INDUSTRY

INTRODUCTION

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RETAIL SECTOR IN INDIA

Liberalized financial and political environment in India has prompted a wave of large
number of entrants into the country’s and rapidly growing retail industry during the past
few years in the India, without doubt. The fundamental change are increasing per capita
income, growing GDP, availability of consumer finance and therefore irreversible.
Retailing in general sense consists of business activities in which involved in buying and
selling of product of goods and services to the ultimate consumers for their own use.

In India, after agriculture, the retail is the second largest sector that provides enough
employment to Indian workforce. But retailing in India is at cross roads on the one side,
retail sales are making new heights year after year and on the other side, traditional Indian
retailers (Kirana stores) face numerous challenges.

Experts believe that retail expansion in the country in coming five to seven years is
expected to be stronger than our Indian GDP growth, driven by changing lifestyles and
by strong income growth, which in turn to be supported by favorable demographic
patterns. Use of plastic money, easy availability of consumer credit will also assist in
boosting consumer demand.

Today, a vast majority of India’s youth population only favors branded goods for own.
With the spread of satellite televisions and visual media, urban life style also change and

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trends have spread across the rural areas also. The shopping of the Indian middle class
especially the young population for clothing is more and more nowdays, eating outside
and lust for modern living styles has create new possibilities for retail growth even in the
rural areas.

Thus, 85% of the retail boom which was focused only in the metros has started to
infiltrate towards smaller cities and towns. Tier-II cities are already receiving focused
attention of retailers and the other smaller towns and even villages are likely to join in the
coming years. This is a positive trend, and the contribution of these tier-II cities to total
organized retailing sales is expected to grow to 20-25%. One of the principal reasons
behind the explosion of retail and its fragmented nature in the country is the fact that
retailing is probably the primary form of disguised unemployment/underemployment in
the country.

Given the already over-crowded agriculture sector, and the stagnating manufacturing
sector, and the hard nature and relatively low wages of jobs in both, many million Indians
are virtually forced into the services sector.

The retail sector in India is highly using or distributed sector. Unorganized retail
constitutes a significant share of over 90%, while the organized retail segment is just in a
start up stage in the country and impressive growth over last few years. Retail sector in
India originated with the Mom and Pop Stores and Kirana Stores, which used to cater for
the product to the requirements of the local population. Over a period of time, the
government encouraged rural retail and provided support for establishing Khadi &
Village industries in the county.

During 1980’s, the retail scene in India changed more with the opening up of the
economy, as a result of which leading retail chains in textile sector were established like
Raymond’s, S Kumar’s and Bombay Dyeing. Subsequently, Titan launched its retail
showroom, and the organized retailing started its grip in the Indian market.

In 1995, major retail outlets such as Food World, Music World, and Planet M, Crossword
entered the Indian retail market. Large retail formats and stores like shopping malls,
hypermarkets and supermarkets came into operation for providing best of the class
experience to the customers. The retail sector evolution witnessed improvements in the
distribution set up, supply chain management, technological innovations, back end

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operational support and excellence and increase in business alliances in the form of
collaborative ventures, mergers, acquisitions, joint ventures, etc.

According to the Ground Zero Series findings of the consulting firm RedSeer, the retail
sector is expected to recover ~80% of pre-Covid revenue (amounting to US$ 780 billion)
by end-2020

DIVISION OF RETAIL INDUSTRYIN INDIA:

The retail industry is divide into 2 parts

 Organised Retailing: Organised retailing refers to trading activities undertaken

by licensed retailers, that is, those who are registered for sales tax, income tax, etc.
These include the corporate-backed hypermarkets and retail chains, and also the
privately owned large retail businesses.

 Unorganised Retailing: Unorganised retailing, refers to the traditional formats of

low-cost retailing, example, the local kirana shops, owner manned general stores,
paan/beedi shops, convenience stores, etc.

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5
GROWTH OF RETAIL MARKET IN INDIA

Indian retail industry is one of the fastest growing sector in the world. Retail industry is
expected to reach in future Rs 76.87 lakh crore (US$ 1.1 trillion) by 2020. The World
Bank’s Doing Business 2020 publication the India hold ranked 63. India ranked 73 in the
United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-
commerce Index in 2019. India’s direct selling industry recorded sales of amount US$
2.47 billion in 2019. Indian online grocery market is estimated to exceed sales of about
Rs 22,500 crore (US$ 3.19 billion) in 2020, it is a significant jump or increment of 76 per
cent over the previous year.

India’s population considering online retail big way and using more. India’s E-commerce
business will reach US$ 99 billion in 2024, growing at a CAGR of 27 per cent over 2019.
Online retail is expected to reach 10.7 per in 2024 from 4.7 per cent in 2019.

India is expected to become the world's third-largest consumer market in future, reaching
Rs. 27.95 lakh crore (US$ 400 billion) in consumption by 2025. Increasing participation
from foreign and private both side players has given a big boost to Indian retail industry.
India’s price attracts large retail players to use it as a sourcing base. Global retailers such
as Walmart, Tesco and JC Penney and GAP, are increasing their sourcing from India.
They are moving from third-party buying offices to establishing their own wholly
owned/wholly managed sourcing and buying offices in India.
The Government of India has introduced many reforms to attract Foreign Direct
Investment (FDI) in retail industry in india. The Government has approved 51 per cent
FDI in multi-brand retail and 100 per cent and FDI in single-brand retail under the
automatic route, which is expected to give a boost to the indian market with plans to
allow 100 per cent FDI in E-commerce. Cumulative FDI inflow in retail sector stood at
US$ 2.12 billion between April 2000 to March 2020. India’s retail sector attracted US$
970 million private equity funds in 2019. Retailing in India is one of the pillars of its
economy and accounts for 14 to 15% of its GDP. The Indian retail market is estimated to
be and one of the top five retail markets in the world by economic value US$ 450 billion.
India is one of the fastest growing retail markets in the world. The Indian retail industry
has one of the most dynamic and fast-paced industries due to the entry of several new
players. Total consumption expenditure is expected to reach nearly USD $3,600 billion

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 by 2020 from USD $1,824 billion in 2017. India’s e-commerce market has witnessed a
phenomenal growth in the past recent years.

RETAIL MARKET CHALLENGES IN INDIA

Indian Retail Market is one of the fastest-growing in the world. The Indian Retail industry
is expected to reach Rs.76.87 lakh crore in 2020, says ibef.org report. India ranks 63 as
per World Bank’s doing business publication 2020. Also, the United Nation’s Trade and
Development’s Business-to-Consumer (B2C) E-commerce Index-2019 gives 73rd Rank.
Importantly the Indian Government has invited Foreign Direct Investment (FDI) in the
Retail sector. This post focusses on 2020: Retail Market challenges in India during this
pandemic affected time, the government policies, and shoppers’ expectations from retail
sectors in the current context.
Bird’s Eye View of Global Challenges in Retail-2020

 Alt Retail is a new jargon in the Retail Market. Retailing is no more just selling products
it is all about providing products on Rental, Servicing, Resales, and Experience.
Subscription-based services have redefined Retailing as Alternate (Alt) Retail. So, In a
nutshell, Subscription and Rental Models will reach new maturity says Coresight
Research Group.
 Luxury Products endorse Inclusivity instead of exclusivity. Today Branded products
endorse social values instead of showcasing aristocracy. So, This is a definite sign of
growing demand for inclusivity in the Retail sector.
 Technology Enablement of Retail through 5G networks and automation promises to
provide better customer experience. While 5G networks provide speedy connectivity
automation, analytics and robotics play a vital role in the digitization of supply-chain.
The overall global retail sector is moving towards Frictionless Retail, Fast Retail, and
Spectacular Retail.
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 Glimpse of Challenges Faced by Indian Retailers

Though India is one of the fastest-growing Retail Market many generalized challenges
scare new entrepreneurs entering the segment. Important ones are:

 Lack of Technology adoption

 Poor Logistics and Infrastructure
 Inefficient Supply-Chain management
 Price War
 Rampant Fraud in Retailing
 Tax Structure and Bureaucracy
 Competition from Unorganized Retailers
 Lack of Customer Understanding
Growth Opportunities for Indian Retail Sector

The brighter side for the Indian Retail sector is the Market Size: India ranks 16 in the
global market as per the FDI Confidence Index. Also, India is the 5th largest retail
destination. In addition, Indian Retail market reached 950 billion US$ in 2018 and is
expected to reach 1.1 Trillion in 2020. Also, With the rapid increase in internet users,
India Retail is projected as the World’s fastest-growing e-commerce market.
Investment Spree is in progress as per ibef.org reports. According to the Indian Retail,
Trading has received Foreign Direct Investment equity of 2.12 billion US$ during the
period April-2000 to March 2020. Importantly the Indian Retail sector is able to obtain
970 million US$ from different private equity funds in the year 2019. Also, Walmart
Investment Cooperative UA has invested Rs.2.75 billion in its India office Wal-Mart
India Pvt. Ltd.
Government of India Policies for Retail

The government of India has allowed 100 FDI in the online retail of goods and services.
Also, Govt has plans to change FDI policies to promote Food Processing products
through E-commerce Sites and Foreign Retailers. This initiative can help Made In India
Products to get a global market.

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Sector Wise Retail Market Share-2019

Retail Market Share of Different Sectors

Market Size of Retail Sector Year on Year Graph

The Growing Trend of Retail Market Size in India

Effect of COVID-19 on Indian Retail Market

During Lockdown a survey conducted by Retailers Association of India says, In Non-

Grocery Retails 80 to 100 percent of sales is reduced. As 85 percent of retail costs are
fixed retailers are facing immense pressure. Most importantly Retail industry is facing

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 severe liquidity challenges that can lead to huge unemployment. While the Food-Retailers
expect to earn 56 percent of profits when compared to the previous year. The Non-Food
Retailers expect to earn 40 percent of previous year profits in the next six months
provided pandemic situation doesn’t worsen. Though, Indian Retail Market Size is
showing a growing trend unexpected onslaught of the pandemic has worsened the
situation for retailers.

