The government announced that they are now seeking to allow 51% of foreign direct investment (FDI) in multi-brand and 100% in single-brand stores with the approval of the Companies Bill 2011 draft. But what exactly does it mean for the common man?
Let's first understand the difference between single and multi-brand retailers. The former is a business that only sells goods of a single brand like Pepe jeans or Catwalk shoes, while the latter sells many brands under one roof like Big Bazaar.
India's retail market is largely dominated by family-run businesses, or more casually known as mom & pop shops. The organized retail market makes for only 10 per cent of the entire industry.
The government is hoping that FDI in retail will help combat inflation that reached an all time in October at 11.06%. Indian retail industries like Pantaloons and Reliance Retail are also eager for change since most will be happy to welcome funding from abroad to help steady and expand their businesses.
The issue of FDI in retail has been one of constant debate since 2007 and faced flak from political leaders in the ruling party as well as from the Opposition, with BJP leader Uma Bharti even threatening to set fire to Walmart stores. Farmer groups are also protesting the move, fearing further exploitation from corporate giants.
Waiting in the wings to move in are global retail biggies like Walmart, Carrefour and Metro Cash who are already operating wholesale stores in India.
For the customers, it means more choice of products, a better shopping experience in stores and supermarkets like there are abroad and better storage facilities to help reduce wastage of fresh produce. FDI is also expected to generate more employment opportunities.
http://www.in.com/news/business/a-dummys-guide-to-fdi-in-retail-21440017-in-83066.html
Let's first understand the difference between single and multi-brand retailers. The former is a business that only sells goods of a single brand like Pepe jeans or Catwalk shoes, while the latter sells many brands under one roof like Big Bazaar.
India's retail market is largely dominated by family-run businesses, or more casually known as mom & pop shops. The organized retail market makes for only 10 per cent of the entire industry.
The government is hoping that FDI in retail will help combat inflation that reached an all time in October at 11.06%. Indian retail industries like Pantaloons and Reliance Retail are also eager for change since most will be happy to welcome funding from abroad to help steady and expand their businesses.
The issue of FDI in retail has been one of constant debate since 2007 and faced flak from political leaders in the ruling party as well as from the Opposition, with BJP leader Uma Bharti even threatening to set fire to Walmart stores. Farmer groups are also protesting the move, fearing further exploitation from corporate giants.
Waiting in the wings to move in are global retail biggies like Walmart, Carrefour and Metro Cash who are already operating wholesale stores in India.
For the customers, it means more choice of products, a better shopping experience in stores and supermarkets like there are abroad and better storage facilities to help reduce wastage of fresh produce. FDI is also expected to generate more employment opportunities.
http://www.in.com/news/business/a-dummys-guide-to-fdi-in-retail-21440017-in-83066.html