UNIVERSITY OF MUMBAI

NCRD’S

STERLING COLLEGE OF ARTS, COMMERCE & SCIENCE

NERUL, NAVI MUMAI

COLLEGE CODE: 707

PROJECT REPORT ON

“FDI IN INDIAN RETAIL SECTOR”

SUBMITTED BY

“FARHEEN RABBANI KHAN”

PROJECT GUIDEANCE

DR. SUMATI GOPAL

IN PARTIAL FULFILLMENT FOR THE COURSE OF

MASTER IN COMMERCE (M.COM)

SEMESTER III

ACADEMIC YEAR 2017 - 2018

 DECLARATION

I FARHEEN RABBANI KHAN OF NCRD’S STERLING COLLEGE OF ARTS,

COMMERCE & SCIENCE, studying in M.COM (Semester III) hereby declare that I have
complete this project report on “FDI IN INDIAN RETAIL SECTOR”

And has not been submitted to any other University of Institute for the award of any degree,
diploma etc. The information is submitted by me is true and original to the best of my knowledge.

Date: ____________ ______________________

Place: Navi Mumbai (FARHEEN RABBANI KHAN)

 ACKNOWLEDGEMENT

I am thankful to STERLING INSTITUTE OF ARTS, COMMERCE AND

SCIENCE for giving me an opportunity to work on the project of the analysis of
emotional quotient from employee’s perspective. I am highly thankful to my
esteemed guide DR SUMATI GOPAL for his support throughout the completion of
this project.
 National Centre for Rural Development’s

Sterling College of Arts, Commerce & Science

Affiliated to University of Mumbai & Approved by Govt. of Maharashtra

CERTIFICATE

This is to certify that Ms. FARHEEN RABBANI KHAN of Bachelor of

Management Studies has undertaken and completed the project work titled “FDI IN
INDIAN RETAIL SECTOR” during the academic year 2017 – 2018 under the guidance

of DR. SUMATI GOPAL submitted on ____________ to this college in fulfillment

of the curriculum of Bachelor of Management Studies University of Mumbai.

This is a bonafide project work and the information presented is true and
original to the best of our knowledge and belief.

PROJECT GUIDE COURSE CO-ORDINATOR

(____________________) (_________________________)

PRINCIPAL EXTERNAL GUIDE

(________________) (_______________)

Plot No. 43, Sector - 19, D.G. WalsePatil Marg, Nerul (E), Navi Mumbai – 400 706, Maharashtra
Tel. No. 022-27705535, 022-27708059, website : sterlingcollege.edu.in
 A Project Report
On

FDI IN INDIAN RETAIL

SECTOR

PREPARED BY:

FARHEEN KHAN

ROLL NO :-

M.COM IIND YEAR

 A Project Report on
FDI IN INDIAN RETAIL
SECTOR
 INDEX
SERIA TOPICS PAG
L NO E NO

1 1. INTRODUCTION .......................................................................
1.1 FDI in Retail Sector ..............................................................
1.2 Research Gap ........................................................................
1.3 Limitation of the Study .........................................................
1.4 NEEDS FOR RESEARCH ...................................................
1.5 OBJECTIVES…………………………………………….

1
2
 CHAPTER-1

Introduction to FDI in Retail

Sector

1
1. INTRODUCTION
Foreign Direct Investment (FDI) is one of the most important sources of non-debt foreign
investment flows in developing countries like India. After the announcement of new industrial
policy, 1991 and the current policies of liberalization, India has been experiencing an accelerating
growth in the flow of foreign investment into the country. During 1992-93, several additional
measures were taken by the government to encourage investment flows: direct foreign investment,
portfolio investment, NRI investment and deposit and investment in global depository receipts.
Some of these measures are given as follows:

 The dividend balancing condition earlier applicable to foreign investments upto 51% equity
is no longer applied except for consumer goods industries.
 Existing companies with foreign equity can raise it to 51% subject to certain prescribed
guidelines. Foreign direct investment has also been allowed in exploration, production and
refining of oil and marketing of gas. Captive coal mines can also be owned and run by
private investors in power.
 India has signed the multilateral investment guarantee agency protocol for foreign
investment on 13thApril 1992.
 Foreign companies have been allowed to use their trademarks on domestic sales from 14th
may, 1992.

Foreign direct investment is nowadays considered as an important source of investible resources.

Developing countries, emerging economies and countries in transition increasingly see FDI as a
source of economic development, modernization and employment generation.

According to International Monetary Fund, FDI is defined as “investment that is made

to ac quire a lasting interest in an enterprise operating in an economy other than that of the investor.
The investor’s purpose being to have effective voice in the management of the enterprise”.
FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity
of the economy. The FDI Policy is governed by the Government of India and with the provision
of Foreign Exchange Management Act (FEMA) 1999.

1
Foreign Direct Investment (FDI) is investment in a foreign country through the acquisition of a
local company or the establishment there, of an operation on a new site. In simple words, it is the
capital inflows from abroad that is invested in or to enhance the production capacity of the
economy. Foreign Direct Investment (FDI) broadly encompasses any long-term investments by an
entity that is not a resident of the host country. Typically, the investment is over a long duration
of time and the idea is to make an initial investment and then subsequently keep investing to
leverage the host country’s advantages which could be in the form of access to better (and cheaper)
resources, access to a consumer market or access to talent specific to the host country - which
results in the enhancement of efficiency. This long-term relationship benefits both the investor as
well as the host country. The investor benefits in getting higher returns for his investment than he
would have gotten for the same investment in his country and the host country can benefit by the
increased know how or technology transfer to its workers, increased pressure on its domestic
industry to compete with the foreign entity thus making the industry improve as a whole or by
having a demonstration effect on other entities thinking about investing in the host country.

Foreign Direct Investment (Fdi) According to the Financial Times, "Standard definitions of
control use the internationally agreed 10 percent threshold of voting shares, but this is a grey area
as often a smaller block of shares will give control in widely held companies. Moreover, control
of technology, management, even crucial inputs can confer de facto control. FDI is a controlling
ownership in a business enterprise in one country by an entity based in another country. FDI is
direct investment into production or business in a country by a company in another country, either
by buying a company in the target country or by expanding operations of an existing business in
that country. foreign direct investment is done for many reasons including to take advantage of
cheaper wages or for special investment privileges such as tax exemptions offered by the country
as an incentive to gain tariff-free access to the markets of the country or the region. FDI refers to
capital inflows from abroad that is invested in or to enhance the production capacity of the
economy. It can be a subsidiary, joint venture or merger or acquisition and includes Greenfield
and Brownfield projects. FDI is distinguished from portfolio foreign investment, a passive
investment in the securities of another country such as public stocks and bonds, by the element of
"control".

2
1.1FDI in Retail Sector
Retailing is the interface between the producer & individual consumer buying for personal
consumption. Retailing is one of the world’s largest private industries. Liberalizations in FDI have
caused a massive restructuring in retail industry. Opening the retail industry to FDI will bring forth
benefits in terms of advance employment, organized retail stores, availability of quality products
at a better and cheaper price.

The Indian retail market was started with a barter system. Gradually a semi – formalized system
started to small groceries. After some decades where these small groceries changed to organized
retail stores. ICICI Conducted a research for the evolution of Indian retail research which describes
about the development of Indian retail market.

As per the current regulatory regime, retail trading (except under single-brand product retailing —
FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a
company to be able to get foreign funding, products sold by it to the general public should only be
of a ‗single-brand; this condition being in addition to a few other conditions to be adhered to. India
being a signatory to World Trade Organisation‘s General Agreement on Trade in Services, which
include wholesale and retailing services, had to open up the retail trade sector to foreign
investment. There were initial reservations towards opening up of retail sector arising from fear of
job losses, procurement from international market, competition and loss of entrepreneurial
opportunities. However, the government in a series of moves has opened up the retail sector slowly
to Foreign Direct Investment (―FDI). In 1997, FDI in cash and carry (wholesale) with 100%
ownership was allowed under the Government approval route. It was brought under the automatic
route in 2006. 51% investment in a single brand retail outlet was also permitted in 2006. FDI in
Multi-Brand retailing is prohibited in India.

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. And while mall based shopping formats are
gaining popularity in most cities today, the price-sensitive Indian shopper has reached out to stores
such as Big Bazaar mainly for the steep discounts and bulk prices. Retail chains such as Reliance

3
Fresh and More have reportedly closed down operations in some of their locations, because after
the initial novelty faded off, most shoppers preferred the convenience and access offered by the
local kirana store. So how would these Western multi-brand stores such as Wal-Mart and Carrefour
strategies their entry into the country and gain access to the average Indian household? Wal-Mart
has already entered the market through its partnership with Bharti, and gained opportunity for
some early observations. The company's entry into China will also have brought some
understanding on catering to a large, diverse market, and perspectives on buying behaviour in
Asian households. Carrefour on the other hand has launched its wholesale cash and carry
operations in the country for professional businesses and retailers, and will now need to focus more
on understanding the individual Indian customer. As such, these retail giants will try to gain from
some quick wins while reaching out to the Indian consumer. For one, they will effectively harness
their expertise with cold storage technologies to lure customers with fresh and exotic vegetables,
fruits and organic produce. Secondly, they will also emphasise on the access that they can create
for a range of inspirational global foods and household brands. Thirdly, by supporting domestic
farmers will try ensuring supplies of essential raw materials to them. Surely, these should engage
shoppers' and farmers interest–but what needs to be seen is whether they can effectively combine
these benefits, with the familiarity, convenience and personalised shopping experiences that the
local "kirana" stores have always offered.