Shoppers Traits-2020

According to Economic Times report 46 percent of Indian workforce is Millennial. This

clearly points to the fact that the buyers in current India are Technology Savvy. They
prefer relying on technology gadgets to purchase and make payments. Providing best
Customer Experience needs utilization of technology tools. So, Retailers have to adopt
technology to thrive in current market. Important Technological developments in Retail
sector are:
 Ultra-Convenience: Convenience in making a purchase is a vital factor for Today’s
Shoppers. Based on how hassle-free a transaction is buying decisions happen. With the
proliferation of smartphones to rural places of India Consumers have got acclimatized to
Digital payments and Transaction methods. So, It is vital for Retailers to change with
time.
 Recommendation Engines and Personalization: With Data Analytics making inroads to
all segments of our life Recommendation Engines that provide a personalized experience
to customers are gaining popularity. Thus, to survive in the retail market relying on
recommendation engines and thus providing the best possible customer experience (CX)
is key.
 Augmented Reality and Virtual Reality: These technologies have redefined Stores’
concept. Today Pop-Up Stores and Virtual Stores are becoming popular amongst
consumers. So, It is inevitable for Retail outlets to test such technology-based tools.
 Contactless and Cashier less Stores: Self-Checkout Kiosks and Self-Order Devices
have gained popularity in supermarkets. Also, the pandemic situation has forced
customers to prefer humanless transactions. Obviously this situation has forced Retailers
to adopt Contactless technologies at their outlets.

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Summary

The trends for the Indian Retail Market is promising. But at the same time, it highlights a
fact that Retailers who are keen to accept technology advancements and adapt them to
their business needs in a customized manner can thrive in this fiercely competitive
market. Also, with the Indian Retail Market Size estimated to grow up to 1750 Billion
US$ retailers can definitely maximize their growth trajectory. We hope this post could
succinctly provide readers an overview of Retail Market Challenges in India.

SCOPE OF RETAILING

Retailing has a very wide scope. It is one of the fastest growing industries in india and is
providing employment opportunities to many people in the country . Retailing provides
employment in two ways. Firstly, it provides entrepreneurship opportunities to the people
and secondly, it provides employment to so many people who cannot own the retail stores
by himself. With the increase in the purchasing power and standard of level of the people
and the rural reach of the retailers, the scope of retailing has increased manifold. The
scope of retailing can be viewed from the two viewpoints. One from the retailer’s, the
entrepreneur’s perspective and the other from the employee’s perspective.
1. Retailer’s perspective:
From the retailer’s perspective, retailing can include anything that the retailer wishes to
sell. It may be goods or services. These may include goods such as mobiles, computers,
electronics, readymade garments, textiles and clothing, jewellery, books, paintings,
medicines, stationery, watches, or may include services such as catering, hospitality,
hospitals etc.

In certain cases permission in form of license is required to be obtained from the

government.

2. Employee’s perspective:
Retailing has provided opportunities for employees. The retailers operating at a small
level required small number of employees to help them in business. These employees
were appointed as salesmen, cleaners, cashiers, etc. By the retailers. But with the increase
in the scope of operations and the growth of retailing, there has been tremendous change
in the industry.

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The following are the areas where the scope of retailing can be seen from the point
of view of the employee:

1. Purchase department
The purchase department is responsible for making all the purchases for the
business. It includes the selection of the merchandise to be sold to the customers,
their price range, the selection of the vendor from whom the purchases are to be
made, etc.
2. Finance department
Finance is the blood of the all organization.it required foir all the activities in te
organization.
3. Finance department
The marketing department includes various activities such as sales promotion,
advertising, public relations, etc. These activities are extremely important from the
view point of reaching the customers. The marketing department is responsible for
conducting extensive market research and understanding customer requirements.
4. Stores
The stores department is responsible for storing the goods. The store’s manager
should ensure that at every time the inventory is maintained at proper levels so
that there is no shortage of goods.
5. Human resource
The human resource department is responsible for the recruitment, selection,
training, induction etc. of the employees. Human resource is a human centric
industry.
6. Technology in retailing
Retail industry in India is in a mature stage and is a very confident user or
information technology.
7. Supply Chain Management
Supply chain management means managing the supply of material , service and
information along the supply chain.

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INTRODUCTION TO FOREIGN
DIRECT INVESTMENT

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INTRODUCTION TO FOREIGN DIRECT INVESTMENT

What is Investment?

Investment is a process in which we invest in any item or asset for generating income is
called investment. If a person purchase any kind of fixed assets is called investment. For
example, an investor may purchase the shares of any company now with the idea that
these shares will provide income in the future. An investment can refer to any kind of
shares, bonds, property, real estate etc.

In general terms the investment is made for future. An investment is the purchase of
goods those are not consumed today but they are used in the future to generate wealth. It
refers to the investment which is made to earn money in future. It is directly affected
change in the income level.

MEANING OF FOREIGN DIRECT INVESTMENT

Foreign direct investment is the investment in which one company investment in other
country for creating more money. A foreign direct investment is an investment made by a
firm or individual in one country in business interested business located in another
country. Generally foreign direct investment takes place when an investor done foreign
business operations or purchase foreign business assets in a foreign company.

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HISTORY OF FDI IN INDIA

The initial entry of FDI in India can be loosely considered from the time of establishment
of East India Company of Britain during the colonial era in the 17th century when the
British merchants approached the Mughal Emperor for establishing factory in Surat city
of India. Along with them the British brought on the Industrial revolution to India which
led to development of transportation (Railways and Roadways) and communication
systems albeit for their benefits. The new innovations and inventions happening around
the European countries got introduced to the Indian subcontinent too. After the Second
World War, many companies entered the Indian market and enhanced their trade with
India. After our Independence the policy makers of new India realized the need of foreign
investment for development and 3 designed the FDI policies aiming it as a medium for
bringing in advanced technologies and gaining valuable foreign exchange resources. With
time and as per economic and political conditions there have been changes in the FDI
policy too. The industrial policy of 1965, allowed MNCs to venture through technical
collaboration in India. Therefore, the government adopted a liberal attitude by allowing
more frequent equity. With time, economic situations in the country and the outlook of
government in power, the attitudes of the policy makers kept changing towards foreign
companies investing in India. FDI was introduced in the year 1991 under Foreign
Exchange Management Act (FEMA), by then finance minister Dr. Manmohan Singh. It

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started with a baseline of $1 billion in 1990. India is considered as second important
destination for foreign investment. The major sectors that attracted FDI are services,
telecommunication, construction activities and computer software and hardware. India in
1997 allowed foreign direct investment (FDI) in cash and carry wholesale. Then, it
required government approval. The approval requirement was relaxed, and automatic
permission was granted in 2006. From 2000 to 2010, Indian retail has attracted about $1.8
billion in foreign direct investment, representing a very small 1.5% of total investment
flow into India. India has received till now a total foreign investment of US $ 306.88
billion since 2000 with 94 per cent of the amount coming during the last nine years. In the
period 1999–2004, India received US $ 19.52 billion of foreign investment. In the period
2004–09, foreign investment in the country touched US$ 114.55 billion, further
increasing to US$ 172.82 billion between 2009–Sept 2013. During FY 2012– 4 13, India
attracted FDI worth US$ 22.42 billion. Tourism, pharmaceuticals, services, chemicals and
construction were among the biggest beneficiaries.

Indian retail industry as one of the most dynamic industry due to the entry of several new
members. Total expenditure of consumption is expected to reach nearly US$ 3,600 billion
by 2020 from US$ 1,824 billion in 2017. It accounts for over 10 per cent of the country’s
gross domestic product (GDP) and around eight percent of the employment
India ranked 73 in the United Nations Conference on Trade and Development's Business-
to-Consumer E-commerce Index 2019. India is the world’s fifth largest global destination
in the retail sector and in World Bank’s India got ranked 63 in 2019.
In FDI Confidence Index, India ranked 16 many countries like (after US, Canada,
Germany, United Kingdom, China, Japan, France, Australia, Switzerland, and Italy.

Market Size

In 2018 Retail industry reached US$ 950 billion at CAGR of 13 per cent and is expected
to reach US$ 1.1 trillion by 2020. Online retail sales forecast to grow 31 per cent to reach
US$ 32.70 billion in 2018. Revenue generated from online retail is forecast to reach US$
60 billion by 2020.
Revenue of India’s offline retailer is expected to increase by Rs 10,000-12,000 crore
(US$ 1.39-2.77 billion) in financial year 2020.

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 India is expected to become the world’s fastest growing E-commerce market, in the sector
and rapid increase in the number of internet users. Various agencies is also expect that
growth of India’s E-commerce market.

Investment Scenario

The Indian retail trading has received Foreign Direct Investment equity inflow total US$
2.12 billion during April–March 2020 according to Department for Promotion of Industry
and Internal Trade (DPIIT).
India’s retail sector affect US$ 970 million from various private equity funds in 2019.
Wal-mart Investments Cooperative U.A invest Rs 2.75 billion (US$ 37.68 million) in
Wal-Mart pvt Ltd in India.

i. Foreign Direct Investment in India does not have a uniform rate. Some industries allow
100% FDI, i.e. the entire funds of the business can be from foreign direct investment.
The percentages vary from 26% to 49% to 51%. There are a few industries where FDI is
strictly prohibited under any route.

a) Atomic Energy Generation

b) Any Gambling or Betting businesses
c) Lotteries (online, private, government, etc)
d) Investment in Chit Funds
e) Nidhi Company
f) Agricultural or Plantation Activities (although there are many exceptions like
horticulture, fisheries, tea plantations, animal husbandry, etc)
g) Housing and Real Estate (except townships, commercial projects, etc)
h) Trading in TDR’s
i) Cigars, Cigarettes, or any related tobacco industry

FDI in some important and sensitive industries like defence, insurance, media, etc.
Because of the safety of our nation are at stake. So, for many such industries, the FDI
limits are in these industry 100% investment is not allowed. For example, defence
industry allows only 49% FDI.

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TYPES OF FDI

There are two types of foreign direct Investment Horizontal and Vertical.

 Horizontal FDI: it refers when a investor or a company start the same business in
foreign as like they operates in our country it’s called Horizontal FDI.
 Vertical FDI: Vertical FDI is where an investment is made within the supply
chain, Sbut not directly in the same industry.

