This document provides an introduction and proposal for a minor project on foreign direct investment (FDI) in multi-brand retail in India. It outlines the background and debate around allowing FDI in multi-brand retail. The objectives are to examine growth and future scenarios of FDI in India and study its importance in the current retail sector. Research questions are posed around the role, benefits, and impacts of FDI on small retailers, farmers, and food inflation. Secondary data sources will be used to conduct an exploratory, descriptive, and analytical study of the multi-brand retail sector and driving forces behind FDI.

1. Minor Project Proposal
ON
FDI IN MULTI BRAND RETAIL IN INDIA
Submitted by
ABHISHEK KUMAR
Under the supervision of
MS.JAGRITI MISHRA
Submitted to
Department of Fashion Management Studies (FMS)
National Institute of Fashion Technology (NIFT)
(Ministry of Textiles, Govt. of India)
GH-0 Road, Behind Info city
Gandhinagar 382007. Gujarat
http://www.nift.ac.in
“September”, “2014”
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2. INTRODUCTION
As of 2013, India's retailing industry was essentially owner manned small shops.
In 2010, larger format convenience stores and supermarkets accounted for about
4 percent of the industry, and these were present only in large urban centers.
India's retail and logistics industry employs about 40 million Indians (3.3% of
Indian population). Potential to be the real growth engine of a country’s
economy. Growing consumerism, changes in consumers’ tastes and
preferences, and heightened brand consciousness has been fast replacing
traditional mom and pop stores with organized retail malls that house lifestyle
and luxury brands from national and international retailers.
FDI expands to Foreign Direct Investment. It represents investment in Indian companies
by foreign entities. GOI has prescribed maximum amount of FDI that can flow into the
country in specific industry sectors. For ex: the cap in the insurance sector is 26 %. FDI
will be in lasting assets such as equity capital. Because of restrictions on capital
convertibility in India, FDI cannot be taken out of the country automatically.
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3. PROBLEM DEFINITION
FDI in retail is the most controversial and debated issue attracting cross sections
of opinion from government, Political Parties, Industry experts and Academia.
Since retail yet does not enjoy independent industry status, there are no
exclusive figures available on FDI in retail sector. In November 2011, India's
central government announced retail reforms for both multi-brand stores and
single-brand stores. These market reforms paved the way for retail innovation
and competition with multi-brand retailers such as Wal-
Mart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike,
and Apple. The announcement sparked intense activism, both in opposition and
in support of the reforms. In December 2011, under pressure from the opposition,
Indian government placed the retail reforms on hold till it reaches a consensus.
Should India allow the entry of FDI in multi-brand retail? But, for the past few
years, there has been plenty of debate and discussion about the potential role of
foreign direct investment (FDI) in multi-brand retail, including food.
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4. REVIEW OF LITERATURE
(FERNANDES, 2014). The study also reveals strong negative influence of
corporate tax on FDI inflow. FDI over the last decade and then attempts to
identify the driving factors for the same and provide policy makers with insights
regarding levers which would help in encouraging FDI outflows and to stimulate
further research in foreign investment from emerging economies. Direct
investment in multi-brand retail will start a better integration of Indian economy
into the global markets and, as such, it is important for the Govt. of India to
develop retail sector for the total economic development of country and welfare
of society in the country. The government's policy on FDI in retailing and tries to
examine it pros and cons while examining the perceptions of small retailers on
the government's decision. though the small retailers are not so
apprehensive about the big stores, they oppose allowing FDI in retailing in
India. This may be because they are not well informed about the pros and cons
of the proposed policy change. Thus, a country- wide discussion through the
mass-media is highly pertinent regarding this issue.
the global giants‟ entry to India and their myths and realities and shows the
status of organized food retailing in India with SWOT Analysis and highlights on
farmer‟s issues towards FDI in multi brand retailing. Technology, labour skills
and infrastructure are the key factors of foreign investment which reveals by
many recent studies. These determinants are significant in order to explain the
trends in the geographical structure of FDI at the world capita income, in relation
to outbound as well as inbound FDI.
