

Growth 2007 > 2006 (%) 39.3

36.9 19.4 49.0 65.0

40.0 42.0

55.2

35.1

55.2 44.7

30.9

53.8 42.4

Table 4.1: Facts about Various Types of Retail Outlet Type of Retail Outlet Haats

Facts- Numerical

Melas

Mandis

Average Sales per Day-Rs.2.25 lakh Number of sales outlets per - Haat 300+ Number of Visitors per Haat- 4500+ Average Sales per Outlet-Rs 900 Villages covered by a Haat - 20-50 Annually held (Approx) - 25,000+ Outlets held at every mela at an average - 800+ Average Sales per Mela-Rs 143 Lakh At average exists - 6,800 catering to a population of 1.36 Lakh

Table 4.4 : Share of Organized Retail % Organized to Total Market Retail Segments 2004 2005 2006 Clothing, 13.6% 15.8% 18.9% Textiles & Fashion Accessories Jewellery 2.0% 2.3% 2.8% Watches 39.6% 43.5% 45.6% Footwear 25.0% 30.3% 37.8% Health & 6.0% 7.6% 10.6% Beauty Care Services Pharmaceutica 1.8% 2.2% 2.6% ls Consumer 7.8% 8.8% 10.4% Durables, Home Appliances/Eq uipments Mobile 6.5% 7.0% 8.0% handsets, Accessories & Services Furnishings, 6.7% 7.6% 9.1% Utensils, FurnitureHome & Office Food & 0.5% 0.6% 0.8% Grocery Out-of-Home 5.7% 5.8% 6.9%

2007 22.7%

3.3% 48.9% 48.4% 14.3%

3.2% 12.3%

9.9%

11.0%

1.1% 8.0%

Food (Catering) Services Books, Music & Gifts Entertainment Total

9.8% 2.6% 3.0%

11.7% 3.3% 3.6%

12.6% 4.1% 4.6%

13.4% 5.3% 5.9%

108 In the overall Retail pie Food and Grocery was the dominant category with 59.5 per cent share, valued at Rs.792,000 crore, followed by Clothing and Accessories with a 9.9 per cent share at Rs.131,300 crore. Interestingly, out-of-home food (catering) services (Rs.71,300 crore) has overtaken Jewellery (Rs.69,400 crore) to become the third largest retail category, with a 5.4 per cent market share this largely reflects the massive employment opportunities to youngsters in the services sector and accompanying changes in consumer lifestyles. Consumer durables (Rs.57,500 crore) is the fifth largest retail category followed by Health & Pharmaceuticals (Rs.48,800 crore), Entertainment (Rs.45,600 crore), Furniture, Furnishings & Kitchenware (Rs.45,500 crore), Mobiles & Accessories (Rs.27,200 crore), Leisure retail (Rs.16,400 crore), Footwear (Rs.16,000 crore), Health & Beauty Care services (Rs.4,600 crore) and Watches & Eyewear (Rs.4,400 crore) in the order. In the organized retail segment, the picture is different altogether. Clothing & Fashion Accessories is the largest category with 38.1 per cent of the market share, valued at Rs.29,800 crore, followed by Food & Grocery accounting for 11.5 per cent of the organized retail market at Rs.9,000 crore , Footwear with 9.9 per cent of the organized retail market share at Rs.7,750 crore, Consumer Durables with 9.1 per cent market share at the fourth place (Rs.7,100 crore), and Out-of-home food (catering) services and Furniture, Furnishings & Kitchenware retail in the order. The mobile & accessories retail market has shown fastest growth in 2007 (25.6%) over the previous year, the other two prominent categories being out-of- home food (catering) services where growth was 25.1 per cent and books, music & gifts leisure category which achieved 23.3 per cent growth.

Definition of 'Foreign Direct Investment - FDI'

An investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation's stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies

Types[edit]
1. Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.[4] 2. Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country. 3. Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.[4]

Horizontal FDI decreases international trade as the product of them is usually aimed at host country; the two other types generally act as a stimulus for it.[citation needed]

Methods[edit]
The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods:

by incorporating a wholly owned subsidiary or company anywhere by acquiring shares in an associated enterprise through a merger or an acquisition of an unrelated enterprise participating in an equity joint venture with another investor or enterprise[5]

Forms of FDI incentives[edit]

Foreign direct investment incentives may take the following forms:[citation needed]

low corporate tax and individual income tax rates

tax holidays other types of tax concessions preferential tariffs special economic zones EPZ Export Processing Zones Bonded Warehouses Maquiladoras investment financial subsidies soft loan or loan guarantees free land or land subsidies relocation & expatriation infrastructure subsidies R&D support derogation from regulations (usually for very large projects)

Governmental Investment Promotion Agencies (IPAs) use various marketing strategies inspired by the private sector to try and attract inward FDI, including Diaspora marketing.

