This document summarizes a study on the impact of foreign direct investment (FDI) in the Indian retail sector. The study used questionnaires to collect primary data from 50 people on their awareness and shopping habits related to FDI. It analyzed the data using statistical tools to understand the impact of FDI and people's opinions. The findings show that while FDI contributes to growth in areas like employment and GDP, it also negatively impacts local retailers and is not helping develop Indian retailers. Overall, the study concludes that FDI in the Indian retail sector has had both positive and negative impacts.

1. A STUDY ON FDI IN INDIAN RETAIL
SECTOR
NIVETHA.V (Reg. No.- 20)
PRINSON.G (Reg. No.- 38)

2. OBJECTIVES
 To know the awareness about Foreign Direct
Investment among general public.
 To know what type of impact has FDI made on
Indian Retail Sector.

3. CONTENTS
1. Introduction
2. Challenges of Indian Retail Sector
3. Contribution to Indian GDP growth
4. Major Indian Retailers category
5. Methodology
6. Data analysis
7. Findings
8. Conclusion

4. INTRODUCTION
 The Retail Sector of India can be divided into two categories.
One is organized and the other one is Unorganized.
 Organized sector retailers are licensed retailers those who are
registered for sales tax, income tax etc.
 And the unorganized retailers are kirana stores, department
stores etc. which are not registered with any tax authorities
and any government departments. The data related to such
stores will not be available with the government.

5.  In 2006, the first step was allowed for Foreign Direct
Investment in Retail. After that 54 FDIs have been
granted by the Government which resulted in cash
inflow of about Rs. 901.64 crores.
 The present scenario certain reforms have been
proposed:
 51% FDI in Multi-brand outlets
 49% to 100% FDI in Single branded stores

6.  The following are considered as growth drivers of Indian Retail
Sector
 Rise in income and increase in the taste and preference of the
consumers
 Dual family income
 Getting knowledge about different products through different
medium of access like Internet, Television etc.
 Knowledge about latest trends and fashion
 Increase in new retail stores
 Availability of credit facilities

7.  FDI in Single Brand Retail is allowed up to 51 percent and subject to
Foreign Investment Promotion Board (FIPB) with the following
conditions:
 Sale of only single brand products
 The products should be sold under the same brand internationally
 Single brand retail products will cover only products which are
branded during manufacturing
 Fresh approval from government is required any addition in the
product category for selling under ‘single brand’

8.  FDI in multi-brand retail is that store with a Foreign
Investment selling multi-brand products under one
roof. It is offering a range of products directly to the
customers in the same way as kirana stores.
 Currently there is a proposal to allow 100% FDI by
Foreign Retailers like Wal-Mart, Carrefour, and
Tesco.

9. Challenges of
Indian Retail Sector
The challenges faced by retailers are numerous which
restricts the Indian Retail Industry to reach its full
potential. The behavioral pattern of the Indian consumers
have changed a lot. This change have happened due to
increase in the earnings, modern influences, increase in
working women force, demand for luxury and quality
products.

10. Apart from this there are challenges which are highly
faced by the Indian Retailers.
 Automatic approval is restricted for Foreign Direct Investment in
retail.
In activities of FDI it is not given approval for automatic route by
the Government certain sectors to flourish its activity fully. Apart
from that FDI has allowed automatic route without prior approval
from either the Government of India or the Reserve Bank of India
in all activities/sectors as mentioned in the consolidated FDI
Policy, issued by the Government of India.

11.  Increased young shoppers.
India has large number of young population. The social media network
made an impact on them. The generation is earning more in the young
age as a result they are ready to spend more on the goods they are
needed.
 Increased in the cost of real estate.
It has become difficult to find good real estate in terms of location and
size. Expensive owing land cost reduces the supply of goods. The
nature of the organization becomes disorganized.

12. Contribution to
Indian GDP growth
 The Government’s decision to allow FDI in retail sector is to improve
investment and contribute to the country’s overall economic growth.
 The retail sector contributes around 10% of GDP. India has the highest
retail outlets, with over 12 million retail outlets.
 This sector has a drastic change over the past 10 years.
 The change of small unorganized family owned retail formats to
organized retailing, liberalization of the economy, increase in the per-
capita income and growing consumerism has increased large business
and investment in retail infrastructure.