ADVANTAGES OF FDI

1. FDI stimulates economic development-

FDI increase a large number of economic growth. It is the primary sources of
external capital as well as increased revenues for a country. It increase employment
level and improve standard of living.
2. FDI results in increased employment opportunities-
With the help of the fdi we can create lots of job for the people. Employment turn,
results in the creation of income sources. People then spend their income, and
enhancing a nation’s purchasing power.
3. FDI enhances a country’s finance and technology sectors-
When FDI occurs, the recipient businesses are provided with access to the latest tools
in finance, technology and operational practices.
4. Easy International Trade-
When a country done investment with another country it makes international trade
easy
5. Tax Incentives-
Parent enterprises also provide foreign direct investment to get additional expertise,
technology and products. As the foreign investor, you can receive tax incentives that
will be most useful in your selected field of business in foreign.

6. Resource Transfer
Foreign direct investment will allow resource transfer and other exchanges of
knowledge, where various countries are given access to new technologies and skills.
7. Reduced Disparity Between Revenues and Costs.
Foreign direct investment can reduce the disparity between revenues and costs. With

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 such, countries will be able to make sure that production costs will be the same and
can be sold easily.
8. Increased Productivity.
The facilities and equipment provided by foreign investors can increase a workforce’s
productivity in the target country.
9. Increment in Income.
Another big advantage of foreign direct investment is the increase of the target
country’s income. With more jobs and higher wages, the national income normally
increases. As a result, economic growth is spurred. Take note that larger corporations
would usually offer higher salary levels than what you would normally find in the
target country, which can lead to increment in income.

LIST OF DISADVANTAGES OF FOREIGN DIRECT INVESTMENT

1. Risk from Political Changes.

Because political issues in other countries can influence, foreign direct investment is
very risky. And most of the risk factors that you are going to experience are extremely
high.
2. Negative Influence on Exchange Rates.
Foreign direct investments can occasionally affect exchange rates to the advantage of
one country and the detriment of another.
3. Higher Costs.
If you invest in some foreign countries, it is more expensive than when you export
goods. So, it is very important to prepare sufficient money to set up your operations.
4. Economic Non-Viability.
Many of the investor consider foreign direct investments as a capital-intensive from the
point of view of investing, it can sometimes be very risky or economically non-viable.
5. Expropriation.
Also remember political changes that can also lead to expropriation, where the
government will have control over your property and assets.
6. Negative Impact on the Country’s Investment.
The rules of government that the foreign exchange rates and direct investments might
put a negative impact on the investing country. Investment may be banned in some
foreign markets, which means that s no opportunity to pursue any business in foreign.
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 METHODS OF FOREIGN DIRECT INVESTMENT

Today, India is one of the most attractive destinations for foreign direct investment. The
county’s stable economy and liberalized FDI policies makes it the perfect destination for
investments. The Government of India has liberalised Foreign Direct Investment
policies and norms for NRI’s (non-resident Indian) and PIO’s (person of Indian origin) in
order to encourage capital flows into the country.
Foreign direct investment is when a party from one county invests in a business based in
another country with the intention of a lasting interest in the said corporation. A lasting
interest is ensured by giving foreign investors a minimum of 10 per cent voting rights in
the business. A controlling ownership in the firm distinguishes foreign direct investment
from foreign portfolio investment.

Foreign direct investment is defined by the International Monetary Fund (IMF) as- “a
category of international investment that reflects the objective of a resident entity in one
economy (direct investor or parent enterprise) obtaining a lasting interest and control in
an enterprise resident in another economy (direct investment enterprise)”.

A foreign entity can make a foreign direct investment by expanding their current business
in a foreign country. They can also reinvest profits from overseas operations, as well as
inter company loans to overseas subsidiaries.

FDI in India can be done in multiple ways. Below are enlisted the ways in which a
foreign investor can penetrate the Indian market:
 Mergers and acquisitions
 Acquiring voting stock in a foreign company
 Joint ventures with foreign corporations
 Starting a subsidiary of a domestic firm in a foreign country
Foreign direct investment equity inflows have other benefits apart from being a critical
driver of economic development. They bring in new technology, create more
employment, help in improving infrastructure, facilitate technological know how, and
bring in managerial expertise.

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 INTRODUCTION TO
FOREIGN DIRECT
INVESTMENT IN RETAIL
SECTOR

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FOREIGN DIRECT INVESTMENT IN RETAIL

FDI in retail drained to the investors. Retail sector is based on the agriculture or producers
if the investment is increase in retail sector it may affect the the agriculture industry
means that foreign companies in many categories can sell products through their own
retail shop in the other country. At present, foreign direct investment in pure retailing
means investment in all kind of brand is not permitted under Indian law. Government of
India has allowed Foriegn direct investment in retail of specific brand of products. India
is a developing country so the FDI is more important to introduce in the country. If the %
in FDI in retail sector (multi-brand) is increased then the investment in India’s retail
market will be from foreign investors and the profits are also increase.

The retail sector in India has significant growth over the last years shift towards the
organised retailing format. Now more than 10% of the country Gross Domestic Product
(GDP) is contributed by the retail sector, providing 8% employment in the country..
Consequently, the government mostly focus on protecting agriculturists and small
retailers, discouraging bigger retailers in the market. Now this has changed with the
revision of the foreign direct investment policy which allows FDI the retail sector.
Earlier, foreign players could only own up to 49% in a local single-brand retail and had to
approach the Department of Industrial Policy and Promotion for permission to own the
remaining 51%. Under the new policy, up to 100% FDI is allowed. In case of multi brand
retail up to 51% of FDI is allowed subject to prior government approval and some other
conditions. All Indian households have traditionally enjoyed the convenience of
calling up the corner grocery "kirana" store, which is all too familiar with their brand
preferences, offers credit, and applies flexible conditions for product returns and
exchange. The company's entry into other countries like Thailand, China will also
have brought some understanding on catering to a large, diverse market, and
perspectives on buying behavior in Asian households. Retail industry reached US$ 950
billion in 2018 at CAGR of 13 per cent AND expected to reach US$ 1.1 trillion by 2020.
Online retail sales were forecast to grow 31 per cent and to reach US$ 32.70 billion in
2018. Revenue generated from online retail is reach US$ 60 billion by 2020. Revenue of
India’s offline retailers, is expected to increase by Rs 10,000-12,000 crore (US$ 1.39-2.77
billion) in financial year 2020. The Indian retail trading has received Foreign Direct
Investment (FDI) equity inflow totalling US$ 2.12 billion during April 2000–March 2020
according to Department for Promotion of Industry and Internal Trade (DPIIT).

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ROUTES OF FDI IN INDIA

There are two routes by which India can do FDI

Figure 1.1

1. Automatic route:
By this route FDI is allowed without prior approval by Government or Reserve
Bank of India. In this route there is no need to permission of anyone. He can
invest in any company it wishes with no need for government approval. Under this
route, investment in different sectors are less restricted. Foreign direct investment
norms and regulations are more liberalized. Here, the overseas investor or the
Indian company does not require any approval from the Reserve Bank of India or
government of India for investment into the country.
2. Government route:
Prior approval by government is needed in this route. there is no investment
without the prior approval of the Government of India. Apart from being a critical
driver of economic growth, FDI also helps bring in more job opportunities, new
technology and improved infrastructure.

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ENTRY OPTIONS FOR FOREIGN PLAYERS PRIOR TO FDI
POLICY:

Although prior to Jan 24, 2006, FDI was not authorized at that time in retailing, most
general players had been operating in the country. Some entrance routes used by
investors have been used mentioned below:-

A. Franchise Agreements
This is the most easiest way to come in the Indian market. In franchising and commission
agents’ services, FDI (unless otherwise prohibited) is allowed with the approval of the
Reserve Bank of India (RBI) under the Foreign Exchange Management Act. This is a
most usual mode for entrance of quick food bondage opposite a world. Apart from quick
food bondage identical to Pizza Hut, players such as addidas, Reebok, Amazon, have
entered Indian market place with the help of this route.

B. Cash and carry wholesale trading

In this 100% FDI is allowed in wholesale trading which involves building of a large
distribution infrastructure to assist local manufacturers. The wholesaler deals only with
smaller retailers and not with Consumers. Metro AG of Germany was the first significant
global player who entered in Indian market through this route.

C. Strategic Licensing Agreements

Some foreign brands give exclusive license and distribution rights to Indian companies.
Through these rights, Indian companies can either sell it through their own stores, or enter
into shop-in-shop arrangements. Or they distribute the brands to franchisees. Mango, the
Spanish apparel brand has entered India through this route with an agreement with
Piramyd, Mumbai, SPAR entered in Indian market into a similar agreement with
Radhakrishna Food lands Pvt. Ltd.

D. Manufacturing and Wholly Owned Subsidiaries.

The foreign brands such as Nike, Reebok, Adidas, etc. that have wholly-owned
subsidiaries in manufacturing are treated as Indian companies and are, therefore, allowed
to do retail. These companies have been authorised to sell products to Indian market to
the consumers by franchising, internal distributors, existent Indian retailers, own outlets,

24
etc. For instance, Nike entered through an exclusive licensing agreement with Sierra
Enterprises but now has a wholly owned subsidiary, Nike India Private Limited.

BRANDS RETAIL TRADING IN INDIA

SINGLE BRAND RETAIL TRADING

Single brand retail trading means selling the different products of a company under one
brand name. For example, Starbucks sells beverages and food items under the only one
brand name of Starbucks. It also sells cups under the same brand name starbucks. Other
examples could be Nike, Adidas, Ikea etc. As per the latest policy issued by Department
of Industrial Policy and Promotion 100% foreign direct investment (FDI) is allowed in
case of single brand retail through automatic route in india. Only those products traded
who are branded during manufacturing and also sold under the same brand in other
countries also covered under this.

However, where the FDI is more than 51%, at least 30% of the value of goods should be
sourced from India. This was in way to promote domestic sectors in India i.e. micro,
small and medium enterprises, village and cottage industries, artisans and craftsmen etc.

MULTI BRAND RETAIL TRADING

Multi-brand retail trading is basically selling the products of different brands under one
roof. For example, Shopper, Big bazar, Reliance Stop etc. These retail shopes sell
products of different brands at one establishment. With regards to multi brand retail
trading, the central government has just framed a policy for specifying the maximum FDI
which is allowed for the procedure. States and Union Territories’ governments have been
given the ultimate authority to allow or reject this policy. At present, 12 States or Union
Territories have agreed to the central government policy.