4
1.2 Research Gap
The findings of this thesis on the topic ‘FDI in retail sector: The case of India’ will be
very useful for analysing current situation of retail sector in India. Government of India is
liberalizing foreign investment policy gradually from 1991. They are welcoming foreign
investment in different sectors. Basically, policy adopted in retail sector after
liberalization has become a good topic of academic debate. In order to fill in the research
gap, this thesis covers the discussion on recent deregulation of FDI policy in retail and its
impact on local business of organized and unorganized retailers. It also tries to enlighten
future retail environment of India on the basis of current market changes and
development. Hence, this thesis tries to fill up the gap by making holistic analysis of
Indian retail market.

5
1.3 Limitation of the Study

The selected case study in this thesis may not cover the whole retail market of India.

This study is based on India, which is a developing country hence the findings of Indian retail
growth stage from Sternquist’s retail development framework may not be applicable for developed
countries.

This study has less focus on online retailing.

Sampling and Sample Size

The selection of the Shop keepers, Counsumers, Retailer and Hawkers were based on the
convenient sampling, according to the availability of shop keepers in a particular time period of
the survey. In all more than 150 questionnaires were distributed but only 100 questionnaires were
included in the study, rest were rejected due to incomplete information or did not return from the
viewers

6
1.4 NEEDS FOR RESEARCH
As India is a developing country, capital has been one of the scare resources that are usually
required for economic development. Capital is limited and there are many issues such as Health,
poverty, employment, education, research and development, technology obsolesce, global
competition.

The flow of FDI in India from across the world will help in acquiring the funds at cheaper cost,
better technology, employment generation, and upgraded technology transfer, scope for more
trade, linkages and spillovers to domestic firms. The following arguments are advanced in favour
of foreign capital

7
1.5 OBJECTIVES
1. To Study the FDI Policy with regard to retailing in India.

2. To Study the Phase of FDI initiated of Single Brand retail & Multi Brand retail.

3. To analyze the impact of Organised retail & Unorganised retail.

4. To analyze the effect of FDI in retail on Employment.

5. To Identify the Strengths, Weaknesses, Opportunities &Thearts of FDI in retail Sector in

Review of changing dynamics of Indian retail.

8
 CHAPTER-2

Research Methodology

9
2. Research Approach
This particular study on FDI in India's retail sector will utilize an inductive approach to the
research, which should help to achieve the aim and objectives set out in Chapter 1. The
investigation will allow us to form a reasoned opinion as to what government policy changes are
required to make the opening up of FDI in retail as successful as possible for the domestic market
and India's economy.

This study will be based predominantly on qualitative research techniques, using primary as well
as secondary methods, in order to allow for an in-depth and insightful exploration of current issues
surrounding FDI in India's Retail market, and to assist in gaining an understanding of the
'sentiment' in India towards foreign retailers and their potential impact on the retail sector and
wider economy. There will be a certain amount of quantitative analysis undertaken with the data
received from the proposed research survey, but this will be interpreted alongside 'qualitative'
open-ended questions too, so as to offer more depth to the respondents' opinions.

The report hopes to establish if there is a genuine argument for government policy to change in
favor of FDI in retail, to assess and make recommendations of changes to current policy, and to
consider the risks to India's economy, society, and the unorganized retail sector, with a view to
encouraging 'socially responsible investment'.

To initiate this study, three questions were originally designed to help construct aims and
objectives and to provide some initial focus. The three Questions were:

Q1. What methods of FDI in retail are currently

permitted and what is the policy?

Q2. What are the key issues concerning FDI

policy change in India's retail sector?

Q3. How can policy help to reduce the risk of

FDI in retail for India and its domestic
markets?

10
2.1 Research Techniques
2.1.1 Types of Research

Primary research in the form of an internet-based survey was used to collect data of a qualitative
open-ended nature, using a descriptive approach so that the report can analyze and interpret the
Indian domestic retail market's sentiment towards FDI and how many people are in favor of various
aspects, as well as ask what changes to policy and the sector they believe are necessary and why.

The survey also includes quantitative 'closed-ended' questions for gathering data that can be
analyzed and interpreted alongside the follow- up open-ended questions. Secondary research was
carried out in the form of a literature review, to compare and contrast material and interpret the
issues with a view to drawing conclusions and developing recommendations.

11
2.1.2 Hypothesis

HYPOTHESIS NO.1

H0: There is interrelation between Single Brand retail & Multi Brand retail of FDI
H1: There is no interrelation between Single Brand retail & Multi Brand retail of FDI

HYPOTHESIS NO.2

H0: There is effect of FDI in retail on Employment.

H1: There is no effect of FDI in retail on Employment.

12
2.2 Data Sources
2.2.1 Primary Data Sources
The primary data sources in this research were collected via an emailed survey questionnaire. We
designed a test survey to be emailed to a pre-selected 'test-sample'. The final survey was then sent
out to a significant sample of Indian retailers and others in retail-related industries.

 Sampling Unit: Employees of bank at Seawood and Nerul Branch.

 Sampling Size: 150 potential respondents (100 respondents for each question )

 Sampling Techniques: multistage sampling

 Sampling Area: Seawoods and Nerul

2.2.2 Secondary Data Sources

 Internet :- Searching the internet extensively the starting point of this research and
provided some valuable secondary data. Website such as the Government of India's
Ministry of Finance www.finmin.nic.in which provides information on current FDI policy
through the Foreign Investment Promotion Board (FIPB), and also provides press releases
and data and statistics have been useful. The report also references some small domestic
industry group's website useful, and other trade lobby sites. Center for Policy One
particular notable internet resource was the Alternatives (www.cpasind.com) which have
provided particularly informative reports on some of the key issues with FDI in Indian
Retail.

 Academic Books :- There is a vast amount of literature on FDI in general; however

there is less on FDI in India, and limited amounts that are specifically focused on the retail
sector. The available text on general FDI were useful background research though, and the
more specific texts such as 'FDI in Retail Sector India' by Arpita Mukherjee & Nitisha Patel
and 'Multinationals in India' by Amar Nayak were utilized to a greater extent as this report
considered them to be far more relevant to the debate on this research topic.

13
 News Articles and Industry Reports :- To obtain up to date information
and opions on the research topic it was necessary to refer to domestic and international
news articles and gather a variety of industry reports and papers, for example the India
Brand Equity Foundation (IBEF) report on India's Retail Market & Opportunities, and
India FDI Watch's report in association with the Association of Community Organizations
for Reform Now (ACORN). All of these helped to provide a wide and balanced
understanding of the key issues of this research.

14
2.3 Limitations of Research Study

2.3.1 Survey Response Limitations

Due to the nature of the survey being internet/online-based, it was inevitable that this would have
limitations on survey response; however, this was counterbalanced by using a very large sample
base. Survey responses were also potentially limited by the length of the survey and by language
barriers.

2.3.2 Inconsistency of Data & Statistics available on FDI / Retail in India

We noted that data available, particularly in relation to India's retail sector, was often inconsistent.
However, for the purposes of this research being more of an exploratory nature, this did not have
too much impact on the findings. Up-to-date data was also hard to source.

15
 CHAPTER-3

Literature Review

16
3. Literature Review Overview

According to De Mello (1999), it is expected that FDI improves the knowledge of the labor
force by providing training through the introduction of new methods, and production and
management practices.

Bajpai and Jeffrey (2000), on “Foreign Direct Investment in India: Issues and Problems”,
analysed to identify the issues and problems associated with India’s current FDI regimes, and also
the other associated factors responsible for India’s unattractiveness as an investment location.
Despite India offering a large domestic market, rule of law, low labour costs, and a well working
democracy, her performance in attracting FDI flows has been far from satisfactory.

According to Hill (2000), on “International Business: Competing in the Global

Marketplace” FDI can make a positive contribution to a host economy by supplying capital.
Multinational enterprises (MNEs) invest in long-term projects, taking risks and repatriating profits
only when the projects yield returns.

Lim (2001), suggests that one of the most important contributions of FDI is its role in the transfer
of technology from developed to developing countries.

According Moosa (2002), Foreign Direct Investment is the process whereby residents of
one country (the source country) acquire ownership of assets for the purpose of controlling the
production, distribution and other activities of a firm in another country (the host country). The
United Nations Conference on Trade and Development, World Investment Report (UNCTAD,
1999), defines FDI as ‘an investment involving a long-term relationship and reflecting a lasting
interest and control of a resident entity in one economy

17
 Saggi (2002), considers FDI as a predominant way of increasing economic growth, since the
transfer of technology and knowledge of multinationals contribute to the increase local firms’
productivity.

According to Mecinger (2003), FDI has a far greater impact for imports than for exports,
which also influences the balance of payments. Also Duttaray et al. (2008), suggest that in the
long run the repatriation of profits is higher than the positive impact of the initial investment.

Sahoo and Mathiyazhagan (2003), refer to the possibility of the emergence of a situation
of multinational oligopoly which lead to the disappearance of local firms. Sylwester (2005),
suggest that multinationals attract more easily the skilled workers, either through its economic
power or through better career possibilities offer, they are able to remove them from local firms or
hindering them to capture these workers.

Makki and Somwaru (2004), report that the increase on exports resulting from FDI leads
local firms to improve their productivity by better use of their capacity and access to economies of
scale

According to Vissak and Roolaht (2005), the host country can become dependent on
technologies introduced by multinationals and other developed countries. This study indicates that
in this way, there is a decline in local firms, interest in the production of new technologies.

