Question

4. Discuss two Foreign Direct Investment (FDI) regulations in India. Cite 2 specific Retail Formats that benefit from each regulation defined. Finallyname how two global fashion brands successfully penetrated the marketplace in India.

Answer 1

The Foreign Direct Investment in India is one of the main sources of foreign income in the nation. The country has emerged as one of the key Information Technology countries across the globe with investment in the sector being extremely high, other sectors such as manufacturing and retail are also ever emerging and companies are choosing them also.

The retail sector in India is ever emerging and companies like Walmart are trying hard to enter the country and expand therefore. The prime reason is that the population of India has enough scope to accommodate foreign countries which are then able to earn higher profits respectively.

On the other hand, there are indeed regulations in place for the retail sector which can benefit the local industries. These are as follows:-

• Only 51% FDI is permitted in multiband retailing

Multiband retailing offers higher profits since multiple brands and their products get sold and hence companies engaged in such trade can relatively earn higher profits respectively.

On the other hand however, only 51% percent of this segment can be directly from foreign direct investment. This helps local growers take benefit from investing in the remaining % which has led to the development of joint ventures which helps local retailers by getting exposure to the segment respectively.

• 50% Of the Profits would stay in the country

This concept makes sure, that the profits which the company makes stay within the country. As a result the company has to increase its production facilities within the country to use that amount which leads to rapid infrastructural development which also help other sectors of the economy respectively.

How two global fashion brands successfully penetrated the marketplace in India?

To analyses this, we must remember that different countries have different strategies to penetrate the Indian Market. The companies in consideration are Wrangler and Gucci.

Gucci being a premium market line has reflected upon the super-rich people of the country. The company has been able to become a prominent one in the Indian market. With its line of perfumes, bags and other items selling widely in the nation.

The penetration strategy involved targeting a specific group of people and then selling the product specifically.

On the other hand, Wrangler emerges more like an Indian option that sells its products to the common public. It penetrated using competitive pricing strategies and is now a common name in the jeans and clothing segment In India.

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