As per the central government, only 51% FDI is allowed and for that also, one needs
permission from government unlike in the case of single brand retail trading no
permission from any governmental authority is required. There are certain conditions over
51% cap which are explained as below:

25
 1. A minimum amount of US $ 100 million i.e. approx 700 crores invested in
India by INR. They can only open their stores in an area where thw population
is having minimum 10 lakhs.
2. 50% of total FDI has to be invested in ‘back-end infrastructure’ within three
years. Back- end infrastructure as defined in the policy will include capital
expenditure on all activities. In back-end infrastructure will include processing,
manufacturing, distribution, design improvement, quality control, packaging,
logistics, storage, ware-house, agriculture market produce infrastructure etc.
3. 30% of the goods should at least be procured from Indian domestic sector
especially in micro, small and medium enterprises, agricultural, co-operatives.
Even if an enterprise during the course of sourcing the goods stops being
micro, small or medium enterprises, they all will still be considered as small
enterprises. Process is follow the same as in case of single-brand retail.

PACKAGE OF LANDMARK REFORMS IN FDI-

Foreign Direct Investment (FDI) in India has grown significantly following the
implementation of recent Government of India initiatives, including the Government of
India high-profile “Make in India” campaign and the continuing liberalisation of the FDI
across a wide range of sectors. The reforms have increase India’s image for all as a
preferred destination for foreign investment, with foreign investors. Now we are having
unrestricted access to many industry sectors; the reforms have also contributed to a
significant boost in India’s ‘ease of doing business’ World Bank ranking since 2015.
India’s FDI inflows increased by an impressive 26 per cent last year According to the
World Investment Report, 2016 published by the United Nations Conference on Trade
and Development.

Some of the recently introduced key reforms to India’s FDI policy are here

Defence
Defence is one of the key sectors in which FDI limits have been liberalised: up to 49 per
cent FDI is now permitted under the automatic route, and up to 100 per cent FDI
permitted under the approval route.

26
There was previously some ambiguity around the requirement for having “state of the art”
technology for proposals involving FDI of more than 49 per cent. It is now understood
that proposals showcasing access to modern technology will be favourably considered,
and the Government of India has also created flexibility for proposals which can
demonstrate “other reasons” for allowing investment beyond 49 per cent. These are
welcome developments in our countrty.

To date, FDI in the defence sector has remained notice low, and with major global
players having expressed an interest in investing in this sector, these reforms are expected
considerable attention from foreign investors. In May 2020, Government increased FDI in
Defence manufacturing under the automatic route from 49 per cent to 74 per cent.

Broadcasting carriage services

According the automatic route Up to 100 per cent FDI is now permitted under the in
Teleports, Direct to Home, Cable Networks, Mobile TV, and Headend-in-the-Sky
Broadcasting Service (against the earlier limit of upto 49 per cent under the automatic
route).

However, it is pertinent to note that an approval would be required in the event the
‘infusion of fresh FDI beyond 49 per cent results in a change in the ownership pattern or
transfer of stake by an existing investor to a new foreign investor in a company not
seeking license/permission from the concerned Ministry of the Government of India’.
There is a certain level of ambiguity around the language used in the exception, in respect
of which the industry is eagerly awaiting for a clarification from the GOI.

The liberalisation of this sector is designed to provide the cash strapped cable industry
with the investment needed to speed up their digitisation efforts. With an ever increasing
subscriber base and large infrastructure requirements, the potential for growth of
investments in this sector remains quite high.

Civil aviation
FDI in airport projects, like greenfield and brownfield, is now permitted up to 100 per
cent under the automatic route. This is significant for brownfield projects, in which FDI
was previously restricted to 74 per cent under the automatic route.

27
FDI in Air Transport Services is also now permitted up to 100 per cent, with FDI up to 49
per cent under the automatic route and FDI beyond 49 per cent under the approval route.
Investment by Non-Resident Indians (NRIs) in Air Transport Services sector is now
permitted up to 100 per cent under the automatic route.

However, the restriction on foreign airlines investing in excess of 49 per cent of the share
capital of an Indian airline remains in place.

The reforms in this sector are also consistent with the recently introduced Civil Aviation
Policy, 2016, which envisages development of under-used air strips amongst others. It is
to be hoped that these developments will provide a shot in the arm to the airline industry.

Pharmaceuticals
While FDI limit for greenfield projects stands at 100 per cent under the automatic route,
for brownfield projects, FDI is now permitted up to 74 per cent under the automatic route,
and beyond 74 per cent under the approval route. Previously, approval had been required
for any FDI in brownfield pharma projects.

Although investments in brownfield projects are subject to certain conditions prescribed

by the GOI (such as maintaining production level of essential medicines, reporting of
technology transfers, maintenance of R&D expenditure and other appropriate conditions
as may be specified upon approval), the relaxation is anticipated to result in increased
M&A activity in the sector and is a very positive step towards ease of doing business in
this strategically important sector.

Trading of Food Products

100 per cent FDI under the approval route is now permitted for trading (including through
e-commerce) of food products manufactured or produced in India. However, the
conditions applicable to the trading of food products have not been relaxed.

The agro-processing industry is also set to gain impetus from the relaxation, particularly
due to the exclusion of this sector from the restrictions placed on single/multi brand retail
trading.

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Single Brand Retail Trading
FDI in retail trading has been a key area in which the GOI hopes to attract major foreign
investment. Investors on the other hand have remained concerned about various
conditions that accompany their investment, predominantly on the local sourcing
requirements which was seen as a difficult condition by foreign investors.

While the FDI limits permitting up to 49 per cent investment under the automatic route
and an investment beyond 49 per cent under the approval route remain untouched, a key
development has been the relaxation of local sourcing norms of 30 per cent for FDI
beyond 51 per cent in single brand retail trading for a period of 3 years.

The relaxed sourcing norms would benefit global players seeking to manufacture and
market their flagship products in India’s enormous consumer goods market.

E-Commerce Activities
The GOI has segregated this sector into two models – firstly, inventory based (inventory
of goods and services owned by the e-commerce entity); and secondly, marketplace based
(e-commerce entity only providing a platform to act as a facilitator between the buyer and
the seller). 100 per cent FDI under the automatic route has been permitted in the
marketplace model (subject to certain additional conditions such as a limit of 25 per cent
of all sales from a single vendor or its group companies). For the inventory based model,
FDI remains not permitted.

Asset Reconstruction Companies (ARCs)

ARCs, which are expected to play a crucial role in solving India’s issues in relation to
stressed assets, have been encouraged by the GOI’s decision to allow 100 per cent FDI
under the automatic route (as opposed to the earlier limit of 49 per cent under the
automatic route).

India’s major banks have accumulated very significant amounts of non-performing assets
and require immediate assistance in this regard. While the limit on the shareholding of
Foreign Institutional Investors/Foreign Portfolio Investors continue to remain at 10 per
cent, FIIs/FPIs are now permitted to invest up to 100 per cent (compared to the earlier
limit of 74 per cent) of each tranche in securities receipts issued by ARCs subject to
Reserve Bank of India guidelines.

29
Pension and Insurance Sectors
The Pension and Insurance sectors have been simultaneously permitted to receive FDI
inflows through the automatic route up to the existing FDI limit of 49 per cent.
Investments in the two sectors are also subject to conditions/regulations framed by the
regulators of these sectors.

FDI IN MULTI BRAND RETAIL-IMPACT ON AGRICULTURE

India’s Agriculture sector plays an important role in economic development. Because

most of our country’s Population fully depend upon agriculture sector. In India,
agriculture sector contribute almost 19% of Indian gross domestic products (GDP). It is
the only sector which is the single largest contributor and showing major role in country’s
for exporting the agriculture products. India is among the 15 leading exporters of
agricultural products. It shows that country has emerged as a significant exporter in
certain agriculture items like rice, meat, spices, raw cotton and sugar. India has increase
export for receiving competitive advantage in certain specialized agriculture products like
basmati rice, non-basmati rice, spices, cotton, coffee, cashew, marine products, buffalo
meat and castor oil. For fully economic development, the central problem is capital
formation not only in industrial sector, but also in the agricultural sector. Therefore
Government permitted 100% FDI in plantation sector namely Tea plantations, Coffee
plantations, Rubber plantations, Cardamom plantations, Palm Oil plantations and Olive
oil tree plantations. Through automatic route and 100 % FDI is allowed in “Single Brand
product retail trading, 51% FDI is permitted in “multi brand retail trading” with condition
that fresh agricultural produce, including fruits, vegetables, flowers grains, pulses may be
unbranded. Benefits available to Agricultural sector due to FDI also responsible for the
progress of nation. After the introduction of GST (Goods and Service tax) Agricultural
sector can be at growth stage due to some projected benefits. According to WTO’s Trade
Statistics share of India’s agricultural exports and imports in the world agriculture trade in
2017 was 2.27% and 1.90%, respectively. Even during the difficult time of corona
pandemic lockdown, India took care to not to disturb the world food supply chain and
export Continued. The exports of Agriculture commodities during March 2020 to June
2020 were Rs. 25552.7 Crore against an export during the same period in 2019 of Rs.
20734.8 Crore, showing a increment of 23.24%.

30
The agricultural exports as a percentage of India’s agricultural GDP has increased from
9.4 % in 2017-18 to 9.9 % in 2018-19. While the agricultural imports as a percentage of
India’s agricultural GDP has declined from 5.7 % to 4.9 % indicating exportable surplus
and decreased dependence on import of agricultural products in India.

In 1950-51, India’s agriculture export was about Rs. 149 crores now it become more and
more to the level of Rs. 2.53 lakh crores in 2019-20. In the last 15 years there has been
substantial increase in export of almost all the agricultural items. but despite being one of
the top producers of agricultural products, India does not figure among top exporters of
agricultural produce. For example, India holds second rank in the world wheat production
but ranks 34th in export. Similarly, despite being world No. 3 in production of vegetables,
but the export ranking of India is only 14th. And in the case for fruits,India is the second
largest producer in the world but export ranking is 23rd. To reach the ranks of top
exporting nation in Agriculture, commensurate with the production, there is a clear and
categorical need to take proactive interventions. It exports 8.23 Lakh MT (LMT) of fruits
worth Rs 5,638 crore and 31.92 LMT of vegetables worth Rs 5,679 Crores annually.
Grapes occupy the premier position in fresh fruit exports followed by Mango,
Pomegranate, Banana, and Oranges.

