IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA project report
Transcript of IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA project report
A Dissertation Project Report
On
“IMPACT OF FDI ON UNORGANISED RETAIL
SECTOR OF INDIA”
(A case study of Agro Products)
Submitted in partial fulfillment for the award of degree of
Bachelors of Business Administration (BBA)
Batch: 2012-15
Under The Guidance Of Submitted By
Department of Business Management
Faculty of Management & Research
INTEGRAL UNIVERSITY
DASAULI, KURSI ROAD, LUCKNOW.
Faculty of Management And Research
Integral university
Dasauli, Kursi Road Lucknow
CERTIFICATE
This is to certify that Mohd. Usman Siddiqui a student BBA III year has completed the
dissertation project report on IMPACT OF FDI ON UNORGANISED RETAIL SECTOR
OF INDIA Under my guidance and supervision.
The dissertation work of the student is found to be satisfactory for submission for award of
degree of bachelor of business administration. I wish him all the best for his future endeavor.
Noor Alam Khan
Assistant Professor
Faculty of Management And Research
Integral university
ACKNOWLEDGEMENT
Working on this project was great challenge. I take this opportunity to express my gratitude to all
those who helped me in completion of my project successfully.
I owe a never - ending debt of gratitude to Prof. Dr Aftab Alam (Dean ) Faculty of Business
Management, Dr Adeel Maqbool (H.O.D) Faculty of Business Management , for his expert
guidance and support.
I would like to thank my project guide Mr Noor Alam Khan for giving their valuable time and
providing useful and fruitful information about this project.
I am also grateful to all those who have either directly or indirectly contributed towards the
completion of the project, for their support and encouragement.
CONTENTS
1. BRIEF PROFILE OF THE STUDY
2. CONCEPTUAL DESCRIPTION OF TOPIC
3. OBJECTIVE
4. RESEARCH METHODOLOGY
5. ANALYSIS AND INTERPRETATION OF DATA
6. FINDINGS,
7. CONCLUSION
8. SUGGESTIONS
9. LIMITATIONS OF THE STUDY
10. REFERENCE:
11. ANNEXURE
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EXECUTIVE SUMMARY
Theory and practice are the two eyes of the management education. Management education
without practical training at an organization remains incomplete. The training prescribed by the
Integral University student have various objectives like helping the student to acquire
knowledge, give an opportunity to know the difference between theory and practice, enable the
student to interact with experienced and knowledgeable persons of business world .
As a student of Bachelor in Business Administration, I got an opportunity to undergo on a
training. The training title is “IMPACT OF FDI ON UNORGANISED
RETAIL SECTOR OF INDIA”
I successfully completed my training report within the specified time. It was really a thrilling
experience for me with senior officials of Industry and to interact with different members,
employees of the organization. It was an experience of enjoyment through hard work and
dedication.
Through this finding of this report, I hope that the Industry in India as well as outside the country
will benefit.
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTRODUCTION
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INTRODUCTION
As per the current regulatory regime, retail trading (except under single-brand product retailing
— FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a
company to be able to get foreign funding, products sold byit to the general public should only
be of a single-brand‘; this condition being in addition to a few other conditions to be adhered to.
India being a signatory to World Trade Organisation‘s General Agreement on Trade in Services,
which include wholesale and retailing services, had to open up the retail trade sector to foreign
investment.
There were initial reservations towards opening up of retail sector arising from fear of job
losses, procurement from international market, competition and loss of entrepreneurial
opportunities. However, the government in a series of moves has opened up the retail sector
slowly to Foreign Direct Investment (―FDI‖). In 1997, FDI in cash and carry (wholesale) with
100% ownership was allowed under the Government approval route. It was brought under the
automatic route in 2006. 51% investment in a single brand retail outlet was also permitted in
2006. FDI in Multi-Brand retailing is prohibited in India.
All Indian households have traditionally enjoyed the convenience of calling up the corner
grocery "kirana" store, which is all too familiar with their brand preferences, offers credit, and
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applies flexible conditions for product returns and exchange. And while mall based shopping
formats are gaining popularity in most cities today, the price-sensitive Indian shopper has
reached out to stores such as BigBazaar mainly for the steep discounts and bulk prices. Retail
chains such as Reliance Fresh and More have reportedly closed down operations in some of their
locations, because after the initial novelty faded off, most shoppers preferred the convenience
and access offered by the local kirana store.