13. Major Indian
retailers categories
Leading players of organized retail market
 Pantaloon Retail
 K Raheja Group
 Tata group
 RPG group
 Landmark group
 Bharti-Walmart
 Reliance
 AV Birla Group’s
 Metro
 Viveks Ltd

14. Unorganized retailing refers to traditional formats of
low cost retailing such as
Local kirana shops
Owner manned general stores
Paan-pidi shops
Convenience stores
Hand cart and pavement vendors

15. Methodology
 Both primary and secondary data is used for the study
 Primary data is collected through questionnaires
 Secondary data is collected through various websites
 Sample size is 50
 The data was tabulated using descriptive and analytical
method of SPSS tool.

16. Data Analysis
Awareness about Foreign Direct Investment
Interpretation
From the above table it is noticed that 60% of people are aware about the FDI and
Remaining 40% are not aware about it.
Options Frequency Percentage
(%)
Yes 30 60
No 20 40
Total 50 100

17. Experience in shopping malls
Interpretation
This table shows that 64% of people have experience of visiting malls and other
36% are not.
Options Frequency Percentage
(%)
Yes 32 64
No 18 36
Total 50 100

18. Visiting shopping malls
Interpretation
It is noticed from the above table 12 percentage of people frequently visit malls
and 28 percentages of people are not often in visiting malls and 60 percentage of
people rarely visit shopping malls.
Options Frequency Percentage
(%)
Frequently 6 12
Not often 14 28
Rarely 30 60
Total 50 100

19. One sample test
Impact of FDI on
Indian Retail Sector
Mean SD t P-Value Rank
Local retailers are affected due
to entry of foreign retailers
3.920 1.027 6.334 0.000 1.000
FDI places only high-class
customers
3.720 0.834 6.105 0.000 2.000
Increases the shopping habits of
the customers
3.720 0.730 6.978 0.000 3.000
FDI has greater impact over
Indian Retailing
3.640 1.064 4.251 0.000 4.000
It encourages more investment
3.640 0.802 5.642 0.000 5.000
Favorable government policies
support FDI for easy entry to
retailing
3.600 0.808 5.250 0.000 6.000
Contributes to Indian GDP
growth
3.360 1.025 2.483 0.017 7.000
FDI creates employment
3.320 1.058 2.138 0.038 8.000
It helps the Indian retailers to
3.080 1.104 0.513 0.611 9.000

20. Interpretation
This above table has the statements related to impact of FDI in Indian Retail
sector in both positive and negative aspects. Most of the statements have been
accepted by the people except one, that is, FDI helps Indian Retailers to develop.
This statement has been rejected by the people that the FDI is not helping Indian
Retailers to develop by showing the insignificant value in the table (the value is
more than the table value at 5% level of significance).

21. Opinion - FDI in Indian retail sector leads to Growth
Interpretation
From the above table it can be noticed that overall opinion among the general
public about FDI in Indian retail sector has both growth and decline.
Options Frequency Percentage
(%)
Strongly agree 2 16
Agree 18 44
Neutral 22 36
Disagree 8 4
Strongly disagree 0 0
Total 50 100

22. Findings
 People are aware about foreign direct investment. They have
experience in visiting shopping malls. But they don’t prefer to
visit regularly.
 The statements given for impact of FDI in Indian Retail Sector
has been accepted by the people except on statement that FDI is
not helping Indian Retailers to develop
 In the overall opinion of the people it shows that FDI in Indian
retail sector leads to both growth and as well as decline.

23. Conclusion
The study can be concluded that FDI plays a major role in the Indian Retail
Sector that is, people accept that there is no development of Indian retailers
along with the some other negative aspects. And they have also accepted
the positive aspects also and it has also been proved in the data analysis.
Since, the positive reviews are more than the negative reviews by
comparing it can be concluded that FDI in Indian Retail Sector has a
positive impact.