31
 SWOT ANALYSIS OF FDI IN RETAIL SECTOR-

 Strengths

1. Benefit in competition: Allowing of FDI into the retail sector will be highly beneficial
to India. The more or more FDI into retail sector increases healthy competition in the
retail chain at domestic level which leads to the innovation of new models, improvement
of quality etc. Increasing of competition in a healthy manner may changes into the
qualitative products at reasonable price. Because of that customer can buy a product
easly and fair price. And because of that the level of customer satisfaction is increase.
2. Better Employment Opportunities: Nowdays a large number of young working
population gets more employment opportunities with development of retail sector in
India. At present, the retail sector occupies the second place in employment generation
after the agriculture sector n India. Once the reforms get implemented in the country
that will increase the employment opportunities substantially . Aspects of retailing to the
under privileged youth providing them employment in the retail sector.

3. Contribution to GDP: Generally, the retail sector contributes much to the GDP of
India. At present, this sector contributes around 33 – 35% to GDP that is higher than the
American retail sector contribution which stood at 20% of the American GDP.
Therefore, allowing of FDI into the retail sector may boost its share in GDP.
4. Better Investment Opportunities: The investors always seek the best return on their
investment with least risk. As the Indian retail sector has much more potentiality and
opportunity to invest in retail market, the investor is looking to invest more funds in this
sector.
5. Free Flow of Technology: With the advent of FDI, there is free flow of exist from one
country to another. It also helps in capital formation and improvement of managerial
skills through the adopting new technology from foreign countries.
6. Improvement in Purchasing Power: Introduction of FDI in the Indian retail sector
reduces the number of middlemen in the retail sector, which ensures more availability of
goods at reasonable and fair price. Because of that the purchasing power of consumers
will be increased.

32
7. High Potential: The Kearny study on Global Retail Market reveals that the Indian
retail market sector is considered to be a sector with a lot of potential. It was ranked as
the 2nd in Global Retail Development Index among thirty developing countries.

 Weaknesses

1. Lack of Infrastructure: The major problem faced by the Indian retail sector is
lack of infrastructure facilities.. Coming FDI into the retail sector leads to
improvement in infrastructural facilities in the sector. FDI will help India to
overcome such weekness, by utilizing the available resources in a more fruitful
manner.
2. Caters to High End Customers: Generally Walmarts provides services to high-
end customers or rich customers . They will do focus on high-end customers
living in the metro cities and will not deliver goods for customer wh ruro lives in
eural areas and small towns.
3. Small Size Outlets: Small size retail shops/outlets is one of the major or biggest
drawbacks of the Indian retail sector. Because all of these are calculated under
unorganized sector .
4. Low Sales Volume : In terms of population India is the second largest in the
World after China ,and its economy is growing rapidly, but its retail sector sales
volume is very low.
5. Industrial Status: In India more than 95% retail shops are functioning under
unorganized sector. The retail sector in India does not enjoy the status of an
Industry. That prevents the retailer from raising funds for various purposes.
6. High Rentals: Acceleration in the Indian retail sector caused space problem,
which escalates, in popular and ideal centres in urban areas real estate rental
values in a significant manner. Therefore, real estate rentals will be affordable for
a few business houses only. Thus, the retail business houses have to pay high
rentals which wear away their profits.

33
 Opportunities

1. Quality Improvement: The flow of FDI into retail sector will help the Indian
consumers by improving the quality of a product. This will lead to cost
competitive measures helping Indian producers in all the segments of the Indian
Economy to flourish in a significant manner. This will ultimately benefit the
consumers also.
2. Improvement of Infrastructural Facilities: Free flow of FDI will help in
building up the infrastructural. Because of that retail sector proving opportunities
to growing population. Therefore, for capital formation done in India and the
foreign capital has to be allowed into India.
3. High Potential Markets: In our country, the retail sector has high potentiality.
Thereby, many foreign business are attracted. The organized retail sector is
expected to grow stronger and faster in the next few years and increase in income
levels etc. which boost up the purchasing power of consumers. The most key
drivers of the Indian Retail Sector are food and apparel retailing. Because of that
the global retail giants are choosing the Indian retail sector as a key market
segment of investing among the developing countries.
4. Creating Transparency in the System: Presently intermediaries are operating as
per norms of Mandi system which are not transparent in terms of their pricing.
According to the reports of many surveys, an average Indian farmer realizes only
one-third of the price, which an ultimate consumer pays in the market. This
drawback is overcome by allowing FDI which ensures direct linkage between the
marts and the farmers. Therefore, farmers and producers are benefited much by
evicting the intermediaries.
5. Eviction of Mandi System or Intermediaries: With collaboration of Foreign
business houses i.e., allowing FDI, the prices of the commodities will be checked
frequently and daily and because o that the results in reducing of mandi system
rules. Bharati Walmart established a “Direct Farm Project” in Punjab, in which
100 farmer as a worker do work. The main objective of the project is to purchase
or procure vegetables directly from the farmers and finishing the middleman
system.

34
 6. Technology Import: The flow of FDI from foreign countries into the Indian retail
sector leads to flow of the Technical-know-how from global firms. The term
technical knowhow includes warehousing technology (cold storage) and
technology relating to distribution system which ensures improvement of supply
chain in India.
7. Rural Retail Market: The Indian rural retail market is not yet exploited; still it is
fresh and attracting more the global firms for Investment. Global retail giants
have an opportunity to venture into rural market and increase profits.

 Threats

1. Problems of Supply Chain Management: One of the greatest barriers to in

FDI into the Indian retail market is mismanagement of supply chain management
with corresponding changes in retail trade after the flow of FDI. With these
there are more problems like infrastructure and store organization.
2. Loss of Job Opportunities: Presently, in most of the country there are more
people lose their jobs because of pendemic. But in future if the retail sector gross
properly there are more jobs opportunity in retail sector.
3. Concentration of Economic Power: When FDI is allowed into the Indian retail
market, the so called big global giants of retail sector follow the penetration
pricing policy with a view to capture the market, which increases the
competition to the domestic retailers and damages their position. Thus, the
global giants become monopolists in such a sector which paves the way for the
concentration of economic power in the hands of a few.
4. Drains out the Country’s share of Revenue: Admittance of FDI into the
Indian Economy will drain out the country’s share of revenue to foreign nations
which may create a negative impact on the Indian Economy.

35
TOP 10 GLOBAL RETAILERS

#1 Walmart Inc. (WMT)

 Revenue (TTM): $534.7 billion

 Net Income (TTM): $15.0 billion
 Market Cap: $366.5 billion
 1-Year Trailing Total Return: 19.4%
 Exchange: New York Stock Exchange

#2 Amazon.com Inc. (AMZN)

 Revenue (TTM): $321.8 billion

 Net Income (TTM): $13.2 billion
 Market Cap: $1.6 trillion
 1-Year Trailing Total Return: 69.5%
 Exchange: NASDAQ

36
#3 Costco Wholesale Corp. (COST)

 Revenue (TTM): $160.9 billion

 Net Income (TTM): $3.7 billion
 Market Cap: $143.7 billion
 1-Year Trailing Total Return: 19.4%
 Exchange: NASDAQ

#4 Walgreens Boots Alliance Inc. (WBA)

 Revenue (TTM): $138.7 billion

 Net Income (TTM): $760.0 million
 Market Cap: $35.3 billion
 1-Year Trailing Total Return: -22.5%
 Exchange: NASDAQ

37
#5 The Kroger Co. (KR)

 Revenue (TTM): $126.6 billion

 Net Income (TTM): $2.1 billion
 Market Cap: $27.1 billion
 1-Year Trailing Total Return: 68.3%
 Exchange: New York Stock Exchange

#6 The Home Depot Inc. (HD)

 Revenue (TTM): $112.1 billion

 Net Income (TTM): $11.0 billion
 Market Cap: $285.5 billion
 1-Year Trailing Total Return: 27.4%
 Exchange: New York Stock Exchange

38
#7 JD.com Inc. (JD)

 Revenue (TTM): $86.4 billion

 Net Income (TTM): $848.1 million
 Market Cap: $99.2 billion
 1-Year Trailing Total Return: 113.3%
 Exchange: NASDAQ

#8 Tesco PLC (TSCDY)

 Revenue (TTM): $82.6 billion

 Net Income (TTM): $1.2 billion
 Market Cap: $28.2 billion
 1-Year Trailing Total Return: 9.5%
 Exchange: OTC

39
#9 Carrefour (CRRFY)

 Revenue (TTM): $81.1 billion

 Net Income (TTM): $1.7 billion
 Market Cap: $12.9 billion
 1-Year Trailing Total Return: -14.6%
 Exchange: OTC

#10 Target Corp. (TGT)

 Revenue (TTM): $80.1 billion

 Net Income (TTM): $2.8 billion
 Market Cap: $62.9 billion
 1-Year Trailing Total Return: 49.3%
 Exchange: New York Stock Exchange

40
These are the top retail sector companies in the world who provide the best retailing
services throughout the world. These are the 10 biggest retail companies by 12-month
trailing (TTM) revenue. This list is limited to companies that are publicly traded in the
U.S. or Canada, either directly or through ADRs. Some companies outside the U.S. report
profits semi-annually instead of quarterly, so the 12-month trailing data may be older than
it is for companies that report quarterly.