So how would these Western multi-brand stores such as Wal-Mart and Carrefour strategies their
entry into the country and gain access to the average Indian household? Wal-Mart has already
entered the market through its partnership with Bharati, and gained opportunity for some early
observations. The company's entry into China will also have brought some understanding on
catering to a large, diverse market, and perspectives on buying behaviour in Asian households.
Carrefour on the other hand has launched its wholesale cash and carry operations in the country
for professional businesses and retailers, and will now need to focus more on understanding the
individual Indian customer.
As such, these retail giants will try to gain from some quick wins while reaching out to the
Indian consumer. For one, they will effectively harness their expertise with cold storage
technologies to lure customers with fresh and exotic vegetables, fruits and organic produce.
Secondly, they will also emphasise on the access that they can create for a range of inspirational
global foods and household brands. Thirdly, by supporting domestic farmers will try ensuring
supplies of essential raw materials to them.
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Surely, these should engage shoppers' and farmers interest–but what needs to be seen is whether
they can effectively combine these benefits, with the familiarity ,convenience and personalized
shopping experiences that the local "kirana" stores have always offered.
NEW DELHI: With an estimated $25 billion worth FDI in its kitty during 2014, the government
is eyeing a quantum jump in the foreign capital hitting Indian shores in the new year as it hopes
to reap the fruits of further opening up of defence, railways and insurance sectors among others.
The ambitious 'Make in India' programme, launched by Prime Minister Narendra Modi with
much fanfare in 2014, is another big-ticket ride that the government expects the foreign investors
to take to bring billions worth dollars of FDI into the country.
Showing its commitment to fast-track the reform process, the government has taken ordinance
route to increase foreign investment limit in the insurance sector to 49 per cent, from 26 per cent
currently. Besides, it has also liberalised foreign direct investment (FDI) policy for medical
devices.
However, a lot will depend on the government's efforts to improve ease of doing business, where
India ranks poorly at 142nd position and the Prime Minister has set a target to bring this rank to
top-50.
Experts and government officials are optimistic that the various initiatives taken by the
government would yield results in 2015.
"Government's initiatives to improve ease of doing business and opening up of FDI in defence,
railways and construction would boost FDI in 2015," a senior official said.
Experts also say that the global sentiment has turned very positive for India.
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"Global sentiments towards India is extremely positive. Foreign firms are looking at India very
keenly. The measures announced in 2014 and the proposed steps will help in attracting more FDI
In 2015," Head of Tax and expert on FDI with corporate law firm Amarchand & Mangaldas
Krishan Malhotra said.
However, no big-ticket investment has been announced by any foreign company as yet.
Seeking to streamline the foreign investment regime, the commerce and industry ministry has
also proposed to introduce a composite cap which will include FDI, FII and other instruments in
various sectors.
In terms of foreign inflows, FDI is estimated to have grown to over USD 23 billion till October
this year, as against about USD 22 billion in the same period last year and over USD 26 billion in
the entire 2013.
India needs around USD 1 trillion worth investments between 2012-13 and 2016-17, the 12th
Five Year Plan period, to fund infrastructure growth covering sectors such as ports, airports and
highways.
As regards to the controversial FDI policy in multi-brand retail, the new government has not
reversed the policy of allowing global super market chains to open stores in India. But
interestingly it has said that it would not entertain any application in this regard.
Under the 'Make in India' campaign, the Prime Minister has asked foreign and domestic firms to
set up manufacturing units in the country to create jobs and boost economic activities in the
country.
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IMPACT OF FDI ON UNORGANISED
RETAIL SECTOR OF INDIA
IMPACT
FOREX RESERVE
As the limit is increased to 51% in the multi brand retail, the direct investment from abroad
called FDI would inflow to start the business. The inflow of capital would increase the capital
reserve in the Balance of payment which shows the ability of the nation in terms of Forex.
Farmers
The one of the current problem of Indian economic is fiscal deficit which is mostly caused by
subsidy give to the farmers which is considered as unproductive. The one way to cut such
subsidy is to make the farmers independent by making the system securing them to be paid good
price for the commodity. The organized retailers that are capital giant are able to purchase
directly from the farmers paying good price. So the government should be ensuring that the
farmers are getting paid the price of what they are eligible to.
SME
In the norms that are instructed to the foreign player, they should purchase 30% of the product
they deal with from the Small and Medium Enterprise. This ensures the development of SME.
