Benefits of FDI in Retail in India:

Benefits of FDI in Retail in India:


Increase Organized retail sector
  51% FDI in multi-brand retail stores will enhance the organized retail market size. In the next 10 years, the market size will increase up to $260 billion. This will optimistically impact the employees, workers, producers, consumers and Government thus increases the overall economy of the nation. FDI in multi-brand retail stores also boosts the income of producers to $35 - $45 billion annually, provides 3 to 4 million direct jobs & 4 to 6 million indirect jobs opportunities.



Growth in units, output and employment
  FDI will also increase the number of units, output and employment opportunities. Quality standards, technology and marketing will be brought by FDI so Indian retail chains will integrate with global supply chains and thereby increase employment and economic opportunities. For example, liberalization growth from 1993-1994 to 1998-1999 was 16%; from 1998-1999 to 2004-2005 was 12% while from 2004-2005 to 2008-2009 was 19% as well as registered SSIs generated employment increased 6% from 1979-1980 to 1989-1990; 4% from 1993-1994 to 2003-2004 and 19% from 2003-2004 to 2008-2009.

Help small and medium enterprises (SMEs)
  Indian SMEs will get extra orders of USD 60 billion every year from huge retailers. Currently, 35% products are supplied from SMEs and after 10 years (by 2020) over $298 billion worth products will be supplied. FDI will also help SMEs to increase quality as well as to stay connected to the international markets. SMEs will also turn out to be cost-competitive. Through transparent & accountable monitoring of goods and supply chain management systems, government will be benefited by FDI. The government will get extra income of $25 to $30 billion through different types of taxes.



Customers
  Customers will get more option in buying, with better competition. Customers will get all the things that they want to buy because more brands will be available. They will also get guarantee of quality with better transparency and simpler monitoring of adulteration, fake products & traceability. Consumers will get things at cheaper rates which will help to control inflation.



Farmers will be benefited
  In India, farmers are getting only 30% of the consumer price. The entry of big retailers will raise the price realization for farmers by 10% to 30% as a result of direct sourcing. So the farmers can increase their yield and produce. Along with that the economies of scale will let them to provide goods at more reasonable price to customers. They will also get advantage of investment in supply chains and logistics through retailers and logistics companies.



Low income family
  Organized retail will decrease 5% to 10% cost of the monthly consumption basket for a low income family. FDI integrates farmers and enterprises (small & medium) by bringing growth of a healthy supply chain. Fixed percent of foreign retailer’s investments will be spent on setting the back-end infrastructure.




Reduce handling and wastage
  FDI in retail in India also helps to reduce 25% to 50% handling and wastage by consolidation and investments in technology (directly / via aggregators). Direct procurement at the farm let the farmers to get market feedback, technical knowledge and appropriate agricultural extension services. Thus there will be less wastage and rise farm income.

Business Name Ideas

   Creating a business name is easily one of the most enjoyable, yet utterly important, aspects of starting a retail business. Coming up with business name ideas may come easy for some, but others struggle with the task. The wrong business name can actually be the end of a well-built business plan. Let's use brainstorming to generate some solid business name ideas.

* Brainstorming Business Name Ideas

   In order to find the perfect business name for a new retail venture, we must first wade through the muck to find a gem. We'll generate business name ideas by brainstorming, so grab a tablet, a pencil and let's begin.

   At the top of the page, write down the product or service you offer. Underline it. Now below that, write down as many keywords related to your retail business that you can think of. The more words, the better.

   If I were starting a maternity store and sold mostly clothing, I would write down Maternity Clothing. My keywords may look like; maternity, baby, clothing, pregnancy, breastfeeding

   Once you run out of keywords, grab a thesaurus or use an online synonym finder to continue searching for keywords. The idea here is to find exciting and interesting words you may not normally use. By adding to the list with phrases or words of similar (and even opposite) meanings, your word list will grow exponentially. Add these new words to our list of business name ideas.

   Under the words maternity, pregnancy, baby, etc., I would add these words to my growing list; maternity wear, due dates, new arrivals, mother-to-be, reproduction, babe, precious, bambino, little darling.

   Stop and think about your business for a moment. What do you want to accomplish or what is your mission? How would you like others to view your business? What kind of testimonials would you like to receive from your clients or your customers? Now add some of those adverbs and adjectives to the list.

   As a retailer of maternity wear, my mission would be to provide fashionable, trendy, tasteful maternity clothing and accessories for the expecting mom. I would want my buyers to think of my store and staff as knowledgeable, dependable, and trustworthy. My competitors should see me as professional, experienced, a leader in the industry. All of those bolded words and phrases get added to the list.