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5. The enormous range of incentives that is announced by the government should
also be taken as an important deciding factor for corporate strategies of
international location as well as institutional, historical and cultural determinants
should also be considered as they influence the investor’s location related
decisions. Tariff rate, exchange rate and tax rate are important for FDI. According
to some studies the variables such as market size and differences in factor costs
play the important role in deciding the FDI location as these are significant in
determining the market economies which cannot be exploited till the time market
achieves a certain size. India retail industry can be divided into organized and
unorganized sectors. Unorganized retailing is consist of the traditional formats of
low-cost retailing like local kirana shops owner, general stores, hand cart and
pavement vendors, etc. distorted real-estate market, poor infrastructure and
inefficient upstream processes, lack of modern technology, inadequate funding
and absence of skilled manpower. .There has been substantial studies
conducted on various aspects related to the changing consumer behavior and
determinants responsible for retail store choice. Various studies reveals the
shopping behavior of Indian consumers. Because of the large mass of middle
class consumers in India, who are expert bargainers traditional outlets are
preferred. while modern shops are favored because they connect entertainment
with shopping and for a customer it is delight to go out for shopping with
entertainment. The choice of retail store is influence by many variables of
traditional outlets such as nearness to residence, easy availability of credit,
convenient timings, possibility of bargain, etc. The benefit of the modernization of
retail stores goes to the consumer as they get the greatest and widely extended
choice, discounted prices. The main objective of the retailer to retain their
customers and therefore strategies are formulated after having in depth study of
buying behavior of the customer. Organized retail has grown significantly after
liberalization because of the growing purchasing power of Indian middle class.
As a result, Indian government opened its doors for FDI in single brand & multi -
brand retailing. With 30 emerging markets India has been ranked third most
promising nation for retail investment with domestic companies like the Reliance
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6. Fresh, Raheja Group, Future Group, Bhakti Retail and Tata’s Westside
competing for market. According to the current policy of 100 percent FDI in
wholesale cash-and- carry trading is permitted. In single-brand retail, 100 percent
FDI is allowed, but imposed the requirement that the single brand retailer source
30 percent of its goods from India. While it is prohibited to 51 percent in multi-brand
retailing. The question arises whether to increase FDI in multi -brand retail
up to 100 percent will generate problems or create opportunities. There are no
proper answers and sufficient suggestions have been expressed in favor and
against of FDI. the policy frameworks for FDI in Indian retail sector as well as to
know the future trends associated with FDI in retail segment.
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7. RESEARCH QUESTIONS
 What are the role and implications of FDI supermarkets for food inflation,
farmer income enhancement and employment generation?
 What are the benefits that can be secured from the FDI in multi brand
retail?
 How the small retailers will be affected by the heat of multinational retail
giants?
 What are the prospects and problems for FDI in multi-brand retail sector?
 What are the mechanisms which could be used to leverage the presence
of FDI in supermarkets and explores the role of policy and regulation to
promote the small farmer and the traditional retail interests in such
chains?
OBJECTIVES
 To examine growth & future scenario of fdi in India
 To study the importance of FDI in retail sector in present scenario
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8. RESEARCH METHODOLOGY
The Research being conducted here is
Exploratory
Descriptive
Analytical
Predictive
In this Research the facts & the information as so gained from various secondary
sources have been used to make an analysis of the current multi brand retail
Sector & FDI with the driving forces behind these situations. That is extracting &
analyzing the data the relevant important data to complete the project & make it
relevant to the present scenario of FDI in multi brand retailing.
Data Sources: The data for the present study is collected from the primary and
secondary sources. Consist of Personal accounts, unstructured interviews,
surveys and experiments. And also various news in the news papers, videos of
parliament while discussion on FDI are seen for collection of the data. As well as
the reference books, magazines, Newspaper, Internet & Books also used for the
purpose. However, the interpretation of the data and suggestions made assume
importance for the healthy growth if the retail sector in the country.
Sample size: 100(consumers, retailors and farmers associations)
Sample Frame: consumers, retailors and farmers association
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9. Bibliography
FERNANDES, L. (2014, september). www.pbr.co.in/Vol-5%20Iss-5/3.pdf. Retrieved september 5,
2013
http://cci.gov.in/images/media/ResearchReports/FDI%20in%20Multi%20Brand%20Retail_Comp
etition%20Issues.pdf. (2014, september). Retrieved september 5, 2014
.
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