The foreign player would like to provide the quality product. The SME would be encouraged to
produce the commodity that is of high quality.
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Infrastructure
The players are imposed with the restriction of investing 50% of their investment on the Back
end infrastructure. The ruling party in India where the economic development is suffered by lack
of infrastructure is very cautious about to invest in such area. It would become base for economic
in many ways, say transportation.
Distribution
The distribution system is one of the factors determining the cost of the product. As they are
invested in the infrastructure, they could follow JIT. Say Wal-Mart, they are not interested in
expending in the stock maintenance.
Inflation
Inflation is the unruly one which is challenge to the country where the price sensitive people are.
The scale of economy, capital and large turnover are the base by which the lower prices are
offered to the consumer. The entries of multinational players lead to healthy competition that
lowers the price then inflation consequently.
Food Wastage
With the poverty in one side, the wastage of food is on another side in the same country. It
requires the effective distribution system to avoid food wastage. With the good back end
infrastructure, they can able to serve the goods in an optimization way.
GDP
The decline in the GDP mainly due to the agriculture sector is making the economist worry
more. The FDI in retail would improve the GDP by, economist say 0.5%. The booming industry
that has potential capacity would contribute the GDP higher.
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Employment
The more employment would be created in the country either directly or indirectly where youth
pass out is increasing as much as creation of employment. It would be generated in the
agriculture, manufacturing, service industry which consists of GDP. The more people get
employed would rehabilitate the economic cycle.
Consumers
The ultimate beneficiary from the opening of FDI in multi brand retail is consumer. They are left
to choose the retail that would give them goods at lesser price. The more middle income people
living in India are preferred to have shopping more modern in lesser cost.
Retail Industry
Allowing FDI in multi brand retail would infuse the new blood into the industry that has
potential. Foreign players that are competitive oriented would implement new strategy.
Another Side Impact
Middle Man
The middle man in the supply chain including non-hoarders shall get affected. In the long run,
they will be deprived of trade business that causes unemployment. So it could be matched with
the need of employees by the organized sector by appropriate policy by the government.
Dependability
The country may depend on another country as FDI inflow is increasing where the country
independency is decreasing. The economic growth may become more endangered one depending
on another country economic. The capital giant may dominate the industry exceeding the
domestic player. The revenue would outflow abroad affecting Forex reserve.
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FDI Policy in India
FDI as defined in Dictionary of Economics (Graham Bannock et.al) is investment in a foreign
country through the acquisition of a local company or the establishment thereof an operation on a
new (Greenfield) site. To put in simple words, FDI refers to capital inflows from abroad that is
invested in or to enhance the production capacity of the economy.
Foreign Investment in India is governed by the FDI policy announced by the Government of
India and the provision of the Foreign Exchange Management Act(FEMA) 1999. The Reserve
Bank of India (‗RBI‘) in this regard had issued a notification, which contains the Foreign
Exchange Management (Transfer or issue of security by a person resident outside India)
Regulations, 2000. This notification has been amended from time to time. The Ministry of
Commerce and Industry ,Government of India is the nodal agency for motoring and reviewing
the FDI policy on continued basis and changes in sectoral policy/ sectoral equity cap. The FDI
policy is notified through Press Notes by the Secretariat for Industrial Assistance (SIA),
Department of Industrial Policy and Promotion (DIPP).
The foreign investors are free to invest in India, except few sectors/activities, where prior
approval from the RBI or Foreign Investment Promotion Board (‗FIPB‘) would be required.
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FDI Policy with Regard to Retailing in India
It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI Policy
issued in October 2010which provide the sector specific guidelines for FDI with regard to the
conduct of trading activities.
a) FDI up to 100% for cash and carry wholesale trading and export trading allowed under the
automatic route.
b) FDI up to 51% with prior Government approval (i.e. FIPB) for retail trade of Single Brand‘
products, subject to Press Note 3 (2006 Series).
c) FDI is not permitted in Multi Brand Retailing in India.
FDI in ‗Single brand‘ retail implies that a retail store with foreign investment can only sell one brand. For example, if Adidas were to obtain permission to retail its flagship
brand in India, those retail outlets could only sell products under the Adidas brand
and not the Reebok brand, for which separate permission is required. If granted
permission, Adidas could sell products under the Reebok brand in separate outlets.