   Your list should really be growing now and offering many options. Now add your own name to the list and your location, if it's relevant. If you think you may relocate your business one day or plan to sell, then don't use exact pinpoints.

   I know that I would always live in the southeastern region of the United States but I can't guarantee I'll always live in the city or even the state I currently reside. So I'll add the words South, Southern, and Southeastern to my list.

   Now that you have a long list of keywords, see if you can combine any words or if any suggest common sayings, or clichés. Can you create any alliteration, which is a combination of words beginning with the same letter or sound? Also, if any words on your list have a homonym (other words that sound the same but spelled differently) then add it to your list. Try pairing keywords which rhyme or even contradict each other. Keep in mind that your business name must not be misleading or in any way imply something that the business is not.


   After playing around with my list, I find a few possibilities that I like. Magnolia Moms, Due South, Southern Expectations and Precious Trends all have potential.


*Business Name Do's and Don'ts


   Keep these tips in mind while choosing your new business name:

•Do make it easy to understand, spell and pronounce
•Don't use negative sounding words.
•Do consider where your business will fall in an alphabetical list such as the yellow pages.
•Don't limit your product line by choosing a name that won't represent all you do.
•Do create a name you can stand behind.
•Don't use a strictly generic term, such as 'discount office supply' which cannot be protected as trademarks.
•Do be creative and imaginative.

*Testing Your Business Name


   Now look at your list of possibilities and ask the following questions of each name:


•Is it pronounceable and easy to spell?
•Is it distinctive and concise?
•Does it clearly communicate your missive?
•Does it have a positive sound?

   If you think you've chosen a winner, don't commit to it just yet. Get feedback from friends and family. Say it repeatedly. If after a few days you feel confident and comfortable with the name, then it's a keeper. If you can't get used to, toss it out and go back to your list.

*Taglines


   If you have fallen in love with a name that doesn't precisely tell people what you do or what you sell, consider adding a tagline. A tagline is best described as a phrase or adage that defines your company's mission in the fewest words possible. Take another look at your list of keywords to see if any words can create a 3-7 word statement about who you are or what you are selling.

   From the moment of inception, your business name will be linked to your customers' perceptions. All advertising will center on your brand. By putting a lot of thought and effort into generating business name ideas now, you may avoid many marketing and legal pitfalls.

India Retail Report

     Total retail sales in India will grow from US$ 395.96 billion in 2011 to US$ 785.12 billion by 2015, according to the Business Monitor International (BMI) India Retail Report for the second-quarter of 2011. Strong underlying economic growth, population expansion, the increasing wealth of individuals and the rapid construction of organised retail infrastructure are key factors behind the forecast growth. With the expanding middle and upper class consumer base, there will also be opportunities in India's tier II and III cities.



    Mass grocery retail (MGR) sales in India are expected to undergo tremendous growth over the forecast period. BMI predicts that sales through MGR outlets will increase by 218 per cent to reach US$ 27.67 billion by 2015.



    BMI forecasts consumer electronic sales at US$ 29.14 billion in 2011, with over-the-counter (OTC) pharmaceutical sales at US$ 2.30 billion. The former sub-sector is expected to show growth of 66.8 per cent between 2011 and 2015, reaching US$ 48.61 billion, with projected double-digit growth of key products such as notebooks, mobile handsets and TVs. OTC pharmaceuticals, meanwhile, should increase more, by 106.9 per cent throughout the forecast period, to reach US$ 4.75 billion.



    China and India are predicted to account for more than 91 per cent of regional retail sales in 2011, and by 2015 their share of the regional market is expected to be at least 93 per cent. BMI forecasted growth in regional retail sales at 75.2 per cent for 2011, an annual average of 14.9 per cent.



    Organised retail in India is expected to increase from 5 per cent of the total market in 2008 to 14-18 per cent and reach US$ 450 billion by 2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar: Organised Retail Comes of Age in India'.



    Furthermore, according to a report titled 'India Organised Retail Market 2010', published by Knight Frank India, during 2010-12 around 55 million square feet (sq ft) of retail space will be ready in Mumbai, national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Besides, between 2010 and 2012, the organised retail real estate stock will grow from the existing 41 million sq ft to 95 million sq ft.



    Driven by the growth of organised retail coupled with changing consumer habits, food retail sector in India is set to be more than double to US$ 150 billion by 2025, according to a report by KPMG.



    According to the report ‘Strong and Steady 2011’ released by global consultancy and research firm PricewaterhouseCoopers (PwC), India's retail sector, which is currently estimated at about US$ 500 billion, is expected to grow to about US$ 900 billion by 2014.