Importance and barriers to FDI[edit]

The rapid growth of world population since 1950 has occurred mostly in developing countries[citation needed]. This growth has been matched by more rapid increases in gross domestic product, and thus income per capita has increased in most countries around the world since 1950. While the quality of the data from 1950 may be of question, taking the average across a range of estimates confirms this. Only war-torn and countries with other serious external problems, such as Haiti, Somalia, and Niger have not registered substantial increases in GDP per capita. The data available to confirm this are freely available.[6] An increase in FDI may be associated with improved economic growth due to the influx of capital and increased tax revenues for the host country. Host countries often try to channel FDI investment into new infrastructure and other projects to boost development. Greater competition from new companies can lead to productivity gains and greater efficiency in the host country and it has been suggested that the application of a foreign entitys policies to a domestic subsidiary may improve corporate governance standards. Furthermore, foreign investment can result in the transfer of soft skills through training and job creation, the availability of more advanced technology for the domestic market and access to research and development resources.[7] The local population may be able to benefit from the employment opportunities created by new businesses.[8]
Developing world[edit]

A 2010 meta-analysis of the effects of foreign direct investment on local firms in developing and transition countries suggests that foreign investment robustly increases local productivity growth.

[9]

The Commitment to Development Index ranks the "development-friendliness" of rich country investment policies.
China[edit]

FDI in China, also known as RFDI (renminbi foreign direct investment), has increased considerably in the last decade, reaching $59.1 billion in the first six months of 2012, making China the largest recipient of foreign direct investment and topping the United States which had $57.4 billion of FDI.[10] During the global financial crisis FDI fell by over one-third in 2009 but rebounded in 2010.[11]
India[edit]

Foreign investment was introduced in 1991 under Foreign Exchange Management Act (FEMA), driven by then finance minister Manmohan Singh. As Singh subsequently became the prime minister, this has been one of his top political problems, even in the current times.[12][13] India disallowed overseas corporate bodies (OCB) to invest in India.[14] India imposes cap on equity holding by foreign investors in various sectors, current FDI limit in aviation sector is maximum 49%.[15] Starting from a baseline of less than $1 billion in 1990, a 2012 UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 20102012. As per the data, the sectors that attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, US and UK were among the leading sources of FDI. Based on UNCTAD data FDI flows were $10.4 billion, a drop of 43% from the first half of the last year.[1]
United States[edit]

Broadly speaking, the U.S. has a fundamentally 'open economy' and low barriers to foreign direct investment.[16] U.S. FDI totaled $194 billion in 2010. 84% of FDI in the U.S. in 2010 came from or through eight countries: Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the Netherlands, and Canada.[17] A 2008 study by the Federal Reserve Bank of San Francisco indicated that foreigners hold greater shares of their investment portfolios in the United States if their own countries have less developed financial markets, an effect whose magnitude decreases with income per capita. Countries with fewer capital controls and greater trade with the United States also invest more in U.S. equity and bond markets.[18] White House data reported in July 1991 found that a total of 5.7 million workers were employed at facilities highly dependent on foreign direct investors. Thus, about 13% of the American manufacturing workforce depended on such investments. The average pay of said jobs was found as around $70,000 per worker, over 30% higher than the average pay across the entire U.S. workforce.[16]

President Barack Obama said in 2012, "In a global economy, the United States faces increasing competition for the jobs and industries of the future. Taking steps to ensure that we remain the destination of choice for investors around the world will help us win that competition and bring prosperity to our people."[16] In September 2013, the United States House of Representatives voted to pass the Global Investment in American Jobs Act of 2013 (H.R. 2052; 113th Congress), a bill which would direct the United States Department of Commerce to "conduct a review of the global competitiveness of the United States in attracting foreign direct investment."[19] Supporters of the bill argued that increased foreign direct investment would help job creation in the United States.[20]
Canada[edit]

Foreign direct investment by country[21] and by industry[22] are tracked by Statistics Canada. Foreign direct investment accounted for CAD$634bn in 2012. Canada eclipses the US in this important economic measure. Global FDI inflows and outflows[23] are tabulated by Statistics Canada.
United Kingdom[edit]

The United Kingdom has a very free market economy and open to foreign investment. The current Prime Minister David Cameron has sought investment from emerging markets and from the Far East in particular and some of Britain's largest infrastructure including energy and skyscrapers such as The Shard have been built with foreign investment. The United Kingdom has been a nation of free trade and open to global markets and investment for decades often taking advantage of countries looking to make investments.