As per the current regulatory regime, retail trading (except under single-brand product retailing
— FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a
company to be able to get foreign funding, products sold by it to the general public should only
be of a ‗single-brand‘; this condition being in addition to a few other conditions to be adhered to.
India being a signatory to World Trade Organisation‘s General Agreement on Trade in Services,
which include wholesale and retailing services, had to open up the retail trade sector to foreign
investment. There were initial reservations towards opening up of retail sector arising from fear
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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of job losses, procurement from international market, competition and loss of entrepreneurial
opportunities. However, the government in a series of moves has opened up the retail sector
slowly to Foreign Direct Investment (―FDI). In 1997, FDI in cash and carry (wholesale) with
100% ownership was allowed under the Government approval route. It was brought under the
automatic route in 2006. 51% investment in a single brand retail outlet was also permitted in
2006. FDI in Multi-Brand retailing is prohibited in India.
All Indian households have traditionally enjoyed the convenience of calling up the corner
grocery "kirana" store, which is all too familiar with their brand preferences, offers credit, and
applies flexible conditions for product returns and exchange. And while mall based shopping
formats are gaining popularity in most cities today, the price-sensitive Indian shopper has
reached out to stores such as Big Bazaar mainly for the steep discounts and bulk prices. Retail
chains such as Reliance Fresh and More have reportedly closed down operations in some of their
locations, because after the initial novelty faded off, most shoppers preferred the convenience
and access offered by the local kirana store. So how would these Western multi-brand stores
such as Wal-Mart and Carrefour strategies their entry into the country and gain access to the
average Indian household? Wal-Mart has already entered the market through its partnership with
Bharti, and gained opportunity for some early observations. The company's entry into China will
also have brought some understanding on catering to a large, diverse market, and perspectives on
buying behaviour in Asian households. Carrefour on the other hand has launched its wholesale
cash and carry operations in the country for professional businesses and retailers, and will now
need to focus more on understanding the individual Indian customer. As such, these retail giants
will try to gain from some quick wins while reaching out to the Indian consumer. For one, they
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
Page 13
will effectively harness their expertise with cold storage technologies to lure customers with
fresh and exotic vegetables, fruits and organic produce. Secondly, they will also emphasise on
the access that they can create for a range of inspirational global foods and household brands.
Thirdly, by supporting domestic farmers will try ensuring supplies of essential raw materials to
them. Surely, these should engage shoppers' and farmers interest–but what needs to be seen is
whether they can effectively combine these benefits, with the familiarity, convenience and
personalised shopping experiences that the local "kirana" stores have always offered.
LITERATURE REVIEW
There is a reasonable amount of literature available on FDI in India, although it is by no means
abundant in the specific area of Retail. Current policy is in a state of flux; hence a review of
literature on the latest policy proposals and arguments for and against changing policy will be the
back-bone of this study. It will enable accurate and relevant questions to be formulated for the
proposed survey questionnaire and provide a good background understanding of the likely causes
of any patterns and trends that may be revealed by the survey. It is important with a review such
as this to ensure that the sources of information are reliable and trustworthy as possible. A broad
range of opinions from institutional and corporate material, to academic and business-orientated
literature as well and as the newspapers/online media internet resources will be reviewed and
each source was considered for its reliability, and potential to misconstrue the truth.
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Data Sources
Primary Data Sources
The primary data sources in this research were collected via an emailed survey questionnaire.
We designed a test survey to be emailed to a pre-selected 'test-sample'. The final survey was then
sent out to a significant sample of Indian retailers and others in retail-related industries.
Secondary Data Sources
a.) Internet :- Searching the internet extensively the starting point of this research and provided
some valuable secondary data. Website such as the Government of India's Ministry of Finance
www.finmin.nic.in which provides information on current FDI policy through the Foreign
Investment Promotion Board (FIPB), and also provides press releases and data and statistics have
been useful. The report also references some small domestic industry group's website useful, and
other trade lobby sites. Center for Policy One particular notable internet resource was the
Alternatives (www.cpasind.com) which have provided particularly informative reports on some
of the key issues with FDI in Indian Retail.
b.) Academic Books :- There is a vast amount of literature on FDI ingeneral; however there is
less on FDI in India, and limited amounts that are specifically focused on the retail sector. The
available texton general FDI were useful background research though, and the more specific
texts such as 'FDI in Retail Sector India' by Arpita Mukherjee & Nitisha Patel and
'Multinationals in India' by Amar Nayak were utilized to a greater extent as this report
considered them to be far more relevant to the debate on this research topic.