Kobrin (2005), on “The Determinants of Liberalization of FDI Policy in Developing Countries:

A Cross-sectional Analysis 1992-2001”, points out that the decade of 1990s was characterized by
widespread liberalization of laws and regulations affecting inflows of foreign direct investment in
developing countries. Using a data base supplied by UNCTAD, the author employs a cross-
sectional regression methodology to analyze the determinants of liberalization of foreign direct
investment policies in 116 developing countries from 1992 to 2001.

18
Sylwester (2005), suggest that multinationals attract more easily the skilled workers, either
through its economic power or through better career possibilities offer, they are able to remove
them from local firms or hindering them to capture these workers.

Durand (2007), on ‘Externalities from FDI in the Mexican Self-service Retailing Sector’
analyzed the impact of FDI on the retailing sectors of developing economies by specifically
focusing on the Mexican retail sector. It concluded that FDI flows in the retailing sector may affect
negatively the growth of a developing economy. Low consumer prices may impact positively on
the demand, but this phenomenon is partly counterbalanced by the negative effect on wages.

Joseph et al. (2008), in ‘Impact of Organized Retailing on the Unorganized Sector’ conducted
a research by taking interview with retailers. The study states that at macro level, the likely impact
of organized retail in India according to manufacturer’s belief is that organized retail would benefit
society at large, more so the end consumers, in terms of better product choices and price, and
farmers because of higher and more stable price realization for their produce.

Sjoholm (2008), on “The Effect of FDI on Employment and Technology in China” studied the
relationship between FDI and technology and found a clear linkage between the employment and
technology.

Duttaray et al. (2008), suggest that in the long run the repatriation of profits is higher than the
positive impact of the initial investment.

Goswami and Mishra (2009), have made a study on ‘Would Indian Consumers Move from
Kirana Stores to Organized Retailers when Shopping for Groceries?’ have carried out study across
four Indian cities- two major and two smaller cities with around 100 respondents from each city
with the help of a structured questionnaire. The study finds out that organized retailer is preferred
because of their cleanliness, offers and exclusive store brands, whereas kiranas are preferred
because of their location and possibility of multiple shopping.

19
Vacaflores (2011), on “Was Latin America Correct in Relying in Foreign Direct Investment
to Improve Employment Rates?” examines the effect of foreign direct investment on employment
generation for a group of Latin American countries in the period 1980-2006 and finds that FDI has
a positive and significant effect on the employment generation in host countries, which is driven
by its effect on male labour force.

A study made by Devajit (2012), on topic ‘Impact of Foreign Direct Investment on Indian
Economy’ states that FDI is needed by India for its sustained economic growth and development
through creation of jobs, expansion of existing manufacturing industries, short and long term
project in the field of healthcare, education, research and development (R&D) etc.

Mukherjee et al. (2014), on ‘Impact of the Retail FDI Policy on Indian Consumers and the
Way Forward’ conducted a survey and found that most of the international food and non-food
brands are available in the Indian market after 2006. These brands are imported, and the import
duty is high which makes these products expensive and unaffordable for majority of the
population.

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CHAPTER-3

FDI in Retail

21
4. FDI in Retail

4.1 Entry Options For Foreign Players prior to FDI Policy

Although prior to Jan 24, 2006, FDI was not authorised in retailing, most general players had
been operating in the country. Some of entrance routes used by them have been discussed in
sum as below:-

1. Franchise Agreements
It is an easiest track 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 Lacoste, Mango, Nike as good as Marks as good as Spencer, have entered Indian
marketplace by this route.

2. Cash And Carry Wholesale Trading

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 Consumers. Metro AG of Germany was the first significant global player to enter
India through this route.

3. Strategic Licensing Agreements

Some foreign brands give exclusive licences 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 distribute the brands to franchisees. Mango, the Spanish apparel
brand has entered India through this route with an agreement with Piramyd, Mumbai, SPAR
entered into a similar agreement with Radhakrishna Foodlands Pvt. Ltd.

22
4. 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 consumers by franchising,
internal distributors, existent Indian retailers, own outlets, etc. For instance, Nike entered
through an exclusive licensing agreement with Sierra Enterprises but now has a wholly owned
subsidiary, Nike India Private Limited.

23
4.2 FDI Policy in India

FDI as defined in Dictionary of Economics (Graham Bannock et.al) is investment in a foreign

country through the acquisition of a local company or the establishment there of an operation
on a new (Greenfield) site. To put in simple words, FDI refers to capital inflows from abroad
that is invested in or to enhance the production capacity of the economy.

Foreign Investment in India is governed by the FDI policy announced by the Government of
India and the provision of the Foreign Exchange Management Act (FEMA) 1999. The Reserve
Bank of India (‗RBI‘) in this regard had issued a notification,which contains the Foreign
Exchange Management (Transfer or issue of security by a person resident outside India)
Regulations, 2000. This notification has been amended from time to time. The Ministry of
Commerce and Industry, Government of India is the nodal agency for motoring and reviewing
the FDI policy on continued basis and changes in sectoral policy/ sectoral equity cap. The FDI
policy is notified through Press Notes by the Secretariat for Industrial Assistance (SIA),
Department of Industrial Policy and Promotion (DIPP). The foreign investors are free to invest
in India, except few sectors/activities, where prior approval from the RBI or Foreign Investment
Promotion Board (‗FIPB‘) would be required.

24
4.3 FDI Policy with Regard to Retailing in India

It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI Policy
issued in October 2010 which provide the sector specific guidelines for FDI with regard to the
conduct of trading activities.

 FDI up to 100% for cash and carry wholesale trading and export trading allowed
under the automatic route.
 FDI up to 51 % with prior Government approval (i.e. FIPB) for retail trade of Single Brand
products, subject to Press Note 3 (2006 Series).
 FDI is not permitted in Multi Brand Retailing in India.

4.4 Prospected Changes in FDI Policy for Retail Sector in India

The government (led by Dr. Manmohan Singh, announced following prospective reforms
in Indian Retail Sector :-

 India will allow FDI of up to 51% in ―multi-brand‖ sector.

 Single brand retailers such as Apple and Ikea, can own 100% of their Indian stores, up
from previous cap of 51%.
 The retailers (both single and multi-brand) will have to source at least 30% of their goods
from small and medium sized Indian suppliers.
 All retail stores can open up their operations in population having over
1million.Out of approximately 7935 towns and cities in India, 55 suffice such
criteria.
 Multi-brand retailers must bring minimum investment of US$ 100 million. Half of this
must be invested in back-end infrastructure facilities such as cold chains, refrigeration,
transportation, packaging etc. to reduce post-harvest losses and provide remunerative
prices to farmers.

 The opening of retail competition (policy) will be within parameters of state laws and
regulations.

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4.5 Single and Multi-Brand Retailing

4.5.1 FDI in Single-Brand Retail

The Government has not categorically defined the meaning of ‘Single Brand’ anywhere neither
in any of its circulars nor any notifications.
In single-brand retail, FDI up to 51 per cent is allowed, subject to Foreign Investment Promotion
Board (FIPB) approval and subject to the conditions mentioned in Press Note 3
that:-
(a) only single brand products would be sold (i.e., retail of goods of multi-brand even if
produced by the same manufacturer would not be allowed),
(b) products should be sold under the same brand internationally,
(c) single-brand product retail would only cover products which are branded during
manufacturing, and
(d) any addition to product categories to be sold under single brand would require fresh approval
from the government.

While the phrase ‘Single brand’ has not been defined, it implies that foreign companies would
be allowed to sell goods sold internationally under a ‘Single brand’, viz., Reebok, Nokia, and
Adidas. Retailing of goods of multiple brands, even if such products were produced by the same
manufacturer, would not be allowed. Going a step further, we examine the concept of ‘Single
brand’ and the associated conditions:

FDI in ‘Single brand’ retail implies that a retail store with foreign investment can only sell one
brand. For example, if Adidas were to obtain permission to retail its flagship brand in India,
those retail outlets could only sell products under the Adidas brand and not the Reebok brand,
for which separate permission is required. If granted permission, Adidas could sell products
under the Reebok brand in separate outlets.

26
4.5.2 FDI in Multi-Brand Retail

The government has also not defined the term Multi Brand. FDI in Multi Brand retail implies
that a retail store with a foreign investment can sell multiple brands under one roof.

In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce
circulated a discussion paper on allowing FDI in multi-brand retail. The paper doesn‘t suggest
any upper limit on FDI in multi-brand retail. If implemented, it would open the doors for
global retail giants to enter and establish their footprints on the retail landscape of India.
Opening up FDI in multi-brand retail will mean that global retailers including Wal-Mart,
Carrefour and Tesco can open stores offering a range of household items and grocery directly
to consumers in the same way as the ubiquitous ‘kirana’ store.

27
 CHAPTER-5

Analysis of Data

28
5.1 DATA INTERPRETATION AND GRAPHICAL ANALYSIS

Q.1. Are you aware about mall?

The respondents were asked to answer in Yes or No. From the table and consecutive graph it is
clear that out of 100 respondents 79 answered in Yes and 21 respondents answered in No, which
implies that majority of the respondents are aware about the Mall. The remaining respondents who
are not aware about Mall are mostly the vegetable vendors.

90
85

80

70

60

50

40

30

20
15

10

YES NO

29
Q.2. Do you know unorganized retail sector?
The respondents were asked to answer in Yes or No. 80% respondents are aware from unorganized
retail sector and only 20% respondents don‟t know about the unorganized retail sector. It shows
that unorganized retail sector is well known sector in India. In India Unorganized retail sector
comprises around 92%.

