FDI in Retail!

asingh said:
There are restrictions in place, for them not to run haywire. They can operate in cities where the population is >= 1M. Minimal investment of $100M, of which 50% has to be for back-end operations and supply chain mechanisms. Back - end <> land/property. 30% of the sourcing from SMI.

I think the door has been opened, but not crazy wide. Good decision, should help the economy.
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... but who will KEEP WATCH whether they invest 50% of $100M in to back-end operation or doing exactly AS PER agreement? same GOVT!? who kept watch on 2G, 3G, CW Games ... :(

Before FDI in retail>> Indian Seller buy from Indian producer >> sell to Indian>> Pay to Indian worker they employ>> pay tax to Indian Govt. >> keep profit in Indian bank or at home (any how money keep rotating in Indian Economy) :)

After FDI in retail>> Foreign Seller Buy from India (any guarantee?)>> sell to Indian >> pay to Indian employee (top management may be not from India) >> pay tax to Indian Govt. (may be at concessional rates) >> Collect profit & deposit in to THEIR respective Country Bank (Indian money went out of Indian Economy) :(

I'm NOT talking about Big Tycoons who systematically invest Black Money in SWISS BANK but small small grocery shop & general product seller/supplier in Indian City or near to your Society Building & Naka.

I'm not economist nor have deep knowledge about all but my 2 cents.
 
This move should benefit the Indian consumer. It also emantes from the pressure that US has been applying on Indian Govt to open up it's shores to FDI in Retail. Retail in US is saturated IMO.

It should greatly improve customer service, quality of product.

Younger guys who have not seen pre/post Indian Economic Reforms will not understand how much FDI benefits the standard of living. India has evolved culturally post 1991 with the advent of Cable, Coke etc.

If you visit some of the major Retailers site made in JV with Indian counterparts, you'll know how bad they are at the moment.

And let's not assume that they are going to occupy the entire market immediately. Look at the market share in the Passenger car industry for example.

It will also mean that IT services companies will see a lot of traction in Indian Retail market.

And ultimately the end consumer will have more choices, exclusive items at our disposal at better prices and hopefully better logistics and Customer support. Isn't that what we all want?

PS: There was another interesting piece of news some days back stating that there are not many Luxury Retail Stores etc (real estate targeted towards Retail) in pipeline post 2012, primarily because the returns are less compared to other avenues.
 
memnom said:
But too much foreign investment is never a good thing. Just ask America.
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Exactly, Few days back when I was reading economic times. An article said that the limit; FIIs can invest in stock market has hit the ceiling and Govt may modify it. Now considering current scenario; so much investment by FII; still economy in stress. currency on all time low. More dependency on foreign fund also means more exposure to their economic good and bad.

International brands in country is good for consumer as they raise the standard of local market and things, it also means competition low price, several jobs created etc etc.

BUT our economy should not revolve around that. If it happens than it is dance on a rented floor.
 
NinByChoice said:
They have to form a joint venture with Indian company (Bharti-Walmart) to start operations (49% ownership max for foreign partner = non-controlling stake). There are also various other restrictions on the supplying company and where/how much the goods are sourced from. This is why you dont see Walmart or Ikea here.

A lot of these restrictions will now be removed. The holding limit for foreign company is increased to 51% for multi-brand retail. And 100% for single brand retail.
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So what has changed? Just holding limit increased from 49% to 51%? If yes, then how will it make a huge difference considering people are foreseeing this as the biggest reform in years..
 
trigger said:
So what has changed? Just holding limit increased from 49% to 51%? If yes, then how will it make a huge difference considering people are foreseeing this as the biggest reform in years..
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I think 51% means that the foreign investors can now make decisions as they would be majority shareholders
 
trigger said:
So what has changed? Just holding limit increased from 49% to 51%? If yes, then how will it make a huge difference considering people are foreseeing this as the biggest reform in years..
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They are the boss now with much more power.Even say there are only 2 partners foreign having 51% other 49%.Still 51% partner have every right to negate 49% power vote and do his own.
adi_vastava said:
Exactly, Few days back when I was reading economic times. An article said that the limit; FIIs can invest in stock market has hit the ceiling and Govt may modify it. Now considering current scenario; so much investment by FII; still economy in stress. currency on all time low. More dependency on foreign fund also means more exposure to their economic good and bad.