41
Table 1.1 TOP 10 COUNTRIES WITH HIGHEST FDI INFLOWS IN
INDIA (FROM APRIL 2000 TO DECEMBER 2019):-

FDI inflow
Country % Share
(Rs crore)

1. Mauritius 790,280.98 31.07

2.Singapore 587,820.17 20.72

3.Japan 193,069.72 7.24

4. Netherland 186,963.20 6.76

5.U.S.A 165,967.16 6.21

6.United Kingdom 148,437.69 6.12

7.Germany 68,050.40 2.64

8.Cyprus 53,230.40 2.21

9.France 40,038.02 1.55

10.UAE 41,168.87 1.51

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 Table 1.2 Name of major sectors where FDI is permitted but
caps are put on these sectors:

S. No Sector Sectoral Cap/ Route

1. Defence Industry 49% automatic route

2. Civil Aviation 49% FDI (100 percent for NRIs) Automatic

3. Asset Reconstruction Companies 100 % (FDI + FII) – by FIPB if beyond 49%

(ARCs)

4. Banking: Private Sector 74% (FDI + FII) by FIPB if beyond 49%

Banking: Public Sector 20% (FDI + FII) FIPB

5. Broadcasting 26% (FDI + FII) FIPB

(i) FM Radio 49% (FDI + FII) Automatic
(ii) Cable Network 74% (FDI + FII) FIPB beyond
(iii) DTH 49% , 26% (FDI + FII) FIPB

6. Commodity Exchanges 49% (26% FDI + 23% FII) Automatic

7. Credit Information Companies 74% Automatic (FII only 24 %)

(CICs)

8. Insurance 49%; up to 26% automatic and beyond it

FIPB

9. Stock Exchanges, Depositories, 49% (26% FDI + 23% FII) Automatic

Clearing Corp

10. Petroleum and Natural Gas Refining 49% FDI in case of PSUs Automatic

11. Publishing of Newspapers and 26%(FDI+FII) FIPB

Current Affairs News

12. Security Agencies in the Private 49 % FIPB

Sector

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13. Satellite and Establishment and 74 % FIPB
Operation

14. Single Brand Product Retailing 100% subject to sourcing conditions, FIPB
beyond 49%

15. Multi Brand Product Retailing 51% FIPB-subject to various conditions

16. Telecom Services 100% FDI - FIPB beyond 49%

17. Pharma Sector (Brownfield) 100 % FIPB except for medical devices

18. Power Exchanges 29% (26 % FDI+23% FII) automatic

19. Railway Infrastructure 100% percent automatic, FDI beyond 49%

percent in sensitive areas from a security
point of view

20. Construction Development Projects 100% automatic- subject to various

conditions.

India attracted total FDI amount US$ 62,001 million in FY 2018-19. The service sector
has the highest share in India's FDI share amount of US$ 80,670.79 from April 2000 to
December 2019.

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Table 1.3 FDI INFLOW IN INDIA (FROM 2014 TO 2018)

Total FDI Inflow

S. No. Financial Year
(amount in US$ million)

1 2014-15 45,148

2 2015-16 55,559

3 2016-17 60,220

4 2017-18 (P) 60,974

5 2018-19 (P) 62,001

Total 283,902

Mauritius has the highest FDI inflow in India From April 2000 To December 2019. Its
contribution was Rs 790,280 for this period. This was 31% of the total FDI India received
during this period.

Singapore was on second place with Rs. 587,820 and Japan on third place with FDI
inflow of Rs. 193,069 .Retail trading year-on-year increase of 98 per cent in FDI inflows
in FY19. The foreign investments increased from $224 million in FY18 to $443 million
in FY19.

India is the third-largest consumer retail destination in the world, India is now an
attractive investment destination for retail.

45
COVID-19 IMPACT ON INDIAN RETAIL:

Indian Retail Industry has more than 15 million retailers in both small and big trade,
traditional and modern trade. Retail employs in which 40-50 million Indians directly of
which related with modern trade employs more than 6 million Indians equaling to almost
12 per cent of the total Retail consumption of the country. Retail contributes to approx. 40
per cent of India’s Consumption and 10 per cent to India’s GDP in the country.

The lockdown to prevent the spread of Covid 19 in the country has greatly affected retail
business. Most stores, except stores selling essential food & grocery, each and every store
have been shut across the country. Garments, saris, electronics, mobile phones, furniture,
hardware, electronics etc almost all stores are closed nowdays. In non-grocery/food
retailers are reporting 80 per cent to 100 per cent reduction in sales. Even retailers of
essential items are facing losses as just because they aren’t allowed to sell non-essential
items, which would bring them higher margin

In a webinar organised by the Retailers Association of India in partnership with the Trust
for Retailers and Retail Associates of India (TRRAIN) on The Impact of COVID-19 On
Indian Retail, in rhis seminr experts shared their insights. The session was moderated by
Mr. BS Nagesh, Founder TRRAIN, Chairman-RAI and Non-Executive Chairman
Shoppers Stop. Industry leaders such as Kumar Rajagopalan, Chief Executive Officer,
Retailers Association of India; Anuj Puri, Chairman, Anarock Consultants Pvt. Ltd.; and
Pinakiranjan Mishra, Partner & Sector Leader, Retail & Consumer Products, Ernst &
Young India also exchanges suggestions and insights on the topic.

Consumer Behaviour Change:

According to the experts, there is a shift in consumer behaviour from offline shopping to
online shopping as people who were previously averse to online buying are now being
compelled to explore online retail.. Organizations should closely follow consumer
patterns online retail and have an adaptive business model to stay relevant.

Another shift in buying behaviour, especially for millennials is that they may choose to
purchase only what they really requirethe most and hence buy less than they would
earlier.

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IMPACT ON BUSINESSES

Though there is a significant impact on the retail businesses, recovery will fully depend
on the nature of the sector.

Commercial Real Estate sector may get deep hit with tenants getting into rent
negotiations, consolidation of office spaces to tide over cash flow concerns. Retailers are
likely to negotiate with mall owners/landlords on the revenue share model.

Mall owners wouldn’t want their existing occupants to leave and maybe more supportive.

Leadership will focus on cost efficiency than growth. Focus will be high on efficiency
and achieving more with things.

Compassion, empathy, honesty and transparency will be important. Cuts can be reverted
if targets are achieved till March 2021.

Discretionary spending on like entertainment, travel, admin costs are more likely to be cut
than people costs. Organizations which are already highly leveraged are going to face the
toughest challenges to get back on feet easly.

First priority will be People. It’s important to communicate with the employees and ask,
to address their nervousness and anxiety and keep in touch. In the short term critical
situation required thinking for- mission-critical ops. Second priority will be engaging the
customers, how to support our customers and keep communicating with the customers
daily basis.

Government support

Recovery will be dependent on the Government’s support to the sector. It may take a
minimum of 3 quarters to stable. In the absence of major support by Government many as
20-25 per cent of retailers may be out of business or will need dire financial infusion to
stay afloat.

During the webinar, experts also recommended number of measures which will help retail
businesses to remain functional.

47
 Government should focus on giving more money in the hands of the consumer, which
will automatically come back in the system as consumer spends increases on the product.

While the situation on-ground is increasing every day, we must work together, put the
consumers’ interest first and hope to come back to normalcy soon. This pandemic should
act as a trigger for the retail sector to focus on building flexible and agile business and
operational models that can counter such disruptions in the future. This would also mean
increased the customer focus on digital and online models going forward. We should now
focus on moving ahead of the crisis and building more resilient organizations.

These are challenging times indeed and retailers need to take these actions immediately to
navigate through this situation:

 Adopt a flexible retail model

 Shift from Business Continuity to Crisis Management

 Manage the supply constraints

 Deal with the decline in consumer confidence and try to infuse confidence

 Cope with staff shortages and drop in demand

 Plan for the long haul

FDI Policy In E-Commerce Retail

The FDI Policy permits 51% foreign investment in multi-brand retail, subject to approval
of the Indian government and fulfilment of many conditions including the foreign
investor needing to bring in a minimum of US$ 100 million; 50% of the total foreign
investment being invested in backend infrastructure (including investment towards
processing, manufacturing, storage etc.); and the multi-brand retail stores having to be set
up only in cities with a population of more than 1 million. However, no FDI is permitted
in e-commerce multi-brand retail. The Indian government also views e-commerce
platforms operating on an inventory-based model as disguisedly engaging in multi-brand
retail. According to a report by World Economic Forum, India will be the world’s third-
largest consumer market by 2030, behind the US and China. As such, India has the

48
potential to complete its consumer demand against foreign players who eyeing to exploit
the Indian consumer market. The existing guidelines in the retail sector are unappealing.
Also, with lines between e-commerce and traditional retail commerce is not clear, it is
may be time for the Government to takes a relook at the policy on Indian retail and strives
laws for governing the retail industry as a whole.

The retail market should be regulated as a single market regardless of it being a brick and
mortar store or an e-commerce platform. The distinction between single-brand retail and
multi-brand retail could continue, however, it is should apply uniformly to online and
offline retail market. In light of the FDI Policy, FDI in single-brand retail could be
permitted up to 100% (approval required beyond 49%) and in multi-brand retail could be
permitted subject to entry restrictions. The entry restrictions may be made more harsh for
certain category of market players, depending on many factors such as their turnover and
net-worth calculated on a consolidated basis , and sales but not on the basis of funding
being foreign or domestic. The entry restrictions could be with the minimum investment
in development of back-end infrastructure, technological innovation,, employment
generation, collaboration with local players, storage of consumer data, etc., depending on
the sectors which need immediate improvement (for instance, Indian food supply chain is
in desperate need of development and optimisation). Such restrictions would not only
expand the retail market in the country, but would also result in the development of
necessary infrastructure and integrate the traditional “mom-and-pop shops” with the e-
commerce market.