90

80
80

70

60

50

40

30

20
20

10

YES NO

30
Q. 3. Do you know about Foreign Direct Investment?
The respondents were asked to answer in Yes or No. From the table and consecutive graph it is
clear that out of 100 respondents 72% respondents answered in Yes and 28% respondents
answered in No, which implies that 60% of the respondents are aware about FDI and 40% have
not heard about FD

80

72
70

60

50

40

30 28

20

10

YES NO

31
Q. 4. Are you concerned about mall culture?
The respondents were asked to answer in Yes or No. From the table and consecutive graph it is
clear that out of 100 respondents 55% respondents answered in Yes and 45% respondents
answered in No, which implies that majority of the respondents are concerned about mall culture
and only 45% have not showed their concerned about the mall culture.

80
75

70

60

50

40

30
25

20

10

0
Category 1

YES NO

32
Q. 5. Have you experienced any impact on your current
business?
The respondents were asked to answer in Yes or No. From the table and consecutive graph it is
clear that out of 100 respondents, 70% respondents answered in Yes and 30% respondents
answered in No, which implies that more than 70% of the respondents are in the opinion that
opening of mall has very negative impact upon their sale. The reason behind this impact upon
the small shopkeepers is that consumer wants to buy all things under one roof. Shopping in
Mall is an entertainment and prestigious issue for them.

80

70
70

60

50

40

30
30

20

10

0
Category 1

YES NO

33
Q.6. Do you have the fear that FDI in retail will close small
shop?
The respondents were asked to answer in Yes or No. from out of 100 respondents, 65% respondents
answered in Yes and 35% respondents answered in No, Which implies that 65% respondents have
the fear to close the small shop. According to these 65% respondents, now they are selling their
products at very low margin and the most of consumers are moving to organized sectorfor buying
their daily need things also.

70
65

60

50

40
35

30

20

10

0
YES NO

34
Q. 7. Do you think FDI in retail will increase job opportunity?
The respondents were asked to answer in Yes or No. From the table and consecutive graph it is
clear that out of 100 respondents only 38 respondents were answered in Yes and only 38
surprisingly 64 respondents were answered in No, which implies that near about 64% of the sample
taken are not in favor of the opinion that introduction of FDI or big Mall will create job for both
educated and uneducated people in direct and indirect way.

40
38

35

30

25

20

15

10

5
2.4

YES NO

35
Q.8. Can foreign players create monopoly situation in India?
The respondents were asked to answer in Yes or No. from the table and consecutive graph it is
clear that out of 100 respondents 62% respondents were answered in Yes and they were agree with
it that foreign players will create the situation of monopoly in front of Indian retail market but 38%
respondents were answered in No. They told that foreign players cannotcreate the monopoly
situation.

70

62
60

50

40 38

30

20

10

YES NO

36
Q.9. There are various questions being raised on this
controversial issue that FDI in retail will create more
unemployment in the unorganized retail sector?
71% respondents answered that FDI in retail will create more unemployment and employment will
be affected because unorganized retail sector is very huge in India and most of uneducated persons
are earning from this sector but 29% respondents answered that FDI in retail will not affect
employment.

80

71
70

60

50

40

29
30

20

10

YES NO

37
Q.10. According to you, Whom will the F.D.I. benefit the
most?
The respondents were asked to answer in Yes or No. from the table and consecutive graph it is
clear that out of 100 respondents 60% respondents answered that FDI in retail will be more benefit
to customer, then 30 answered to supplier, to producer answer of responded 10% because it will
not affected to producer.

70

60
60

50

40

30
30

20

10
10

0
Category 1

CUSTOMER SUPPLIER PRODUCER

38
5.2 INTERPRETATION OF DATA ANALYSIS
The above analysis was done to find out the view of unorganized retailers upon organized retailers
in awake of allowing FDI in retail which can create the critical situation in front of unorganized,
hawkers, pavements and mom-pop shops (kiryana stores).
Questions were asked about impact of organized retail on their small mom-pop shop, fear of
closure of shops due to big retailers; majority of respondents were agreed that organized retailers
have the negative impact on their current business( on kiryana stores) and they also have the fear
of closure of the small retail shops. Small retailers has the fear that the consumers are attracting
towards to organized retail segment because they have the good market strategies such as offers,
discounts on branded products.

A middle class or lower class consumer always try to increase his/her buying capacity and
organized retailers can do it very easily because they buy all products in bulk at low margin cost,
also they have money power.

On the other hand retailers were asked the question about the job opportunity and impact on
employment. Majority of respondents answered, it is very difficult to provide the job all
unorganized retailers. Around 92% retailers are earning from this sector and most of them are not
skilled, educated and don‟t have an idea about market strategies. How can they join the organized
retail sector? This is a very big issue. At the end, neither they can run their mom-pop shop nor can
they join organized retail.

FDI in retail will create more unemployment in India. An organized retailer will contact directly
to farmer or producer to buy the products at low cost and will provide them good price of products.
We cannot deny that in this situation farmers and producers will get good price but once organized
retailer will establish their feet in to the Indian market they will create MONOPOLY situation.

39
 The Traditional Farm Produce Supply Chain

On the other hand; Traders, commission agent, wholesaler and retailers cannot stand in this supply
chain. It will create unemployment. This supply chain can be spoil by Foreign Direct Investment
in retail.

40
 CHAPTER-6

Structure Indian Retail Sector

41
6.1 Type of Indian Retail Sector

Definition of Retail

In 2004, The High Court of Delhi defined the term retail as a sale for final consumption
in contrast to a sale for further sale or processing (i.e. wholesale). A sale to the ultimate
consumer.
Thus, retailing can be said to be the interface between the producer and the individual
consumer buying for personal consumption. This excludes direct interface between the
manufacturer and institutional buyers such as the government and other bulk customers.
Retailing is the last link that connects the individual consumer with the manufacturing and
distribution chain. A retailer is involved in the act of selling goods to the individual consumer
at a margin of profit.

Division of Indian Retail Sector –

42
Organised Retail and Unorganised Retail & Online Retail

The retail industry is mainly divided into: -

1) Organised Retail

2) Unorganised Retail

3) Online Retail

Organised retail 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 retail, on the other hand, refers to the traditional formats of low-cost retailing, for
example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience
stores, hand cart and pavement vendors, etc.

Online retail is defined as retailing conducted online. The concept of online retailing has brought
together many retailers online. Features like easy search for required product, cash on delivery,
home delivery services and tracking transaction status have played a crucial role in enhancing
customer shopping experience

The Indian retail sector is highly fragmented with 97 per cent of its business being run by the
unorganized retailers. The organized retail however is at a very nascent stage. The sector is the
largest source of employment after agriculture, and has deep penetration into rural India
generating more than 10 per cent of India‘s GDP.

43
ADVANTAGES OF CONVENTIONAL AND MODERN
ORGANISED RETAIL REFORMS

Conventional Organized Modern Organized

1. Large Bargaining Power 1. Low operating cost and overheads

2. Proximity to consumers 2. Range and variety of goods

3. Long operating hours, strong 3. Long operating hours, quality

customer relations, convenience assurance (brand related and
and hygiene. durability).

44
6.2 Growth and Evolution of Indian Retail Sector

The Indian Retail Industry is the 5th largest retail destination and the second most attractive
market for investment in the globe after Vietnam as reported by AT Kearney‘s seventh annual
Globe Retail Development Index (GRDI), in 2008.The growing popularity of Indian Retail sector
has resulted in growing awareness of quality products and brands. As a whole Indian retail has
made life convenient, easy, quick and affordable. Indian retail sector specially organized retail is
growing rapidly, with customer spending growing in unprecedented manner. It is undergoing
metamorphosis. Till 1980 retail continued in the form of kiranas that is unorganized retailing.
Later in 1990s branded retail outlet like Food World, Nilgiris and local retail outlets like Apna
Bazaar came into existence. Now big players like Reliance, Tata‘s, Bharti, ITC and other reputed
companies have entered into organized retail business.
The multinationals with 51% opening of FDI in single brand retail has led to direct entrance of
companies like Nike, Reebok, Metro etc. or through joint ventures like Wal-mart with Bharti,
Tata with Tesco etc.

Evolution of retail sector

It is essential to highlights on the evolution of the retail sector in India. Earlier, weekly markets,
village fairs and melas evolved as a source of entertainment which was

within the rural reach. Later on, these were transformed Mom and Pop/ Kirana stores which are of
traditional variety neighbourhood shops. After that we see government supported PDS outlets,
khadi stores, cooperatives etc. Finally, with the liberalization a new large middle class with
spending power had emerged and shaped this sector a new format. The vast middle class market
demanded value for money products. This has fuelled the growth of supermarkets, departmental
stores and shopping malls.

45
As be seen in the share of organized sector in 2007 was
7.5% of the total retail market. Organized retail business
in India is very small but has tremendous scope. The total
in 2005 stood at $225 billion, accounting for about 11%

of GDP. In this total market, the organized retail accounts

for only $8 billion of total revenue. According to A T
Kearney, the organized retailing is expected to be more

than $23 billion revenue by 2010.