International brands in country is good for consumer as they raise the standard of local market and things, it also means competition low price, several jobs created etc etc.

BUT our economy should not revolve around that. If it happens than it is dance on a rented floor.
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Why is the dollar market running against rupee when all knows that its ultimately US whose economy is going negative .And indian stock market falling.Its all becoz foreign ers who have invested here are all taking their money out and converting them to dollars hence suddenly in 2 months from 42 to 52-53.Its all becoz of foreign dependence else whats wrong here when everyone looking for job gets one and no company shutting shop here locally.
mehrotra.akash said:
I think 51% means that the foreign investors can now make decisions as they would be majority shareholders
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Yup...thats the point.Decision making power goes out of hand.
 
But if the Indian companies (Big baazar,Spencers,Subiksha,etc) and the govt. could not manage to make the supply chain more efficient, whats the harm in letting foreign companies try their hand?

esp. since they are being limited to cities > 1,000,000 population , and other such restrictions
 
mehrotra.akash said:
But if the Indian companies (Big baazar,Spencers,Subiksha,etc) and the govt. could not manage to make the supply chain more efficient, whats the harm in letting foreign companies try their hand?

esp. since they are being limited to cities > 1,000,000 population , and other such restrictions
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Do you think in INDIA rules are followed strictly?

Also suppose a place have 4 lakh population and in 4 years it goes to 6 lakhs and government says no it crossed 10 lakhs will we count individually or technically will the store wont open ?

And when foreign players enter they have only 1 intention make profit and bring that back to their parent country which is happening right now in stocks.All investment made so far with multiple returns earn is going back to parent.Best example is british gas selling stake in gujarat gas so as now they can find new international market to multiply their money as they know after diesel ,government wont allow multiply profit on gas as already gas prices in international market is all time high and government busy with subsidy or dont increase price stuff.

When the same happens in retail at that time this players(future group) will fall flat and that will really earn bad name to country economic consumption.Though i dont have idea what restriction will be impose on FDI right now.I am talking flat FDI majority stake.
 
Every day there are unreported suicides by farmers from vidarbha. Most of the deaths are not reported and treated as accidents by government who wants to cover this mess at all costs.

Right now when i am writing this some farmer from Yaetmol , Akola , Wardha ,Bhandara etc is consuming pesticide as the farming has literally become uneconomical for them and they are under heavy debt ,never ending loans.

Yesterday when i visited my village , the rate of onions , tomatoes , vegetables ,grains being sold by farmers were 1/50th to the middle men, of what is being sold in the cities by middle men.

Trust me farmers in Vidharbha wants big chains like reliance fresh who earlier used to pickup the fruits and vegetables directly from them.

For every 300 Farmers there is one middleman .Check your figures. What will we do when there are no farmers left to cultivate.

Can we be all so shortsighted that we loose the basic economics of this chain.Don't the farmers of India have any right to live ?

Check your facts.Compare a farmer from US/UK/Europe and compare them to ours side by side. Aren't we missing something ?

While we fight for small changes in government law debating on the cons and condition of small kirana shop,middle men,who close the shop at 9PM, somewhere a farmer who has not idea of existence of TE/Forum/Internet stays awake all night so at 2 Am in the morning when the electricity comes/turns 3Phase/ they can water farms,each day ,every day ,almost all his life at this hour and sell his sweat at the cheapest rate, so for most of us who don't know the hrs of load shedding in rural areas can sit here and debate stuff reading this on monitor 24X7 taking life and electricity for granted,while life somewhere gives up.
 
It is just ~42 cities as of now, which are theoretically possible. Christ, it is not that foreign stores are going to take over and rule us.

Most of us are so gung-ho getting stuff via Shop and Ship to India and ebay.us, now when stuff like this is coming to our own shores we get so paranoid and show a false sense of nationalism. Is it paranoia or a misunderstanding of what is about to happen.
 
