FDI in Retail: Opportunity or Threat

-

Recently Commerce and Industry ministry proposed a proposal to government for allowing FDI in Retail sector. The industry is getting hot after this proposal is being made. Retail sector is a sunrise sector with high growth potential. Till now India comprises 5%organised and remaining unorganized sector and expected to reach 10% by 2012. The factor that drives this growth is rise in Demographic profile, consumers aspirations, growing income of middle class family. Coming to the point that Is that good for India or not. The answer is yes because by allowing FDI in retail sector our economic condition will be strong and many more advantages along with disadvantages. Currently government has allowed 51% FDI in single brand Retaling and 100% in cash and carry business. Presently big Retailer are operating in this cash and carry business. For instance Walmart, Tesco to joint venture with different Indian companies.
Why FDI in Retail- As in first paragraph I have written that since 2006 government has allowed 51% FDI in single brand retailing. As far as new proposal are concern Government is going to allow up to 51% FDI in multi-brand Retailing only if it passes through various process of Indian Government. The very first reason for this proposal is our economy condition will be strong, strong distribution network, local employment, Improve in Infrastructure and many more. The second one is discouraging the player which is not serious in this sector. Government has seen condition of economy before and after FDI.
But some conditions- It is very obvious that government has also fear that If big players like Walmart, Tesco, Carrefour will enter into this segment they will destroy local vendors. so, Government is going to put some condition in this game. Conditions are as followings for Multinational players-
1. The very first condition is If a foreign player will enter than they have to procure goods from local manufacturers.
2. The second one is there will be 50% reserve employment for rural youth.
3. According to proposal players have to spent 50% of FDI in Infrastructure, logistic and agro-processing.
4. Paying attention towards agriculture food processing to boost Indian economy.
5. For protecting local vendors these retailers can operates only in big cities where minimum population is one million.
As far as my understanding is concern it is sure that our economy will boost but what happened with other players. There will be high price war in this sector that leads to destroy local players. But I am not sure would it be success in India due to Infrastructure problems. lets see what happened............

Comments

Post a Comment

Popular posts from this blog

World Class Exhibition Center in Dwarka

-
Image
The national capital is set to get a state-of-the-art convention centre on the lines of the ones in Shanghai, Hong Kong and Singapore for hosting exhibitions, trade fairs and summits of international standards. To be constructed in Dwarka’s Sector 25, three kilometers from the IGI airport in south-west Delhi, the two-phased project was approved by the Union cabinet in November while the contracts were awarded last week. Architects working on the project, billed as one of the biggest in Asia, said it is conceived as a smart, zero energy, world-class facility designed for an events like G-20 summit. The  exhibition-cum-convention centre in Dwarka  and its allied infrastructure which includes, an arena, primary structure, Delhi Metro, road connectivity, hotels and office spaces, is being constructed at an estimated cost of ₹25,703 crore. It will be completed by 2025, a statement of Union ministry of commerce and industry informing about the Cabinet decision said.
Read more

Toyota: A Case of Overconfident

-
Image
Toyota a Japanese automobile company and world's largest automobile company in terms of sales. Now a days company is facing crisis this is due to recall of their vehicles(Toyota Prius) which has some sort of problem in brake and accelarater. Why this is a case of overconfident because when company got news about problem in few cars. They were fully confident that they can handle this problem effectively but fact is not like this. Now they are going to become victim of overconfident. According to company's philosophy "each problem provides opportunity for improvement". That's what company is facing problem. According to analysts the main reason for this recall is higher growing rate and other factors as well. so, being a company who believe in Just-in-time facilities how they are facing this types of problems. Now when Toyota started repairing millions of defected car they were not able to handle it. The very first and recent reason is Arrogance which the company h
Read more

Marketing Myopia : A complex Marketing concept

-
Image
Marketing Myopia is a term used in marketing which has been written by Theodore Levitt. Basically this concept talks about short sightedness of an Industry or any product or services by company or marketers. In this post I will write about this concept in brief with example for better understanding. According to Mr. Levitt they started talking about first Railroads. In case of railroads there was not a fault in management however there were fault in vision of long term. They took railroads only in terms of railways instead of taking in entire Transportation solution. This concept say that instead of taking it in one way of solution they should take in to in a way of entire solution. So, this is what we called as Marketing Myopia. They are giving excuse that car and other transportation services have destroyed the drastic growth of this sector. Again there is time to think out of the box. Second example is the Bollywood industry again there is also same problem. In case of Bollywood wha
Read more