As a result, the Indian retail industry is expected to grow further in the future days. By the year
2013, the organized sector is also expected to grow at a CAGR of 40%. The key factors that drive
growth in retail industry are young demographic profile, increasing consumer aspirations, growing
middle class incomes and improving demand from rural markets. Also, rising incomes and
improvements in infrastructure are enlarging consumer markets and accelerating the convergence
of consumer tastes. Liberalization of the Indian economy, increase in spending per capita income
and the advent of dual income families also help in the growth of retail sector. Moreover, consumer
preference for shopping in new environs, availability of quality real estate and mall management
practices and a shift in consumer demand to foreign brands like McDonalds, Sony, Panasonic, etc.
also contributes to the spiral of growth in this sector. Furthermore, the Internet revolution is making
the Indian consumer more accessible to the growing influences of domestic and foreign retail
chains.

One report estimates the 2011 Indian retail market as generating sales of about $470 billion a year,
of which a miniscule $27 billion comes from organized retail such as supermarkets, chain stores
with centralized operations and shops in malls. The opening of retail industry to free market
competition, some claim will enable rapid growth in retail sector of Indian economy.

Others believe the growth of Indian retail industry will take time, with organized retail possibly
needing a decade to grow to 25% share. A 25% market share, given the expected growth of Indian
retail industry through 2021, is estimated to be over $250 billion a year: a revenue equal to the
2009 revenue share from Japan for the world's 250 largest retailers.
46
The Economist forecasts that Indian retail will nearly double in economic value, expanding by
about $400 billion by 2020. The projected increase alone is equivalent to the current retail market
size of France.

In 2011, food accounted for 70% of Indian retail, but was under-represented by organized retail.
A.T. Kearney estimates India's organized retail had a 31% share in clothing and apparel, while the
home supplies retail was growing between 20% to 30% per year. These data correspond to retail
prospects prior to November announcement of the retail reform.

47
6.3 Challenges of Retailing in India
In India the retailing industry has a long way to go and
to become a truly flourishing industry, retailing needs
to cross various hurdles. The first challenge facing the
organized retail sector is the competition from
unorganized sector. Needless to say, the Indian retail
sector is overwhelmingly swarmed by the unorganized
retailing with the dominance of small and medium
enterprises in contradiction to the presence of few giant
corporate retailing outlets.

The trading sector is also highly fragmented, with a

large number of intermediaries who operate at a
strictly local level and there is no ‗barrier to entry‘,
given the structure and scale of these operations
(Singhal 1999).The tax structure in India favors
small retail business. Organized retail sector has to pay
huge taxes, which is negligible for small retail
business. Thus, the cost of business operations is very
high in India. Developed supply chain and integrated
IT management is absent in retail sector. This lack of
adequate infrastructure facilities, lack of trained work
force and low skill level for retailing management
further makes the sector quite complex.

Also, the intrinsic complexity of retailing- rapid price

changes, threat of product obsolescence, low margins,
high cost of real estate and dissimilarity in consumer
groups are the other challenges that the retail sector in
India is facing.

48
The status of the retail industry will depend lie
ahead for the retail industry as consumer spending
still has not seen a consistent increase. In fact,
consumer spending could contract further as banks
have been overcautious in lending. Thus, retailers
are witnessing an uphill task in terms of wooing
consumers, despite offering big discounts.

Additionally, organised retailers have been facing a

difficult time in attracting customers from traditional
kirana stores, especially in the food and grocery
segment.

While in some sectors the restrictions imposed by the government are comprehensible; the
restrictions imposed in few others, including the retail sector, are utterly baseless and are acting as
shackles in the progressive development of that particular sector and eventually the overall
development of the Indian Inc. The scenario is kind of depressing and unappealing, since despite
the on-going wave of incessant liberalization and globalization, the Indian retail sector is still aloof
from progressive and ostentatious development. This dismal situation of the retail sector
undoubtedly stems from the absence of an FDI encouraging policy in the Indian retail sector.

49
6.4 FDI Encouraging Policy

FDI encouraging policy can remove the present limitations in Indian

system such as: -
1. Infrastructure
There has been a lack of investment in the logistics of the retail chain, leading to an inefficient
market mechanism. Though India is the second largest producer of fruits and vegetables (about
180 million MT), it has a very limited integrated cold-chain infrastructure, with only 5386
stand-alone cold storages, having a total capacity of 23.6 million MT. , 80% of this is used
only for potatoes. The chain is highly fragmented and hence, perishable horticultural
commodities find it difficult to link to distant markets, including overseas markets, round the
year. Storage infrastructure is necessary for carrying over the agricultural produce from
production periods to the rest of the year and to prevent distress sales. Lack of adequate storage
facilities cause heavy losses to farmers in terms of wastage in quality and quantity of produce
in general. Though FDI is permitted in cold-chain to the extent of 100%, through the automatic
route, in the absence of FDI in retailing; FDI flow to the sector has not

been significant.

2. Intermediaries dominate the value chain

Intermediaries often flout mandi norms and their pricing lacks transparency. Wholesale
regulated markets, governed by State APMC Acts, have developed a monopolistic and non-
transparent character. According to some reports, Indian farmers realize only 1/3rd of the
total price paid by the final consumer, as against 2/3rd by farmers in nations with a higher
share of organized retail.

3. Improper Public Distribution System (“PDS”)

There is a big question mark on the efficacy of the public procurement and PDS set- up and the
bill on food subsidies is rising. In spite of such heavy subsidies, overall food based inflation
has been a matter of great concern. The absence of a ‘farm-to- fork’ retail supply system has
led to the ultimate customers paying a premium for shortages and a charge for wastages.

50
4. No Global Reach
The Micro Small & Medium Enterprises (MSME) sector has also suffered due to lack of
branding and lack of avenues to reach out to the vast world markets. While India has
continued to provide emphasis on the development of MSME sector, the share of unorganised
sector in overall manufacturing has declined from34.5% in 1999-2000 to 30.3% in 2007-08.
This has largely been due to the inability of this sector to access latest technology and improve
its marketing interface.

Thus the rationale behind allowing FDI in Indian retail sector comes from the fact, that it
will act as a powerful catalyst to spur competition in retail industry, due to current scenario of
above listed limitations, low completion and poor productivity. Permitting foreign investment in
food-based retailing is likely to ensure adequate flow of capital into the country & its productive
use, in a manner likely to promote the welfare of all sections of society, particularly farmers and
consumers. It would also help bring about improvements in farmer income & agricultural growth
and assist in lowering consumer prices inflation.

Apart from this, by allowing FDI in retail trade, India will significantly flourish in terms of
quality standards and consumer expectations, since the inflow of FDI in retail sector is bound
to pull up the quality standards and cost-competitiveness of Indian producers in all the
segments. It is therefore obvious that we should not only permit but encourage FDI in retail
trade.

Lastly, it is to be noted that the Indian Council of Research in International Economic Relations
(ICRIER), a premier economic think tank of the country, which was appointed to look into the
impact of BIG capital in the retail sector, has projected the worth of Indian retail sector to reach
$496 billion by 2011-12 and ICRIER has also come to conclusion that investment of big money
(large corporate and FDI) in the retail sector would in the long run not harm interests of small,
traditional, retailers.

In light of the above, it can be safely concluded that allowing healthy FDI in the retail sector
would not only lead to a substantial surge in the country‘s GDP and overall economic
development, but would inter alia also help in integrating the Indian retail market with that of
51
the global retail market in addition to providing not just employment but a better paying
employment, which the unorganized sector (kirana and other small time retailing shops) have
undoubtedly failed to provide to the masses employed in them.

Industrial organisations such as CII, FICCI, US-India Business Council (USIBC), the American
Chamber of Commerce in India, The Retail Association of India (RAI) and Shopping Centers
Association of India (a 44 member association of Indian multi- brand retailers and shopping
malls) favour a phased approach toward liberalising FDI in multi-brand retailing, and most of
them agree with considering a cap of 49-51 per cent to start with.
The international retail players such as Walmart, Carrefour, Metro, IKEA, and TESCO share
the same view and insist on a clear path towards 100 per cent opening up in near future. Large
multinational retailers such as US-based Walmart, Germany‘s Metro AG and Woolworths Ltd,
the largest Australian retailer that operates in wholesale cash-and-carry ventures in India, have
been demanding liberalisation of FDI rules on multi-brand retail for some time.

52
 CHAPTER-7

SWOT of FDI in retail Sector

53
7.1 SWOT Analysis for opening of FDI in Indian Retailing
Babu (2012) recognized technology, labour skills and infrastructure as determinants of foreign
investment.

He mentioned the rationale behind Allowing FDI in Retail Sector as: FDI can be a powerful
catalyst to spur competition in the retail industry, due to the current scenario of low competition
and poor productivity. The policy of single-brand retail was adopted to allow Indian consumers
access to foreign brands. Since Indians spend a lot of money shopping abroad, this policy enables
them to spend the same money on the same goods in India.

In this analysis, a study was made regarding following strength, weaknesses, opportunities and
threats of retail industry:

Strengths - It has also contributed to large scale investments in the real estate sector with major
national and global players investing in devolving the infrastructure and construction of the
retailing business. -The annual growth of departmental stores is estimated at 24%. -The
governments of states like Delhi and National Capital Region (NCR) are very upbeat about
permitting the use of land for commercial development thus increase the availability of land for
retail space.

Opportunities - Global retail giants take India as key market .It is rated fifth most attractive
retail market. ---The organised retail sector is expected to grow stronger than GDP growth in the
next five years driven by changing lifestyles, increase in income and favourable demographic
outline. -Food and apparel retailing are key drivers of growth. -Rural retailing is still unexploited
Indian market.

