Foregin Direct Invstment in Indian Retail Market

Topics: Retailing, Shopping mall, Department store Pages: 24 (7648 words) Published: February 1, 2013

Journal of Business Administration Research

Vol. 1, No. 1; 2012

FDI and Indian Retail Sector: An Analysis
Dr. Namita Rajput, Associate Professor Department of Commerce Sri Aurobindo College, Malviya Nagar, Delhi-110017 University of Delhi, India Tel: 91-93-1218-0054, 91-82-8588-8860 E-mail:

Dr. Subodh Kesharwani Assistance Professor (Senior grade) School of Management Studies Ground Floor, Academic Block-C, Room No. 18, Delhi-68, IGNOU, India Tel: 91-93-5002-6685 E-mail:

Akanksha Khanna (Corresponding author) Research Scholar IGNOU, Delhi, India Tel: 91-97-8038-9975 Received: May 22, 2012 doi:10.5430/jbar.v1n1p53 Abstract In the post-liberalisation period, changes in the consumer purchase behaviour are seen with growing liberalisation, rise in per capita income, GDP and explosion of brands. This rise in large base of consumers has been an attraction for big global retailers and major domestic corporate sector to invest in modern retail sector in India. This unprecedented rise in multiple brands has given Indian consumers a wider choice of products and ample opportunities to take advantage of in the present scenario. The retail industry is expected to grow at a rate of 14% by 2013. The first step towards allowing Foreign Direct Investment in Retail was taken in the year 2006. Subsequently the government of India has allowed 100% FDI in single brand retail to give consumers greater access to foreign brands, with the ongoing debate whether it should be allowed in multi-brand retail or not. With emergence of new ways like E-retailing, Indian retail sector is growing at a faster rate along with the employment potential. The retail landscape is showing a marked change, along with changes in the strategies of retailers towards the suppliers so as to get the best advantage. With the rapidly changing retail scene, India is soon going to be one of the fastest growing regions having great potential. The objective of the present paper is to analyse the impact of the present retail FDI policy on Indian consumers and economy using SWOT analysis. The analysis reveals that it will have a positive impact on the growth of Indian economy as a whole. Keywords: Foreign direct Investment, E-Retailing, Retailing, GDP, Multinationals, Policies, Infrastructure development 1. Introduction Foreign Direct Investment, or FDI, is a measure of foreign ownership of domestic productive assets such as factories, land and organizations. Foreign direct investments have become the major economic driver of globalization, accounting for over half of all cross-border investments. It is cross border investment, where foreign assets are invested into the organizations of the domestic market excluding the investment in stock. It brings private funds from overseas into products or services. The domestic company in which foreign currency is invested is usually being E-mail: Online Published: June 28, 2012

Accepted: June 4, 2012


Published by Sciedu Press


ISSN 1927-9507

E-ISSN 1927-9515

Journal of Business Administration Research

Vol. 1, No. 1; 2012

controlled by the investing foreign company. Eg. An American company taking major stake in a company in India. Their ROI is based on the performance of the project. Retail is the sale of goods to end users, not for resale, but for use and consumption by the purchaser. The retail transaction is at the end of the supply chain. Manufacturers sell large quantities of products to retailers, and retailers sell small quantities of those products to consumers. Thus, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. The retail industry in India is divided into organized and unorganized sectors accounting for Rs. 350 million of total revenues. Organized retailing refers...
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