Effect of economic recession on FDI in India

[nychadha]

Hi All, would like see and learn your view points on - Effect of economic recession on FDI in India. Welcoming a good participation!

[trillionaire]

The FDI flow will not be hampered on the other hand the government has to liberalise the flow of FDI into the economy on certain sectors which is in need of foreign management and funds. Some sectors like retail I think requires more FDI inflow to accelerate the economic groth of the country

[roadrunner]

Since major FDI in India comes from US the current financial and liquidity crises in US will effect us.

[ramdas.jadhav]

FDI in india will definately will get affected as global recession and liquidity problem. But it will be only for certain sector like real estate & IT which was over rated.

[manasi_1381]

FDI in multi-brand retail?

Posted: 20 Oct 2008 02:05 PM CDT

Could global economic turmoil achieve, what the dream team of economic administrators could not achieve for retail sector in India?
Yes, we are talking about allowing FDI in multi-brand retail!

The country has so far not allowed any FDI in multi-brand retail due to strident political opposition, particularly of the Left, to the entry of multinational retail giants in India, who in their opinion, could ruin livelihood security of small traders and a large number of persons employed with traditional form of retail business.

However, as fears of foreign fund flows into India diminishing in the next few months are becoming real, the government has begun to seriously think in terms of revisiting its policy on FDI in the retail sector.

This, if allowed, will open up floodgates of new capital as foreign retail majors are too keen to foray into India’s retail sector.

While, infusion of 100 per cent FDI in ‘cash and carry’ (B2B) retail is currently permitted, only 51 per cent FDI is allowed in single brand retail. No FDI is, however, permitted in case of multi-rand retail.

While, the likes of Metro AG (Germany) and Shoprite (South Africa) have already taken advantage of 100 per cent FDI in ‘cash and carry’ business and likes of Carrefour (France) and Tesco (UK) have announced their intention to do so, single brand retailers like Marks & Spencer (UK) and Vision Express (Netherlands) have been forced to accept partnerships with local business houses for entry into single brand retail. Given the choice, many of them would have liked to go on their own.

Multi brand retail giants like Wal-Mart, Carrefour, and Tesco, on the other hand, due to current FDI policy, have been compelled to either take franchise route or provide technical (back-end) services. Some have even chosen to wait until the policy is completely changed to meet their requirements.

Although, no major policy decisions are expected as the general elections are due in the next six months, the government is believed to be considering relaxation in FDI norms for both single and multi-brand retail.

Kamal Nath, the union minister of commerce and industries, at a recent trade conference in Paris, had announced that the government is seriously considering permitting up to 100 per cent FDI (as against 51 per cent at present) in single brand retail, specifically in the area of luxury retail. The official line so far has been to consider allowing 100 per cent FDI in single brand retail in the segments that do not adversely affect local employment.

It is also believed that, despite pronouncements to the contrary, the commerce ministry has mooted a proposal that seeks to allow up to 49 per cent (as against Zero per cent at present) FDI in multi-brand retail.

Although, this will require a lot of political courage on part of the government, if both proposals of the commerce ministry are accepted, the country can expect to receive a large inflow of FDI in the retail sector from MNC retailers, as modern retail is growing at 40 per cent or more every year

[darshanaoo]

Originally Posted by manasi_1381

FDI in multi-brand retail?

Posted: 20 Oct 2008 02:05 PM CDT

Could global economic turmoil achieve, what the dream team of economic administrators could not achieve for retail sector in India?
Yes, we are talking about allowing FDI in multi-brand retail!

The country has so far not allowed any FDI in multi-brand retail due to strident political opposition, particularly of the Left, to the entry of multinational retail giants in India, who in their opinion, could ruin livelihood security of small traders and a large number of persons employed with traditional form of retail business.

However, as fears of foreign fund flows into India diminishing in the next few months are becoming real, the government has begun to seriously think in terms of revisiting its policy on FDI in the retail sector.

This, if allowed, will open up floodgates of new capital as foreign retail majors are too keen to foray into India’s retail sector.

While, infusion of 100 per cent FDI in ‘cash and carry’ (B2B) retail is currently permitted, only 51 per cent FDI is allowed in single brand retail. No FDI is, however, permitted in case of multi-rand retail.

While, the likes of Metro AG (Germany) and Shoprite (South Africa) have already taken advantage of 100 per cent FDI in ‘cash and carry’ business and likes of Carrefour (France) and Tesco (UK) have announced their intention to do so, single brand retailers like Marks & Spencer (UK) and Vision Express (Netherlands) have been forced to accept partnerships with local business houses for entry into single brand retail. Given the choice, many of them would have liked to go on their own.

Multi brand retail giants like Wal-Mart, Carrefour, and Tesco, on the other hand, due to current FDI policy, have been compelled to either take franchise route or provide technical (back-end) services. Some have even chosen to wait until the policy is completely changed to meet their requirements.

Although, no major policy decisions are expected as the general elections are due in the next six months, the government is believed to be considering relaxation in FDI norms for both single and multi-brand retail.

Kamal Nath, the union minister of commerce and industries, at a recent trade conference in Paris, had announced that the government is seriously considering permitting up to 100 per cent FDI (as against 51 per cent at present) in single brand retail, specifically in the area of luxury retail. The official line so far has been to consider allowing 100 per cent FDI in single brand retail in the segments that do not adversely affect local employment.

It is also believed that, despite pronouncements to the contrary, the commerce ministry has mooted a proposal that seeks to allow up to 49 per cent (as against Zero per cent at present) FDI in multi-brand retail.

Although, this will require a lot of political courage on part of the government, if both proposals of the commerce ministry are accepted, the country can expect to receive a large inflow of FDI in the retail sector from MNC retailers, as modern retail is growing at 40 per cent or more every year

yup .................................................. .................................................. .................................................. .................................................. ..............................................

[deepakraam]

Well a nice q to talk about.FDI is always a better option for country than a FII.When the developed economies are shirking in growth it is quite natural for the companies to start shops in developing economies esp in a country like India.Well FDI investments also needs the support of the Govt and our Govt is doing its best to bring investments to the country.FDI in BFSI will not be possible due to the global financial crunch but investment in other avenues like Retail,Print,Cinemas,Infrastructure will boom.

-Deepak.

[vishakha12]

Hi

I think the economic market down n crisis will affect market but will not last for long time i guess bcoz it is hampered mainly in US and retail or finance sector are current boom,Banks always go on in any case n many no of people go for it daily so the booming sector will be reset for sometime but not last long.
indian economy can pick it up easily

vishakha

[nalingoel007]

hi
the foreign minister is lookng to allow 100% fdi looking for credit inflow..and tht too thay are looking for fdi's in arab countires..it will strenghthen our market

[khaitansaket]

econoic recession has badly hit india in the way they are too much dependent on us and other countries