Threats - Difficult to target all segments of society. -Labour rules and regulation are also not
followed in the organized retails. -Lack of uniform tax system

54
Weakness - Will mainly cater to high-end consumers placed in metros and will not deliver
mass consumption goods for customers in villages and small towns. -Small size outlets are also
one of the weaknesses in the Indian retailing.

So it was concluded that India is a rising star and going to be one of the fastest growing regions of
the future.

Allowing healthy FDI in the retail sector would not only lead to a substantial surge in the country’s
GDP and overall economic development, but would inter alia also help in integrating the Indian
retail market with that of the global retail market in addition to providing not just employment but
a better paying employment, which the unorganized sector (kirana and other small time retailing
shops) have undoubtedly failed to provide to the masses employed in them.

55
7.2 Foreign direct investment and employment opportunities
in Indian retail sector
Wakchaure (2011) founded FDI in retail to be favourable for Indian economy. According to him,
FDI in retail sector would certainly enable to optimize youth employment India. For those fearing
the effects of FDI in retail in India, the examples of Thailand and China should give comfort. Entry
of foreign players in Thailand and China gave a big boost to retail and the exports in both countries
got a shot in the arm. Notwithstanding the mounting pressure from leftwing parties, the present
Indian government has decided to allow FDI in retail outlets meant exclusively for single brands
which mean that multinationals can invest up to 51% in joint ventures for marketing their premier
brands.

However, the policy certainly needs a relook and should evaluate measures for further
liberalization to invite FDI in this sector to optimize youth employment opportunities.

He also said that the supermarkets and the small stores can be complimentary to one another and
not end up in a bitter competition. Both have their advantages.

The opponents of the giant retailers forget that India is large enough for both the multinationals
and the small family runs businesses. For instance, when McDonalds, Kentucky Fried Chicken
and other such outlets came to India, their opponents in the Left parties and in the saffron Swadeshi
Jagran Manch (SJM) argued that the Indian eateries as well as the small roadside vendors will
become bankrupt because the foreign investors have deep pockets. But nothing of this kind
happened. All businesses have thrived. The idli and dosa still remain the favourite meals of Indians
along with the burgers. The aloo tikkis sold on the roadside still sell like hot cakes.

There is nothing to fear, therefore, from the advent of the giant retail stores. On the contrary, they
will bring in an element of high professionalism in the production and sale of the commodities in
daily use, and also highlight the need for improved infrastructural facilities linking the towns with
the countryside. Evidently, storage and transport arrangements will receive a boost. All of this has
considerable employment potential.

56
Since any economic change entails disruption, some small retailers will undoubtedly suffer
because of the competition. But the more enterprising among them should be able to overcome the
challenge by offering a greater variety of goods and by establishing close personal contacts with
the customers. It was concluded that a major reason for opposing FDI in the retail sector is political
and not economic. The politicians seem to believe that by raising the fear of a foreign invasion
they can appear more patriotic. They also apparently consider the thousands and thousands of
small shopkeepers as constituting some kind of a nationwide vote bank for those who oppose FDI.
They look upon the supermarkets as typical of a capitalist society, were unbridled consumerism is
the driving force of the economy. For them, the attraction which the shining shopping malls have
for young people will make them imitate the Western way of life at the expense of their Hindu
cultural roots.

57
 7.3 Impact on Traditional Mom and Pop Stores

The main question being raised is whether the traditional mom and pop stores will survive and
co-exist or leave the field for major organized retail players?

The answer could be a co-existence. The major advantage for the smaller players is the size,
complexity and diversity of our Indian Markets. If we look at the organized retail players, most
of them have opened shop in the Metros, Tier 1 and Tier 2 towns. Very rarely do we find
organized players in the rural areas and we have more than 70% of the population living in the
rural areas.
There are a multitude of reasons being floated around to prevent the
liberalisation of the FDI norms for Indian retail:
 Primary among these is the concern regarding the kirana stores as well other locally operated
Mom and Pop stores being adversely affected by the entry of global retail giants such as Walmart,
Carrefour and Tesco. As these brands would come with advanced capabilities of scale and
infrastructure in addition to having deep pockets, it is argued that this would result in the loss of
jobs for lakhs of people absorbed in the unorganised sector.
 Fears have also been raised over the lowering of prices of products owing to better operational
efficiencies of the organised players that would affect the profit margins of the unorganised
players.
 Instability surrounding the political arena with a number of scams of varying magnitudes doing
the rounds has also led to a sense of uncertainty among foreign investors.

Many Industry experts though, feel that the reservations against the introduction of Multi-Brand
retail are mostly misplaced. The successful deployment of 100%FDI in China is a case in point.
Partial FDI in retail was introduced in 1992 in China. Subsequently, in December 2004, the
Chinese retail market was fully opened up to utilise the enormous manpower and wide customer
base available that has led to a rapid growth of the sector. Today, its retail sector is the second
largest (in value) in the world with global retailers such as Walmart, 7-Eleven and Carrefour
comprising 10% of the total merchandise.

58
Multi-brand retail, if allowed, is expected to transform the retail
landscape in a significant way:

1. Firstly, the organised players would bring in the much needed investment that would spur
the further growth of the sector. This would be particularly important for sustenance of some
of the domestic retailers that don‘t have the resources to ride out the storm during an
economic slump such as the case with Vishal, Subhiksha and Koutons, which couldn‘t
arrange for funds to sustain their growth.

2. The technical know-how, global best practices, quality standards and cost competitiveness
brought forth through FDI would augur well for the domestic players to garner the necessary
support to sustain their growth.

3. Indian has also been crippled by rising inflation rates that have refused to come within
accepted levels. A key reason for this has been attributed to the vastly avoidable supply
chain costs in the Indian food and grocery sales which has been estimated to be a whopping
US$ 24 Bn. The infrastructure support extended to improve the backend processes of the
supply chain would enable to eliminate such wastages and enhance the operational
efficiency.

4. FDI in multi-brand retail would in no way endanger the jobs of people employed in the
unorganised retail sector. On the contrary, it would lead to the creation of millions of jobs
as massive infrastructure capabilities would be needed to cater to the changing lifestyle
needs of the urban Indian who is keen on allocating the disposable income towards
organised retailing in addition to the local kirana stores. These stores would be able to retain
their importance owing to their unique characteristics of convenience, proximity and skills
in retaining customers. Also, these would be more prominent in the Tier-II and Tier-III cities
where the organised supermarkets would find it harder to establish themselves.

59
FDI in multi-brand retail is therefore a necessary step that needs to be taken to propel further
growth in the sector. This would not only prove to be fruitful for the economy as a whole but will
also integrate the Indian retail sector with the global retail market. It is not a question of “how it
will be done but when”.

Contrary to the above view,

Traditional retailing has been established in India for many centuries, and is characterized by
small, family-owned operations. Because of this, such businesses are usually very low-margin, are
owner- operated, and have mostly negligible real estate and labour costs. Moreover, they also pay
little by way of taxes. Consumer familiarity that runs from generation to generation is one big
advantage for the traditional retailing sector. It is often said that the mom-and-pop store in India is
more like a father-and-son enterprise.

Such small shops develop strong networks with local neighbourhoods. The informal system of
credit adds to their attractiveness, with many houses running up a tab‘ with their neighbourhood
kirana store, paying it off every fortnight or month. Moreover, low labour costs also allow shops
to employ delivery boys, such that consumers may order their grocery list directly on the phone.
These advantages are significant, though hard to quantify. In contrast, players in the organized
sector have to cover big fixed costs, and yet have to keep prices low enough to be able to compete
with the traditional sector. Getting customers to switch their purchasing away from small
neighbourhood shops and towards large- scale retailers may be a major challenge. The experience
of large Indian retailers such as Big Bazaar shows that it is indeed possible. Anecdotal evidence
of consumers who return from such shops suggests that the wholesale model provides for major
bargains – something Indian consumers are always on the lookout for.

The other major challenge for retailers in India, as opposed to the US, is the storage setup of
households. For the large-scale retail model to work, consumers visit such large stores and return
with supplies likely to last them for a few weeks. Having such easy access to neighbourhood stores

60
with whom, as discussed above, it is possible to have a line of credit and easy delivery service,
congested urban living conditions imply that few Indian households might be equipped with
adequate storage facilities.
In urban settings, real estate rents are also very high. Thus opportunities in this sector are limited
to those retailers with deep pockets, and puts pressure on their margins. Conversely for retailers
looking to set up large stores at a distance from residential neighbourhoods may struggle to attract
consumers away from their traditional sources of groceries and other products.

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7.3.1 Impact of organized retail on unorganized

Retail (Case Study – China)

Myth: Organized global retailers eat up local retail chains including mom and pop stores

Truth: China, which brought in global retailers like Wal-Mart in 1996, has just about
20% of organized retail meaning the argument that unorganized retail gets decimated, is
fallacious.

1. FDI in retailing was permitted in China for the first time in 1992. Foreign retailers were
initially permitted to trade only in six Provinces and Special Economic Zones. Foreign
ownership was initially restricted to 49%.

2. Foreign ownership restrictions have progressively been lifted and, and following China‘s
accession to WTO, effective December, 2004, there are no equity restrictions.

3. Employment in the retail and wholesale trade increased from about 4% of the total
labour force in 1992 to about 7% in 2001. The numbers of traditional retailers were also
increased by around 30% between 1996 and 2001.

4. In 2006, the total retail sale in China amounted to USD 785 billion, of which the share of
organized retail amounted to 20%.