49
LITERATURE

REVIEW

50
LITRATURE REVIEW

1. Anusha Chari* T.C.A. Madhav Raghavan** University of North Carolina

Indian Statistical Institute at Chapel Hill & NBER New Delhi, India (March
2011), India’s retail sector remains off-limits to large international chains
especially in multi-brand retailing. A number of concerns have been raised about
opening up the retail sector to FDI in India. The first concern is the potential
impact of large foreign firms on employment in the retail sector. A second related
concern raised in the DIPP’s report is that opening up FDI would lead to unfair
competition and ultimately result in large-scale exit of incumbent domestic
retailers, especially the small family-owned business. A third concern raised by
domestic incumbent firms in the organized retail sector is that this sector is under-
developed and in a nascent stage.
2. LINA M. FERNANDES, RUKSANA BANU. And, SIMI SIMON,(November
2012). Accoding to all The Policy of multi-brand retail by Indian government
would bring improvements in rural infrastructure, technology, price for
agricultural produce and employment opportunities. With the help of new policy
Indian economy get additional benefits as the industries will be able to focus on
intermediaries and create more jobs for skilled employees in Indian retail sector.
3. Pankaj Kumar, Ph.D. Scholar, Department of Management and Humanities,
Sant Longowal Institute of Engineering and Technology and Dr. Sanjeev
Bansa, Associate Professor (Management), Department of Management and
Humanities, Sant Longowal Institute of Engineering and Technology
(January 2015). according to both FDI is multi-brand retail was already
permitted, but that too with several conditions, including 30 per cent local
procurement. . It is therefore quite difficult to say whether FDI will be beneficial
or harmful for Indian economy. It will enhance the supply of better commodities
with a reasonable price, and it increase small retailing and increase employment.
4. Smitha B Nair1 , Dr. Minimol M C2 1 Research Scholar Bharathiar
University, Asst. Professor Presidency College, Bangalore, 2 Research Guide
Bharathiar University, Asst. Professor RCBS, Rajagiri valley, Kochi.
According to the study , A remarkable quality of India's economic reorganization
plan is that it has emphasized evolutionary changeover on a sudden. This shift was
adopted since the reforms were introduced in India June 1991. The revised FDI
51
 retail policy includes 100 percent FDI in Single brand and 51 per cent in multi
brand. And the result is to capital formation and technological enhancement in the
country. The present study has proved that FDI retail sector affect Indian
Economy. So it is very important that government has to take further more
initiative to promote FDI in retail sector in India, and it leads to the economic
growth of the country.
5. Rekha Sharma1,*, Jyoti Bansal2 1Assistant Professor, Assistant Professor,
Aggarwal College Ballabgarh, Faridabad, Haryana, India 2Assistant
Professor, Amity University, Noida, Uttar Pradesh, India, (March 2015). FDI
should be initially allowed in less sensitive sectors and also in the sectors wherein
the domestic companies are established strongly. So the foreign direct investment
helps in establishing strong infrastructure. And government should take initiative
to improve infrastructure in the country.
6. Dr.Surbhi G.Garg1 & Priyanka Khare2 1,2Shri Guru Nanak Girls Degree
College, Lucknow, (March 31,2019). According to both Indian FDI empower
economy to withstand competition. It increase productivity, quality, and expertise
the employment in the segment. FDI is helps in developing the Indian economy.
7. Dr. A. Seilan, Assistant Professor of Economics, Scott Christian College
(Autonomous), Nagercoil. (Nov.2015). FDI would lead to a more comprehensive
integration of India into the worldwide market. It is obligatory for the government
to promote this sector for the overall economic development and for the social
welfare of the country. If it is done in the right manner, it makes boost condition
in the economy.
8. Virendra Kumar Gupta Research Scholar, Department of Commerce,
Mahatma Gandhi Kashi Vidyapith, Varanasi, India, (August-2019). FDI
allow India to secure foreign infrastructure in India. It increase capital base of
India.
9. Mr.R S Ch Murthy Chodisetty Register Number: 14351035 Research scholar
Under the esteemed guidance of Dr. P Rajababu, MBA, Ph.D Associate
Professor, KLU Business School, Guntur Dist, (DECEMBER-2019). Based on
the findings and conclusions, efforts were made to make suggestions that could be
adopted and further studied by researchers. Countries are competing for maximum
FDIs because they are the safest external financing. Overall, FDI increase, gross
fixed capital formation, macroeconomic stability, and institutional quality are the
52
 main variables that impact growth. Exports and human capital are also not seen as
significant growth indicators in the Indian economy. In addition to domestic
investment, FDIs have received significant growth.. FDI also important in terms
of growth, exports, gross fixed capital formation, human capital, macroeconomic
stability and institutional quality.
10. Anis ur Rehman 1* , Faraz Ahmad Abbasi, 1 Department of Management
and Information System, College of Business Administration, University of
Hail, KINGDOM OF SAUDI ARABIA, (January 2020). The permission given
by the Indian government 100 percent investment by automatic route for single
brand and 51 for multi brand retailing. . It has been discovered that employment
and pricing benefit significantly impact managers’ perception of Foreign Direct
Investments in the retail sector of India. Although the Indian government has
made favorable policies for FDI, its for the foreign retailers who consider India as
a favorable FDI destination to set up their businesses.
11. Dr. K. VICTOR BABU (AUGUST, 2020) retail sector is expected to grow in
future. In India, lot of departmental stores, Super markets and highly organized
malls are emerging into this retail sector. The researcher concluded that retail
sector there is tremendous growth rate in the year 2017-18.
12. Dr.Naresh Guduru Associate, Professor Balaji Institute Of Technology &
Science,Narsampet FDI in retail has now gained momentum in both single brand
and multi brand retail. The very banned sector has got so much increment. The
single brand retail has allowed 100% FDI. The foreign direct investment and
politically responsive multi brand retail have been facing a lot of trouble., yet
policies are to be changed and should allowed in a phased manner This will make
the retail industry to be topped and the growth will be well developed in
encouraging the GDP growth of the country. The small retail should also function
in a smooth manner even if the foreign players dominate the segment to conclude
the growth of retails industry will be topped.

53
OBJECTIVES
OF
RESEARCH

54
OBJECTIVES OF RESEARCH

1. To identify the major challenges of FDI in retail sector.

2. To examine the structure and opportunity of FDI in the same sector.

3. To analyze the impacts of FDI in Indian retail sector.

55
 RESEARCH

METHODOLOGY

56
MEANING OF RESEARCH: Research is defined as the creation of new knowledge
and/or the use of existing knowledge in a new and creative way so as to generate new
concepts, methodologies and understandings. This could include synthesis and analysis of
previous research to the extent that it leads to new and creative outcomes.

Research is defined as the creation of new knowledge and/or the use of existing
knowledge in a new and creative way so as to generate new concepts, methodologies and
understandings. This could include synthesis and analysis of previous research to the
extent that it leads to new and creative outcomes.

MEANING OF RESEARCH METHODOLOGY

Research methodology simply refers to the practical “how” of any given piece of
research. More specifically, it’s about how a
researcher systematically designs a study to ensure valid and reliable results that address
the research aims and objectives.

RESEARCH PROCESS
Figure 3.1

57
MEANING OF RESEARCH DESIGN

A research design is a framework or blueprint for conducting the marketing research

project. It details the procedures necessary for obtaining the information needed to
structure or solve marketing research problems. In simple words it is the general plan of
how you will go about your research. The function of a research design is to ensure that
requisite data in accordance with the problem at hand is collected accurately and
economically. Simply stated, it is the framework, a blueprint for the research study which
guides the collection and analysis of data. The research design, depending upon the needs
of the researcher may be a very detailed statement or only furnish the minimum
information required for planning the research project.

TYPES OF RESEARCH DESIGN

The types of research design into five categories:

1. Descriptive research design: In a descriptive design, a researcher is solely interested

in describing the situation or case under their research study. It is a theory-based design
method which is created by gathering, analyzing, and presenting collected data. This
allows a researcher to provide insights into the why and how of research. Descriptive
design helps others better understand the need for the research. If the problem statement
is not clear, you can conduct exploratory research.

58
2. Experimental research design: Experimental research design establishes a
relationship between the cause and effect of a situation. It is a causal design where one
observes the impact caused by the independent variable on the dependent variable

5. Explanatory research design: Explanatory design uses a researcher’s ideas and

thoughts on a subject to further explore their theories. The research explains unexplored
aspects of a subject and details about what, how, and why of research questions..

In this research project I am using descriptive research design. Because it is theory base
research.

59
RESEARCH TOOLS

TIME HORIZON

 CROSS-SECTIONAL STUDIES
 LONGITUDINAL STUDIES

A study can be done in which data are gathered just once, perhaps a period of days or
week or month, in order to answer the research question. Such studies are called one shot
or Cross-Sectional studies.

On the other hand, when the researcher tries to collect data at more than one point of time
it is known as Longitudinal studies.

Here, in this study Longitudinal studies this study is to be used as data for data at more
than one point of time.

60
STUDY SETTING

 CONTRIVED
 NONCONTRIVED

As we know that Research can be done in the natural environment where work proceeds
normally or in artificial settings.

“A Contrived Setting with research interference to the excessive degree”

Whereas, Non-Contrived Setting researchers interference with minimal degree or

moderate extent.

In this study settings will be Contrived Settings due to high degree of interference of
researcher and influence by no. of variables.

61
DATA COLLECTION

Data Collection is the process of gathering the information on variable of interest, it is an

important component of research in all the fields of study. It enables the researchers to
answer the relevant questions and evaluate the outcomes.

Figure 3.2

Primary Data: Primary data is the data collected for the first time by the
researcher by himself/herself for the specific purpose.

Secondary Data: It is the data which is collected by someone else, secondary data
is collected by someone else for some purpose or for research study. The data of
this studyis collected from the secondary data that means that data are already
available. That data has been collected and analyze by someone else. The sources
of the data for this study are:

 Books
 Magazines
 Journals
 Internet
 Newspaper

62
DATA ANALYSIS AND
INTERPRITATION

63
DATA ANALYSIS

The burgeoning population, growing middle income households and increasing women
workforce provide a highly positive outlook for the retail businesses in India. Fuelled by
these factors, the Indian retail industry is expected to grow from US$ 790 billion in FY
2019 to US$ 1400 billion by FY 2024, as the overall economy crosses the US$ 5 trillion
mark.

As internet penetration increases, more international retailers set up shops in India and
established Indian brands and retailers set themselves on a high growth trajectory, the
share of organised retail market is expected to increase from 12 percent in FY 2019 to 25
percent in FY 2024.The e-commerce market itself is estimated to grow from US$ 24
billion in FY 2019 to US$ 98 billion in FY 2024. Going forward, given the strong retail
and consumer outlook, India is expected to witness redefining trends which will shape the
future of the retail market.