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c.) News Articles and Industry Reports :- To obtain up to date information and opinions on the
research topic it was necessary to refer to domestic and international news articles and gather a
variety of industry reports and papers, for example the India Brand Equity Foundation (IBEF)
report on India's Retail Market & Opportunities, and India FDI Watch's report in association with
the Association of Community Organizations for Reform Now (ACORN). All of these helped to
provide a wide and balanced understanding of the key issues of this research.
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Limitations of Research Study
Survey Response Limitations
Due to the nature of the survey being internet/online-based, it was inevitable that this would have
limitations on survey response; however this was counterbalanced by using a very large sample
base. Survey responses were also potentially limited by the length of the survey and by language
barriers.
Inconsistency of Data & Statistics available on FDI / Retail in India
We noted that data available, particularly in relation to India's retail sector, was often
inconsistent. However, for the purposes of this research being more of an exploratory nature, this
did not have too much impact on the findings. Up-to-date data was also hard to source.
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Retailing inIndia is one of the pillars of its economy and accounts for 14to15%ofits GDP. The
Indian retail market is estimated to be US$ 450billionand one of the top five retail markets in
the world by economic value. India is one of the fastest growing retail markets in the world,
with 1.2 billion people. India's retailing industry is essentially owner manned small shops .In
2010, larger format convenience stores and super markets accounted for about 4%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%ofIndian population). Until 2011, Indiancentral
government denied foreign direct investment (FDI) in multi- brand retail ,for bidding foreign
groups from any ownership in supermarkets, convenience stores or any retail outlets. Even
single –brand retail was limited to 51% ownership and a bureaucratic process.
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 Walmart, 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 there forms .In December 2011,under pressure from the
opposition, Indian government placed the retail reforms on hold till it reaches a consensus.
In January2012, India approved reforms for single-brand stores welcoming anyone in the world
to innovate in Indian retail market with 100%ownership, but imposed the requirement that the
single brand retailer source 30% of its goods from India. Indian government continues the hold
on retail reforms for multi-brand stores. IKEA announced in January that it is putting on hold
its plant open stores in India because of the 30% requirement. Fitch believes that the 30%
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requirement is likely to significantly delay if not prevent most single brand majors from Europe
,USA and Japan from opening stores and creating associated jobs in India.
IMPACT OF FDI ON AGRO PRODUCTS
India has emerged as a major player in the global agriculture market. Indian agriculture exports
during 2012-2013 were US$ 41 billion against agriculture imports of US$ 20 billion, with an
output of net trade surplus of US$ 21 billion.
Having a good rainfall, the agriculture sector in India is likely to grow in the range of 5.2-5.7 per
cent in 2013-14 agriculture year (July-June), nearly three times more than the last year. The farm
sector had grown at 1.9 per cent last fiscal.
In 2012-13, the share of exports of agricultural and processed food products in overall exports
rose to 10.6 per cent. Total exports of Indian agricultural and processed food products during
April–November 2013 stood at US$ 14,515.10 million as compared to US$ 13,281.47 million
during the same period last year, according to data released by the Agricultural and Processed
Food Products Export Development Authority (APEDA).
FDI would also bring investment in post-harvest infrastructure that would increase the shelf-life
of produce and minimize food wastage (now as high as 20-30%). Moreover, new investment
would result in other positive externalities such as better seeds and stricter standards that would
increase quality and productivity while lowering costs .
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Conclusion:
The subsequent development of the Indian agriculture sector through FDIs is predicted to have a
significant positive impact on the 700-million strong rural populations, living in about 600,000
small villages of India. Rapid investments in technology development, irrigation infrastructure,
emphasis on modern agricultural practices and provision of agricultural credit and subsidies are
the major factors contributed to agriculture growth. FDI in Indian agriculture sector increase
employment opportunities. FDI remains permanent in the host country because of the
development in the infrastructures of the host country. Therefore, there exist the long run
relationship between level of GDP and foreign capital stock
OBJECTIVES OF STUDY
To find out the impact of FDI on unorganized retail sector of India
To find out the impact of FDI on Agro Products
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RESEARCH METHODOLOGY
RESEARCH :-
The activities of market research include defining marketing opportunities and problems,
generating and evaluating marketing ideas, monitoring performance and understanding the
marketing process. The methodology of the study included selection of sample, study/ survey if
library references, collation and compilation of the primary and secondary data and information
obtained through structured questionnaires, open ended interview. The method of research was
deductive as conclusive would be drawn after the analysis and interpretation of data collected.