5. Some of the changes which have occurred in China, following the liberalization of its retail
sector, include:

a.) Over 600 hypermarkets were opened between 1996 and 2001

b.) The number of small outlets (equivalent to „kiranas‟) increased from 1.9 million to over

2.5 million.

c.) Employment in the retail and wholesale sectors increased from 28 million people to 54
million people from 1992 to 2000.

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Effect of FDI on Traditional Market in China

Type No. of stores in 1996 No. of stores in 2001

Type No. of stores in No. of stores in

1996 2001

Traditional 1,920,604 2,565,028

Supermarkets 13,079 152,194

Convenience NIL 18,091

Hypermarkets NIL 593

Thus the above discussion and case of China suggest that it is too early to predict the erosion
of mom and pop stores in India with opening of multi-brand retail sector in India to foreign
investors.

63
7.3.2 Impact on Consumers and existing Domestic Supermarkets
Supermarkets tend to charge consumer’s lower prices and offer more diverse products and higher
quality than traditional retailers—these competitive advantages allow them to spread quickly,
winning consumer market share. In most countries supermarkets offer lower prices first in the
processed and semi- processed food segments.

Only recently, mainly in the first- and second-wave countries have supermarket prices for fresh
fruits and vegetables been lower than traditional retailers (except in India). The food price savings
accrue first to the middle class, but as supermarkets spread into the food markets of the urban poor
and into rural towns, they have positive food security impacts on poor consumers. For example, in
Delhi, India, the basic foods of the urban poor are cheaper in supermarkets than in traditional retail
shops: rice and wheat are 15% cheaper and vegetables are 33% cheaper.

Existing Indian retail firms such as Spencer's, Foodworld Supermarkets Ltd, Nilgiri's and ShopRite
support retail reform and consider international competition as a blessing in disguise. They expect
a flurry of joint ventures with global majors for expansion capital and opportunity to gain expertise
in supply chain management. Spencer's Retail with 200 stores in India, and with retail of fresh
vegetables and fruits accounting for 55% of its business claims retail reform to be a win-win
situation, as they already procure the farm products directly from the growers without the
involvement of middlemen or traders. Spencer‘s claims that there is scope for it to expand its
footprint in terms of store location as well as procuring farm products. Foodworld, which operates
over 60 stores, plans to ramp up its presence to more than 200 locations. It has already tied up with
Hong Kong-based Dairy Farm International. With the relaxation in international investments in
Indian retail, India‘s Foodworld expects its global relationship will only get stronger.

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7.4 ADVANTAGES OF FDI IN RETAIL
India's retail industry is one of the biggest around the world when it comes to the privately owned
ones. The industry has seen some major restructuring thanks to the FDI structure becoming more
liberal than before. The benefits of FDI in retail, as per experts, carry greater weightage than the
cost related implications. With FDI in retail, operations in distribution and production cycles are
expected to become better. Owing to factors such as economic operations, the cost of production
facilities will come down as well. This will mean a greater choice of products at lesser and
justifiable prices for the customers.

As a result of FDI, companies will be able to bring in technology and skills from other countries
and this will help in infrastructural development of India. This will also help in creating more value
for money for the buyers. After FDI in retail, it is possible to set up a properly organized chain of
retail stores as the capital to do is readily available. The investment can be regarded as a long term
one as the physical capital put into a domestic company is not liquidated easily.

This is its main difference from equity capital. ICRIER had also predicted that if FDI in retail was
introduced in India during 2011-12, the Indian economy could have grown by 13 percent; the
unorganized sector could have seen a 10 per cent growth and the organized sector could have
increased by 45 per cent

65
7.5 DISADVANTAGES OF FDI IN RETAIL
Experts say that while analyzing the positives and drawbacks of FDI in retail, both the government
and the opposition did not refer to the Parliament Committee report where its effects had been
studied in great detail. The committee had taken into cognizance many witnesses, NGOs,
individuals, and trade associations to come up with the said report. The Committee visited various
corners of India and also went through reports and gathered knowledge about the experience of
similar decisions in other countries. It also enquired from several government departments
regarding the matter.

The Committee had surmised in its report that the number of people getting jobs will be lesser than
the amount of people losing the same as a substantial amount of marginal and small farmers will
be wiped out. Some other problems expected out of this were aggressive pricing and prevalence
of monopoly.

As per the Committee's report almost 8 percent of India's workforce is employed in the
unorganized retail sector. This comes up to roughly 40 million people. It has been stated that FDI
in retail will generate 2 million jobs. However, the Committee had stated that it is not a proper
indication as it does not take into account the number of people who already work in the retail
sector.

ICRIER had executed a second study on the effects of FDI in retail during 2011 and in that it had
stated that FDI will bring about a fantastic shopping experience for the consumers. It had actually
interviewed 300 people from the middle and high income groups. Thus, in effect, the efforts of the
Parliament Committee were overlooked for a private organization.

66
 CHAPTER-8

Policy taken by Government

67
8. Policy taken by Government

Following are the few recommendations for formulation of policies by

government:

Much of the Indian retail trade (particularly grocery) still has traditional features: small family-run
shops and street hawkers dominate the situation in most of the country. However, the retail trade
in India is now undergoing an intensive structural change which could cause irreversible damage
to local commodity supply chains and competition. The existing regulations are not adequate to
fulfil the new requirements. India can learn (and perhaps forestall loss of genuine competition and
product variety) from the experience of south-east Asian countries which are improving regulatory
frameworks and some advanced retailing economies like Germany which are already considered
more successful regulators in this sector. German competition policies in content and
implementation are significant for India to the extent that they are different from other advanced
retailing countries like the US and Great Britain. German policy now proactively aims to preserve
small and medium competitors in retail sector.

Policies for ―Competitiveness with Inclusiveness in the Supermarket Revolution. As the

supermarket revolution proceeds in developing countries, governments have several options for
helping small farmers participate in supermarket channels (or gain access to viable alternatives)
and traditional retailers coexist or compete with the modern retail sector.

Option 1:Regulate Modern Retail? To the extent developing countries have regulated modern
retail; their goal has been to reduce the speed and scope of its spread. The regulations have mainly
limited the location and hours of modern retail. On balance, these regulations have done little to
limit supermarket spread, partly because although regulations tend to target large-format stores
(and thus not limit small traditional stores), modern retail comes in a wide variety of formats,
including neighbourhood stores and convenience stores.

Few developing countries have a pro-traditional or pro–small retail policy. Instead they usually
take a laissez-faire approach to small shops and hawkers and make minimum initial public
investments in open and covered municipal markets. A number of developing countries even have
policies that encourage the development of supermarkets and regulate wet-markets in order to
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modernize commerce, lower food prices and congestion, and increase public hygiene and
economic competitiveness.

Finally, in the early stages of supermarket spread, the supermarket sector is relatively fragmented
(weakly concentrated), and farmers and processors thus have a wide range of potential buyers
among supermarket chains and between the modern and traditional sectors. In the advanced stage
of supermarket spread, however, the sector becomes concentrated— for example, in Latin America
four to five chains typically control about 75percent of a sector that in turn controls an average of
55percent of food retail. At that stage it is important for governments and the private sector to
enforce competition policies.

Option 2: Upgrade Traditional Retail. A number of good examples of programs to upgrade

traditional retail exist. Of particular interest are those of East and Southeast Asia, such as in China,
Hong Kong, the Philippines, Singapore, and Taiwan. In most of these countries, the programs in
question are municipal, sometimes under a national umbrella policy. The programs have several
elements in common:

• Governments involved in these programs have a broad tent approach—that is, they allow
development of supermarkets as well as traditional retailers.

• They are proactive: the Hong Kong Consumer Council‘s dictum of ―managing and facilitating
change rather than leaving wet-markets to flounder and collapse, characterizes all the East and
Southeast Asian approaches studied.

• They promote traditional retailer modernization and competitiveness. Singapore‘s approach is to

―cherish but upgrade and modernize. Hong Kong‘s policy is to retain but modernize.

• They accept the social and market role of wet-markets, hawkers, and small traditional shops but
encourage them to locate in non-congested areas and on fixed sites (to increase hygiene and tax
payment) and to improve their physical infrastructure. They also train the operators in business
skills, food safety, and hygiene.

69
• They experiment with privatizing wet-market management in some cases (such asin China and
Hong Kong).

Option 3: Upgrade Wholesale Markets to Serve Retailers and Farmers Better. Small shops and
wet-market stall operators typically source food products from wholesale markets, which typically
buy from small farmers. Upgrading wholesale markets‘ infrastructure and services is thus
important to the whole traditional supply chain. Private-sector actors are helping traditional
retailers (and supermarket independents and chains) obtain the services and products they need.

Examples are modern cash-and-carry chains that act as wholesalers, like Bharti/Wal-mart in India,
Metro in China, and Makro in Pakistan. But governments and wholesaler associations also need
to invest in upgrading wholesale markets in order to maximize access by farmers and retailers.
Such programs have been undertaken in China and Mexico.

Option 4: Urban Planning Laws. The state of urban planning in India is such that there is as yet
no ceiling on the size or number of retail outlets that may be started in a designated commercial
zone. The ministry of urban development at the central level has no jurisdiction over urban area
planning in the states except in the case of exceptional laws pertaining to the coastal regions,
forests, the Delhi region and union territories. It is clear that land use laws/zoning laws are not the
most commonly used regulatory devices against large format retailing and at present the land use
laws in urban centres are in the most pliant condition since the local governments implement them
and they are most susceptible to omission and commission on behalf of real estate developers who,
in turn, share a common interest with corporate retailers. What is needed is to include regulations
for the establishment of big retail projects in States Regional Planning documents. When
municipalities allow big retail projects, they are scrutinised to ensure that they meet the
requirements of regional planning.

