The document discusses India's economic reforms in 1991 that liberalized FDI policies to encourage capital inflows and accelerate economic growth. It defines FDI as investments from abroad that enhance a country's production capacity and generate development, modernization, and jobs. The retail sector is then described as highly fragmented with 97% being unorganized small shops, but organized retail is growing. Allowing FDI in multi-brand retail would further organize and develop the industry through infrastructure investment and technology transfers, while creating more jobs and transparency.

1. Dr.Shendge G.L.
Asst. Professor in Economics
MGV’s , ASC Collage Manmad

2. In recognition of the important role of FDI in
accelerating the growth of a country, govt. of
India initiated a slew of economic and
financial reforms in 1991. as a result of the
various policy initiative taken, India has been
rapidly changing from a restrictive regime to a
liberal one and FDI is encouraged in almost all
economic activities under automatic route.
About FDI……

3. According to IRBD and UNCTAD “FDI refers to
capital inflows from abroad that is invested in
or to enhance the production capacity of the
economy. It is non-volatile, non-debt creating
and results in economic development,
modernization and employment generation in
the economy”.
FDI Define as follow………

4. Retailing is the interface
between the producer and
the individual consumer
buying for personal
consumption, this exclude
direct interface between the
manufacturer and
institutional buyers such as
government and other bulk
consumers
What is retailing…..

5. STRUCTURE OF INDIAN RETAILING SECTOR
• Organized retailing refers to trading activities undertaken by licensed retailers,
that is, those who are registered for sales tax, income tax, etc. These include the
corporate-backed hypermarkets and retail chains, and also the privately owned large
retail businesses.
• Unorganized retailing, 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.
• The retail industry is mainly divided into: -
1) Organized 2) Unorganized Retailing
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

6. kela – 15 RS. Ananas – 20 RS BANANA – 45 RS. PINE APPLE – 60 RS
BEFORE FDI IN INDIA AFTER FDI IN INDIA

7. PROSPECTS OF FDI IN RETAIL IN INDIA
SECTOR WILL BECOME MORE ORGANISED
INFRASTRUCTURE DEVELOPMENT
CREATES MORE JOBS
MORE TRANSPARECY
ALL THE PARTIES WILL BE BENEFIT
Cheaper production facilities:
Availability of new technology:
Long term cash liquidity:

8. Rank Country Cumulative inflows
(April ‘’00-March ‘12)
%age to
total inflows
(in terms
of US $)
1. MAURITIUS 289,471 (64,169) 38%
2. SINGAPORE 77,588 (17,153) 10%
3. U.K 74,661 (15,896) 9%
4. JAPAN 57,851 (12,313) 7%
5. U.S.A 47,889 (10,564) 6%
6. NETHERLANDS 32,325 (7,109) 4%
7. CYPRUS 29,670 (6,400) 4%
8. GERMANY 20,828 (4,621) 3%
9. FRANCE 13,378 (2,927) 2%
10. U.A.E 10,320 (2,243) 1%
TOTAL FDI INFLOWS 775,006(170,407)

9. Sr.no Sector Cumulative inflows
(April’ 00-March’ 2012)
% age to total
inflows (In terms of
US $)
1. SERVICES SECTOR
(financial & non-financial)
145,764(32,351) 19%
2. TELECOMMUNICATIONS
(radio paging, cellular mobile, basic
telephone services)
57,078(12,552) 7%
3. CONSTRUCTION ACTIVITIES
(including roads & highways)
52,253(11,433) 7%
4. COMPUTER SOFTWARE &
HARDWARE
50,118(11,205) 7%
5. HOUSING & REAL ESTATE 49,717(11,113) 7%
6. CHEMICALS (OTHER THAN
FERTILIZERS)
47,904(9,844) 6%
7. DRUGS & PHARMACEUTICALS 42,868(9,195) 5%
8. POWER 33,214(7,299) 4%
9. AUTOMOBILE INDUSTRY 30,785(6,758) 4%
10. METALLURGICAL INDUSTRIES 26,936(6,041) 4%

10. Strengths
Major
contribution
to GDP
High
Potential
High
Employment
Generator
High Growth
Rate

11. WEAKNESS
Lack of
Competitors
No ‗Industry‘
status, hence
creating financial
issues for retailers
Low Productivity
Shortage of
Talented
Professionals
Highly
Unorganized

12. OPPORTUNITIES
Healthy Competition will
be boosted and there will
be a check on the prices
(inflation)
Create transparency in
the system

13. THREATS
Current
Independent Stores
will be compelled
to close
Big players can knock-
out competition