Isn't it a tad hypocritical to accept a huge increase in the Indian services and software sector coming from outsourcing from other countries and then say that protectionism is good?
 
Exactly, its only the middle men who introduce inefficiency in the system who MAY be harmed in any way

Even there, there is a very large amount of inertia in our culture with the mandi and kirana system, so the demographic which will actually use these stores as their primary shopping destination is relatively small

Probably big enough to support their business, but not big enough to shutdown a large number of small shops
 
whatsinaname said:
Isn't it a tad hypocritical to accept a huge increase in the Indian services and software sector coming from outsourcing from other countries and then say that protectionism is good?
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I agree with you, but then you are forgetting that selfishness is a overwhelming human trait. People want everything to be in their favor. People demand that America should not be protectionist about their jobs when they want to tighten their visa rules and with the same voice also demand that India be protectionist and they don't even see anything unfair or hypocritical in that. People will say/demand whatever is in their interests.

For instance go to TOI and look up any article related to the Telangana issue. The would be tonnes of Telangana people complaining how outsiders are taking up their jobs and what not, but most these guys are themselves working in other states or countries. They want other states and countries to accommodate them, but they don't want to accommodate anyone else in their own cities. Same goes for how some mumbaikars in other countries and states always complain about Bihar and UP people in Mumbai.
 
asingh said:
It is just ~42 cities as of now, which are theoretically possible. Christ, it is not that foreign stores are going to take over and rule us.

Most of us are so gung-ho getting stuff via Shop and Ship to India and ebay.us, now when stuff like this is coming to our own shores we get so paranoid and show a false sense of nationalism. Is it paranoia or a misunderstanding of what is about to happen.
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Any idea if BLR , Gurgaon and NOIDA would be in the 1M+ cities?

Also, with statements like "I will burn down the 1st walmart with my own hands" coming from our politicians, I wonder how many of these players would be scared off (since a $100M initial investment is required as well)
 
freshseasons1 said:
Check your facts.Compare a farmer from US/UK/Europe and compare them to ours side by side. Aren't we missing something ?
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I agree about the middleman part and there is no doubt that quite often farmers do not get what they should because of middle men, but I think your are forgetting something. Farmers abroad do not always get subsidies on everything like in India, They don't get to illegally tap electric lines to get free electricity without meters and abuse it like anything. When electricity is cut due to abuse, they don't get to come on to the roads in numbers, burn buses, create all sorts of mayhem (Personal Experience) and hope to get away with it like in India. I haven't seen anyone take electricity for granted and abuse it like village folk do. Both the rich and the poor are the kings in India. except for a few honest folk, every ounce of electricity used in villages is illegally tapped and used at the expense of middle class tax payers. If you want to pity anyone, then pity the avg middle class man because that is whom the country is really running on and that is whom everyone else's (whether rich or poor) privileges come at the expense of.
 
mehrotra.akash said:
Any idea if BLR , Gurgaon and NOIDA would be in the 1M+ cities?

Also, with statements like "I will burn down the 1st walmart with my own hands" coming from our politicians, I wonder how many of these players would be scared off (since a $100M initial investment is required as well)
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Bangalore and GGN have breached 1M. Noida has not.

Here is the comprehensive list.
 
Update:

Well people can sit back and relax. A lot of states are opposing it. TN/WB/UP are the front runners (J'ita, Didi, M'wati respectively). So that nicely takes out ~25/42 cities from the bucket. Also UPA just divulged that by 30% SME -- is applicable globally. So the stores can source anywhere from the world...! Though they might give more clarity on this later on.
 
West Bengal, hell yeah!! WB likes to kick itself in the groin again and again and again..

PS: I'm not from WB but this deficit ridden state needs a huge makeover.

I was discussing this with some people at work, (our client is a major US retailer), I could not believe the level of ignorance. No wonder these communist states will never get anywhere. Because people cannot think for themselves, they are oblivious and will purposefully ignore major events to make their cases. Singur, after huge delays Rajarhat etc ..it's a sham.
 
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