Research is a structured enquiry that utilizes acceptable scientific methodology to solve problems
and create new knowledge that is generally applicable.
Scientific methods consist of systematic observation, classification and interpretation of data.
The process used to collect information and data for the purpose of making business decisions.
The methodology may include public research , interviews, surveys and other research
techniques and could include both present and historical information.
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Data collection-
1.Primary Data –Primary research consists of a collection of original primary data collected by
the researcher.
It is often undertaken after the researcher has gained some insight into the issue by reviewing
secondary research or by analysing previously collected primary data.
It can be accomplished through various methods, including questionnaires in the physical
sciences, amongst others.
For my study through Questionnaire and interaction
2. Secondary Data– through internet, articles magazines etc.
Secondary data is data collected by someone other than the user. Common sources of secondary
data for social sciences include censuses, organisational records and data collected through
qualitative methodologies or qualitative research. Primary data, by contrast are collected by the
investigator conducting the research
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Research Design:
Descriptive
A descriptive study is one which information is collected without changing the environment (
i.e., nothing is manipulated).
Sampling
A statistical method of drawing representative data by selecting people because of the ease of
their volunteering or selection units because of their availability or easy access.
Universe
Lucknow city
Sample size
25 Respondents
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DATA ANALYSIS
AND
INTREPRETATION
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PART A:
Q1) AGE
FREQUENCY PERCENTAGE
20-30 10 40
Above 30 15 60
Total 25 100
INTERPRETATION
According to the pie chart we can say that 40% respondents are between 20-30 and 60%
respondents are above 30.
40
6020-30
Above 30
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Q2) GENDER :-
FREQUENCY PERCENTAGE
MALE 25 100
FEMALE 0 0
TOTAL 25 100
INTERPRETATION :-
100
00
20
40
60
80
100
120
MALE FEMALE
Series 3
Series 2
Series 1
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According to the chart we can say that there are 25 respondents as male and 0 females.
Q3) INCOME :- (YEARLY)
FREQUENCY PERCENTAGE
20,000-40,000 5 20
50,000-70,000 5 20
More than 70,000 15 60
Total 25 100
INTERPRETATION:-
According to this chart we say that the income of 10 respondents is between 20K to 70K
INCOME
20,000-40,000
40,000-70,000
More than 70,000
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and the income of 15 respondents is more 70K (Yearly)
PART B :-
Q1) PRODUCTION OF AGRO PRODUCTS YEARLY. (IN Kg’s)
INTERPRETATION:-
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
100-200 300-400 More than 500
FREQUENCY PERCENTAGE
100-200 10 40
300-400 12 48
More than 500 3 12
Total 25 100
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According to the above pie chart 88% of the farmers group are able to produce upto the
quantity 400kg and the rest12% are able to produce more than 500kg per year.
Q 2).LOANS FROM BANK AND OTHER INSTITUTION FOR THE PRODUCTION
OF THE AGRO PRODUCTS.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 12 48
N0 13 52
Total 25 100
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INTERPRETATION :-
According to the above pie chart its clear that 48%use to take loan and rest 52% not.
Q3) DO YOU KNOW ABOUT THE AGRICULTURAL POLICIES OF THE INDIAN
GOVERNMENT.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 10 40
NO 15 60
Total 25 100
LOAN
YES
N0
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INTERPRETATION :-
According to the study its shown that 40 % are known to it and 60% are unknown.
Q 4) DO YOU KNOW ABOUT THE FDI IN AGRICULTURAL SECTOR.
a) YES
b) NO
FREQUECY PERCENTAGE
YES 20 80
NO 5 20
Total 25 100
YES
N0
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
In the above mentioned chart 80% are knowing the FDI’s of Govt. and rest 20% are
unknown.
Q 5) ARE YOU IN FAVOUR OF FDI BY GOVERNMENT.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 10 40
NO 15 60
Total 25 100
% KNOWING ABOUT THE FDI
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
40% are in favour of FDI and rest 60% aren’t as shown above
Q 6) DO YOU BELIEVE THAT LIFTING RESTRICTIONS ON FDI IN RETAIL
SECTOR WILL ALLOW MORE INVESTORS.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 18 72
NO 7 28
Total 25 100
0%
10%
20%
30%
40%
50%
60%
70%
YES NO
IN FAVOUR OF FDI
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
72% are in favour to remove the restriction and the rest 28% are not according to
the above pie chart.
