FDI in retail: A multidimensional analysis of foreign direct investment in Indian retail industry

“Foreign direct investment (FDI) or foreign investment can refer to the net inflow of funds to acquire a long-term management interest in an enterprise operating in a foreign economy. It is the accumulation of equity, reinvestment of retained earnings, other long-term sources of capital, and short-term funds as presented in the balance of payments.” According to a recent survey by UNCTAD India is projected as the second most attractive destination for FDI (only after China) for multinational corporations during the years 2010–2012. As per the data, the sectors such as telecom, services, infrastructure and computer hardware and software attract the FDI the most. The leading sources of FDI are from the economies such as the US, the UK, Singapore and Mauritius.

Retailing includes all the activities involve the selling goods and services directly to final consumers for personal, non-business use. PwC research indicates that although the Indian retail sector is worth USD 260 Billion & it contributes 14% to GDP of India. Indian retail industry is growing approximately 12% rate annually, out of that organized retail sector contributes only 5 to 6% but growth rate is approximately 18 to 20% & unorganized retail sector is growing approximately at 4 to 5% annually. India is becoming an emerging, exciting & dynamic retail destination due to large market size, low organized retail penetration, strong GDP growth rate, increasing personal income & large number of inspirational customers like middle class, young people & rural population. In the growing market, retailing has become one of the major emerging trends in the entire economical cycle.

This research is based on various aspects related to Foreign Direct investment in Indian retail industry, formats of retailing, various players in Indian retail industry, study of advantages and drawbacks of FDI in Indian Retail Industry and SWOT analysis of FDI in Indian retail industry. This study is also focusing on perceptions of small retailers from various areas of pune city. As in pune city there are variety of small retailers and there is great presence of organized retailers also variety of customers from various income levels found so pune city can be considered as representative of India as well as world to find out impact of FDI on local retail industry of any country.