    India has also been ranked as the third most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney in its 9th annual Global Retail Development Index (GRDI) 2010. Within Asia, India is expected to account for the third largest share at US$ 2.7 billion in 2015, according to a report released by research firm Ovum on January 12, 2011.



    Foreign direct investment (FDI) inflows between April 2000 and January 2011, in single-brand retail trading, stood at US$ 128.34 million, according to the Department of Industrial Policy and Promotion (DIPP).

• Carrefour, the world’s second-largest retailer, has opened its first cash-and-carry store in India in New Delhi. Germany-based wholesale company Metro Cash & Carry (MCC) opened its second wholesale centre at Uppal in Hyderabad, taking to its number to six in the country.

• Jewellery retail store chain Tanishq plans to open 15 new retail stores in various parts of the country in the 2011-12 fiscal.

• V Mart Retail Ltd, a medium-sized hypermarket format retail chain, is set to open 40 outlets over the next three years, starting with 13 stores in 2011, in Tier-II and Tier-III cities.

• RPG-owned Spencer's Retail plans to set up 15-20 new stores in the country in 2011-12.

• Spar Hypermarkets, the global food retailing chain of the Dubai-based Landmark Group, expects to start funding its India expansion beyond 2013 out of its local cash flow in the country. So far, the Landmark Group has invested US$ 51.31 million in setting up five hypermarkets and plans to pump in another US$ 51.31 million into the next phase of expansion.

• Bharti Retail, owner of Easy Day store—supermarkets and hypermarts—plans to invest about US$ 2.5 billion over the next five years to add about 10 million sq ft of retail space in the country by then, according to a company spokesperson.

• The country's largest consumer products company Hindustan Unilever is testing waters in the coffee shop market even as US giants Starbucks and Dunkin' Donuts finalise plans to tap into increasing out-of-home consumption of coffee in the country. Hindustan Unilever has opened a 'Bru World Cafe' outlet on a pilot basis at Juhu, an upmarket western suburb of Mumbai.

Policy Initiatives




    100 per cent FDI is permitted under the automatic route for trading companies for cash & carry trading wholesale trading/ wholesale trading.



    FDI up to 51 per cent under the Government route is allowed in retail trade of Single Brand products, according to the Consolidated FDI Policy document. Permitting FDI in multi brand retail is being contemplated by the government under union budget 2011-12. “FDI in multi-brand retail should be opened up as this is a capital intensive sector and the entry of foreign players will lead to greater competition in this critical sector,” said Mr Hari S Bhartia, President, CII and Co-Chairman & Managing Director of Jubilant Bhartiya Group, in the 2011 pre-budget meeting with Mr Pranab Mukherjee, the Finance Minister.



    The Consumer Affairs Ministry has given the green signal to allow 49 per cent FDI in multi-brand retail. It has written a letter to this effect to the Commerce Ministry. "Multi-brand retail should be permitted with a cap of 49 per cent. A significant chunk of investments should be spent on back-end infrastructure, besides logistics and agro-processing," the Consumer Affairs Ministry had said in response to the discussion paper floated by the Department of Industrial Policy and Promotion (DIPP) in June 2010 on allowing 100 per cent FDI in multi-brand retail.



   The Securities and Exchange Board of India (SEBI) has notified the increase in the retail investment limit to US$ 4,423 in initial public offers (IPOs). The new norms will be applicable to issues that have yet not opened for subscription.



Road Ahead



According to industry experts, the next phase of growth is expected to come from rural markets.



   The organised modern retail segment in India will grow by over three times during the next five years (from 2010), to reach a figure of US$ 80 billion, as per consultancy firm, Technopak. India's modern consumption level will double within five years to an annual figure of US$ 1.5 trillion from the present level (taking 2010 as the reference year) of US$ 750 billion, according to Raghav Gupta, President, Technopak.



    Further, the luxury brand in the country is estimated to be worth about US$ 4.06 billion-US$ 4.51 billion and is expanding rapidly driven by the growing aspirations of youth and income levels in the country. Thus, major international brands are in the process of expanding their retail presence. For instance, Paul & Shark now has two stores with Hyderabad and will have few more by next year, Zegna, another Italian brand, known for its formal wear and quality suits, is also expanding and Diesel will have seven stores in the country.



    Ramesh Tainwala, who brought global luggage maker Samsonite into the country, has bought a 50 per cent stake in Planet Retail, which markets fashion brands like Guess, Next and Nautica from NRI businessman VP Sharma, in a bid to expand his presence in the booming retail space.



    In addition, the direct selling fast moving consumer goods (FMCG) segment is growing faster in Uttar Pradesh compared to markets in other states. Segment leader Amway India said it was growing by 35 per cent in Uttar Pradesh vis-à-vis 27 per cent pan-India.