The position of the neighbouring municipalities thus needs to be strengthened by a new law (that
has been introduced to adjust German building law with European regulation). New big retail
projects are now checked to assess their influence on the local supply. Investors in retail have to
prove that their project will not end up affecting retail shops in the same or neighbouring
municipality, and smaller shops in the neighbouring municipalities will not close down due to the

70
new competition. The proposal of not allowing FDI in retail initially to major cities, SEZs as well
as certain sectors; and also not allowing in cities with population of less than 1million is move in
right direction.

Option 5: Regulation of misleading statements and advertisements. The law against dishonest
competition (referred to as unfair trade practices in India) forbids a number of marketing practices
which are regarded as dishonest.

These include misleading statements or advertisements about business circumstances, especially

the nature, origin, manner of manufacture or the pricing of goods or commercial services or the
size of the available stock. In a recently reported case in India a leading corporate retailer,
Subhiksha claimed in advertisements that its prices were the lowest compared to rivals like Big
Bazar, D- MART, and Apana Bazar, etc. Big Bazar filed a case against the advertisements and the
Advertising and Standards Council of India is understood to have given its verdict in April 2007.
However, the verdict has not been made public as yet.

Option 6: Regulatory Framework to avoid monopolistic practices. The possible monopolistic/

monopsonistic tendencies of the large retailers (fears of ‗predatory behaviour‘ and ‗abuse of
dominance‘) would have to be proactively dealt to ensure competition in the market. Appropriate
policy formulation can also aide this cause, as was done during the telecom sector liberalisation
with the National Telecom Policy mandating that each circle should have at least 4-6 players. It is
to be understood that free and fair competition in procurement of farm produce is the key to
Retailer‘ enhanced remuneration.

71
 CHAPTER-6

Conclusion,
Recommendations & Further
Research

72
Conclusion

Thus from developed countries experience retailing can be thought of as developing through
two stages. In the first stage, modern retailing is necessary in order to achieve major efficiencies
in distribution. The dilemma is that when this happens it inevitably moves to stage two, a
situation where an oligopoly, and quite possibly a duopoly, emerges. In turn this implies
substantial seller and buyer power, which may operate against the public interest.
The lesson for developing countries is that effective competition policy needs to be in place well
before the second stage is reached, both to deter anticompetitive behaviour and to evaluate the
extent to which retail power is being used to unfairly disadvantage smaller retailers and their
customers. The sources of retail power need to be understood to ensure that abuses of power are
curbed before they occur.

The more important debate lies in the parameters of competition policy. The benefits brought
by modern retailers must be acknowledged and not unduly hindered. While it is true that some
dislocation of traditional retailers will be felt, time will prove that the hardship brought will not
be substantial. Competition law is being created and adopted across Asia but in the immediate
future its impact is not expected to be large. Competition laws only become vital as time passes
and retail becomes concentrated in the hands of a few powerful companies, whether or not these
companies are foreign or domestic.

The discussion above highlights:

1. Small retailers will not be crowded out, but would strengthen market positions by
turning innovative/contemporary.
2. Growing economy and increasing purchasing power would more than
compensate for the loss of market share of the unorganised sector
retailers.
3. There will be initial and desirable displacement of middlemen involved in the
supply chain of farm produce, but they are likely to be absorbed by increase in the
food processing sector induced by organised retailing.

73
4. Innovative government measures could further mitigate adverse effects on small
retailers and traders.
5. Farmers will get another window of direct marketing and hence get better
remuneration, but this would require affirmative action and creation of adequate
safety nets.
6. Consumers would certainly gain from enhanced competition, better
quality, assured weights and cash memos.
7. The government revenues will rise on account of larger business as well as recorded
sales.
8. The Competition Commission of India would need to play a proactive role.

74
Recommendations
1. The government should revoke the recent Press Notes that relate to permitting cascading
sub-companies, as these are only serving to provide a loop-hole for back-door entry by
foreign retailers and are not promoting transparency within the policy.
2. Labour Laws need to be reviewed to be more in line with the requirements of retail sector
employment.
3. Investment should be made by the government to improve the efficiency of the
manufacturing sector so that this sector can grow and provide more employment
opportunities going forward.
4. Certain sensitive products should be restricted from foreign retailing, so as to protect the
traditional craftsmen and unorganised traders. The products to be restricted needs to be
given thought and researched before any decisions are made.
5. The government should impose local employment quotas on foreign retailers, firstly to
reduce the effects of any potential labour displacement, and secondly to encourage foreign
retailers to provide training, skills and development to local people who without it would
not be able to transfer to the 'organised' retail sector or back-end services.
6. Consider providing Tax relief and/or subsidy by way of low rate loans to domestic retailers
to provide support.
7. Implement a 'phased introduction' of FDI to the retail sector, say over 2-4 years, so as to
provide gradual adjustment for the domestic players and to allow fine-tuning and
adjustment of policy if issues arise.
8. The government should reform price control policies to ensure that foreign retailers cannot
sell below a minimum price, rather than the current Maximum Retail Price (MRP).
9. Bureaucracy and formalities should be reduced by updating related legislation, for
example, reducing the number of licences required by businesses to open a store. This
should assist the domestic players in expanding and will help to streamline the efficiency
of the sector.
10. Other related regulations such as copyright law, need to be updated and brought in to line
with the needs of the future Indian retail sector.

75
Further Research
There are many areas that have been highlighted as requiring further research during this study.
Each individual argument for and against almost requires an entire research project to itself so as
to delve further into the complexities of each specific scenario, for example, Special Economic
Zones which have not been possible to cover in any detail within this study could provide an
interesting area of research so as to establish the advantages and disadvantages of operating under
a SEZ system. Consumerism is an area that is worthy of further research so as to ascertain whether
there is any correlation between changes in consumer dynamics and the emergence of organized
retail in specific 'verticals'. The GATS Agreements and World Trade Organisation Doha Round
would also be another interesting avenue of research. With the Doha Rounds to conclude in 2010,
it would be interesting to investigate how this might impact foreign investment in the retail sector
in India.

76
BIBLIOGRAPHY

Articles/Reports

 "The Bird of Gold - The Rise of India's Consumer Market". McKinsey and Company. May
2007.
 Anand Dikshit (August 12 2011). "The Uneasy Compromise – Indian Retail". The Wall
Street Journal.
 Majumder, Sanjoy (25 November 2011). "Changing the way Indians shop". BBC News.

STATUTEs

 COMPETITION ACT 2002

 Department of Industrial Policy & Promotion and Foreign Exchange Management Act,
1999
 Agriculture Produce and Marketing Act
 Monopolies and Restrictive Trade Policy Act,1969

WEBSITES

 http://www.legallyindia.com/1468-fdi-in-retailing-sector-in-india-pros-cons-by-hemant-
batra
 http://siadipp.nic.in/policy/changes/pn3_2006.pdf
 http://dipp.nic.in/DiscussionPapers/DP_FDI_Multi- BrandRetailTrading_06July2010.pdf
 http://www.cci.in/pdf/surveys_reports/indias_retail_sector.pdf

77
Questionnaire
FOREIGN DIRECT INVESTMENT
A Foreign direct investment (FDI) is a controlling ownership in a business enterprise in one
country by an entity based in another country.

* Required

NAME * ______________________________

AGE *

 15-25
 26-50
 50 +

Gender:

 Male
 Female

Occupation:

 Student
 Employee
 Professional
 Business
 Others

1. Do you know about Foreign Direct Investment

 Yes
 No

2. Earning members of family

 One
 Two
 Three
 Four and above

78
79
3. Monthly Income of family:

 Up to 20,000
 40,001 to 60,000
 20,001 to 40,000
 Above 60,000

4. How much normally do you spend when you go shopping?

 Up to Rs.5000
 5001 to 10000
 10001 to 15000
 Above 15000

5. Do you know unorganised retail sector

 Yes
 No

6. Are you concerned about Mall Culture?

 Yes
 No

7. According to you, does it pace economic growth?

 Yes
 No
 No idea

8. Do you think FDI can improve the present infrastructural levels in India?

 Yes
 No
 Can't say

9. Can FDI induce competitive environment?

 Yes
 No

80
  Can't say

10. In which of the following sectors FDI should be promoted?

 Large Scale Industries

 Small Scale Industries
 Healthcare
 IT and Communications
 Transportation
 Fashion & Clothing
 Hotels & Restaurants
 Should not be enforced

11. FDI is prohibited under the Government Route as well as the Automatic Route in the
"Agricultural sector" (excluding Floriculture, Horticulture, Development of seeds). Do you
think FDI can lead to advancements in Agriculture?

 Yes
 No
 May be

12. Do you have fear that FDI in retail will close small shop?

 Yes
 No
 May be

13. Do you think in retail will increase Job Opportunity?

 Yes
 No
 May be

14. There are Various questions being raised on this Controversial issue that FDI in retail will
create more unemployment in the Unorganised retail Sector?

 Yes
 No

15. Can Foreign Players create Monopoly situation in India

81
  Yes
 No

16. Which of the following is the the most desired outcome of F.D.I.?

 Increase the investments in our market supply chains

 Improvement the quality of goods in the country
 A new channel of employment

17. According to you, Whom will the F.D.I. benefit the most?

 Producers
 Suppliers
 Consumer

18. Give your suggestions regarding impact of FDI in Indian retailing

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Thank You

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