TABLE NO.1 GROWTH OF RETAIL SECTOR INDUSTRY

INDUSTRIES EXPECTED GROWTH %

E-COMMERCE BUSINESS 27

INDIAN AGRICULTURE 31

INDIAN FMCG 30

INDIAN PHARMACEUTICAL 30

64
CHART NO.1 GROWTH OF RETAIL SECTOR INDUSTRY

32

31

30

29

Series1
28

27

26

25
E-COMMERCE INDIAN AGRICULTURE INDIAN FMCG INDIAN
BUSINESS PHARMACEUTICAL

Interpretation:

This chart show the growth rate of different retail sector in india. Agriculture sector is
the most growing sector in India. The growth rate of the agriculture sector is
31%. After agriculture Indian FMCG and pharmaceutical industry grow the rate of
growing is 30% of both sectors. And in the last E-commerce sector is expected to grow
27%.

65
TABLE 2: INDUSTRY WISE EMPLOYMENTS IN ORGANISED &
UNORGANISED SECTORES IN INDIA

Sector People working for unorganised sector

in India(In million)
Construction 48.92
Education 6.31
Electricity and water supply 1.21
Health 2,68
Manufacturing 52.49
Mining 1.79

Trade, Hotel and Restaurant 50.17

Chart 2: CHART OF INDUSTRY WISE EMPLOYMENTS IN

ORGANISED & UNORGANISED SECTORES IN INDIA

People working for unorganised sector in

India(in million)
Construction
Education
Electricity and water supply
Health
Manufacturing
Mining
Trade, Hotel and Restaurant

Interpretation

This shows the employment in different sector in India. The most employment generating
sector is manufacturing 52.49% And after that trade, and hotel and restaurant is 50.27%
.After this construction work increase employment in India. Education create 6.31
employment and health sector create 2.62% employment.and mining sector also contribute
1.79% employment. with the help of these sectors employment increase in India.
66
TABLE 3 FORCASTED CAGR IN GROCERY RETAILERS BY
CATEGORY %

CATOGARY CAGR

Modern Grocery Retailers 11

Convenience stores 8.5
Hypermarkets 5
Traditional Grocery Retailers 25
Tobacco specialists 3.1
Online Grocery market 20.63

CHART 3: FORCASTED CAGR IN GROCERY RETAILERS BY

CATEGORY %

CAGR
25
20
15
10
5
0 CAGR

INTERPRETATION:

This chart show the compound annual growth rate of different. Online grocery market
show the highest CAGR 20.63% after the traditional grocery store at 25%. Modern
grocery retailers show 11% growth. Convenience stores show 8.5% growth. Tobacco
specialists stores growth is 8.5%. Hypermarket is grow at 5%. Because of these stores
growth it may helps in growing country as well.
67
TABLE 4: DISTRIBUTION OF FOREIGN DIRECT INVESTMENT
EQUITY INFLOWS IN INDIA FOR FY 2020, BY SECTOR
DIFFERENT INDUSTRY EQUITY INFLOWS
Service sector 555.29
Computer software and hardware 542.5
Trading 324.06
Telecommunication 309.4
Hotel and Tourism 210.6
Automobile industry 197.53
Infrastructure 145.1
Chemical 74.92
Construction development 43.5
Drugs and Pharmaceuticals 36.5

CHART 4: DISTRIBUTION OF FOREIGN DIRECT INVESTMENT

EQUITY INFLOWS INDIFFERENT RETAIL SECTOR INDIA FOR
FY2020.

600
500
400
300
200
100
0 Series1

INTERPRETATION

This shows that foreign direct investment equity inflow in different sectors. Service sector
is the most growing sector now days it grow 555.29%. this sector receive most of the
equity part. After this the computer and software sector receive inflows now days. It
receive inflows at 542.5%. Trading sector is receive inflows 324.06%.
Telecommunication is receive inflows as well at 309.4%. Hotel and tourism get equity
210.6%. Automobile industry is also receive inflows 197.53%. Infrastructure sector is
receive inflows 145.1%. Chemical sector is receive inflows 74.92%. Construction
development is receive inflows 43.5%.

68
CHART 5: HARDEST-HIT INDUSTRIES DURING CORONAVIRUS:

INTERPRETATION:

The Covid-19 hits these industries most the leisure and hospitality industry saw the
largest decline payroll amount 7,653,000. In retail sector net decline is amount 2,106,900.

69
CHART 6: CHANGES IN CONSUMER BEHAVIOUR DURING
COVID-19 IN RETAIL SECTOR

INTERPRETATION

During covid-19 lots of impact put on consumer behavior. Some people ready to buy the
product or some people reject to buy. According to the chart 67% of people say that the
buying behavior is change and 33% says no impact on buying.

CHART 7: ONLINE RETAILING IN INDIA

INTERPRETATION:

This shows the online buyers and how much they spend. According to other
year in 2020 during Covid-19 most of the people use online retailing. It
increase the level online selling.

70
CHART 8: RETAIL ECOMMERCE SALE

INTERPRETATION

In 2020 the sale of the E-commerce retailing is increase in 2019 the sale is 24.8%but in
2020 the sale of product is now reach the level of 49.29% . But now for 2021 it is
expected that the sale may be reach 20.6% or in 2022 it may be go for 19.8%.

71
CHART 9: INDIAN RETAIL: ORGANISED AND UNORGANISED

CHART 10: GLOBAL RETAIL DEVELPOMENT

INTERPRETATION:

This chart shows how much retail sector growing global level. China got 1st position in
worldwide retail sector and India is got 2nd position in global retailing. National retail
sales in billion is 1202$ in 2019.

72
FINDINGS

73
FINDINGS

1. Improvement in productivity.
2. Growth in different retail sector industry.
3. In E-commerce business expected growth is 27%.
4. The FDI is significantly contributing in the economic development of India.
5. FDI will generate more job opportunities for skillful and experienced workers in
India.
6. FDI will contribute to boost Gross Domestic Product growth in the country.
7. FDI inflows boost the export sector of the country.
8. FDI will generate more job opportunities for skillful and experienced workers in
India.
9. The Indian Economy is one of the most favorable investment destination for most
of the developed and developing countries.
10. FDI inflows drastically boost the export sector of the country.
11. FDI help in socio economic stability of the whole economy.

74
SUGGESSIONS

75
According to my analysis of Foreign Direct Investment Trends Since 2004 And Its
Impact on Various Sectors in India, I suggest the below outlined some points through this
the flow of FDI increased, these points are as follows :-

 FDI is more necessary for creation of new job opportunities, growth of existing
manufacturing sector. It is also needed in the healthcare, education, Research and
Development, infrastructure, retailing and also in long term financial projects.
 Government should ensure the equitable distribution of FDI inflows among states
in India. The central government must give more freedom to state government, so
that they can attract FDI inflows at their own level. The government should also
provide additional incentives to foreign investors to investment in India.
 The policy makers of the country to focus more on attracting diverse types of FDI.
 The policy makers should design policies where foreign investment can be
utilized as means of enhancing domestic manufacturing, savings, and exports;
 Government should providing clarity on the existing businesses of E-commerce
companies operating in India.
 Government of India has allowed 100% FDI in online retail of goods and services
through the automatic route, thereby providing clarity on the existing businesses
of
 E-commerce companies operating in India.
 As there are limited customers enrolled in the loyalty programme like coupons,
point system, privilege card, discount sale, door delivery, buy one get one offers
etc., to increase the loyalty of the existing customers
 We have to use effective marketing channel like internet, hoardings, sms and TV
will lead to the betterment of the service.
 The research on the retailing and the retailer to provide efficacious training for
their staff members towards awareness of the products and services, greater
customer perception to serve them better, customer satisfying techniques and
optimal problem solving methods.
 We have to provide less cost product to the customer. If the product cost is
minimum the demand of the product will increase.

76
CONCLUSION

77
CONCLUSION

As far as the case of FDI in retail sector in India is concerned it has Provide the better
way for a better growth oriented and development oriented markets for Indian consumers.
With the help of FDI the companies are able to bring new skills and expertise and adding
it to their core values to increase the efficiency in various forms, which are so important
for a developing country like India. There is support for FDI in multi brand retail as well.
Also it will help in bringing down inflation by reducing price of goods, particularly
agricultural produce. Thus a conclusion can be made and it can be guessed that a good
Foreign exchange policy, FDI and FII and other measures can boost up the Indian
economic growth and development in retail sector as well as the other sectors too.

After demonetization and GST, Narendra Modi has led his footsteps to promote his
moto : ‘Made In India’ by allowing Foreign Direct Investment to grab the opportunity and
a firm hold over the retail stores of India. India holds the second highest population in all
over the world. This leaves a lot of scope and potential for such retail shops excerpting
maximum profits from such a wide population. So growth of this sector create more
opportunity for others.

78
BIBLIOGRAPHY

79
Books & Reports

 Gupta, R. (2012). FDI in Indian Retail Sector: Analysis of Competition in Indian

Agri-food Sector. Bangalore: Christ University.
  Hooda, S. (2011). A Study of FDI and Indian Economy. Kurkshetra: National
Institute of Technology.
 Johnson, D. B., & Morris, H. B. (2014). Opportunities and Significance of Foreign
Direct Investment in the Telecommunication Sector in India. In A. Vijaykumar
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 “FDI in Retail Sector: India”, joint report of ICRIER-Department of Consumer
Affairs (Government of India), published by Academic Foundation, 2005, with
Nitisha Patel.
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REPORTS

1. Media Reports, Press Releases, Deloitte report, Department of Industrial Policy

and Promotion website, Union Budget 2019–20, Consumer Leads report by FICCI
and Deloitte - October 2019https://www.ibef.org/industry/retail-india.aspx
2. David Gilbert, Retail Marketing Management, New Delhi, Pearson Education
Ltd, 2003.
3. Lakshmi Prabha G. and Amatul Baseer, Emerging Retail Trends in India, Indian
Journal of Marketing, 2007, pp.23-27.
4. Dr. M. Dhanabhakyam , Indian Retail Industry - Its Growth, Challenges And
Opportunities Published : Jul
2007https://www.fibre2fashion.com/industryarticle/2203/indian-retail-industry-
its-growth-challenges-and-opportunities ISBN No:978-93-5408-401-0 83
5. Pinakiranjan Mishra (2020) , An EY perspective on the key retailer issues and the
resilience strategies that they can build for now, next and beyond.
6. Verma, n. (2013). Foreign direct investment in indian retail sector. Drawing
lessons from the international experience , ii (v), 13-20. 197

81
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