Q 7) ARE YOU IN FAVOUR THAT RESTRICTION ARE BINDING THE
TECHNICAL SKILLS.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 14 56
NO 11 44
Total 25 100
LIFTING RESTRICTION IS HELPFUL
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
56% believe that restrictions are hampering the technical skill and 44% are not
in favour.
Q 8) DOES THE GOVT. BOUNDARIES OF FDI EFFECTS CONSUMERS
CHOICE.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 16 64
NO 9 36
Total 25 100
RESTRICTIONS ARE BOUNDINGS
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
64% are in favour and the rest 36% are not as shown above.
Q 9) ARE YOU ABLE TO AVAIL ALL THE BENEFITS OF FDI .
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 15 60
NO 10 40
Total 25 100
EFFECTS OF GOVT. POLICY
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION :-
60% are availing the FDI benefits and the rest 40% aren’t.
Q 10) FDI IS PROFITABLE FOR GOVERNMENT AS WELL AS AGRO SECTOR.
a) YES
b) NO
FREQUENCY PERCENTAGE
YES 18 72
NO 7 28
Total 25 100
AVAILING THE PROFIT
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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INTERPRETATION:-
72% think that its right and the rest 28% oppose as shown above.
FINDINGS
After analyzing the FDI in Indian retail sector by relating it to the agricultural products
my findings from the study are :-
Due to the absence of the efficient way of production few farmers are not able to
produce the agro products at their extent.
Due to illiteracy a large number of farmer group are still unknown to the norms
of the government regarding the FDI.
FDI PROFITABLE FOR AGRO AS WELL AS GOVT.
YES
NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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A large group of farmers are not in the support of FDI as they think that it’s not
of their worth.
A large number of the farmer group are againts the restriction of the FDI norms
of the government as they think tat it’s effecting the agro products production in
the different way.
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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SUGGESTION FOR RETAIL SECTOR
Much of the Indian retail trade (particularly grocery) still has traditional features: small family-
run shops and street hawkers dominate the situation in most of the country. However, the retail
trade in India is now undergoing an intensive structural change which could cause irreversible
damage to local commodity supply chains and competition. The existing regulations are not
adequate to fulfil the new requirements. India can learn (and perhaps forestall loss of genuine
competition and product variety) from the experience of south-east Asian countries which are
improving regulatory frameworks and some advanced retailing economies like Germany which
are already considered more successful regulators in this sector. German competition policies in
content and implementation are significant for India to the extent that they are different from
other advanced retailing countries like the US and Great Britain. German policy now proactively
aims to preserve small and medium competitors in retail sector.
SUGGESTION OF AGRICULTURAL SECTOR
The government of India has allowed foreign direct investment in the fertilizers industry of the
country. Foreign Direct Investment (FDI) in fertilizers in India is allowed up to 100% under the
automatic route in India. The various advantages of FDI inflows into fertilizer industries are
growth, quality, improved technology and expansion of fertilizer industry that will result in the
generation wide range of qualitative agro products. It is widely believed that these steps will aid
in the growth of agriculture infrastructure in the country and will benefit the sector in the long
run.
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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Conclusion The discussion above highlights:
Small retailers will not be crowded out, but would strengthen market positions by
turning innovative/contemporary.
Growing economy and increasing purchasing power would more than
compensate for the loss of market share of the unorganised sector retailers.
There will be initial and desirable displacement of middlemen involved in the
supply chain of farm produce, but they are likely to be absorbed by increase in the food processing sector induced by organised retailing.
Innovative government measures could further mitigate adverse effects on small
retailers and traders.
Farmers will get another window of direct marketing and hence get better
remuneration, but this would require affirmative action and creation of adequate
safety nets.
Consumers would certainly gain from enhanced competition, better quality,
assured weights and cash memos.
The government revenues will rise on account of larger business as well as
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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recorded sales.
The Competition Commission of India would need to play a proactive role.
Thus from developed countries experience retailing can be thought of as developing
through two stages. In the first stage, modern retailing is necessary in order to
achieve major efficiencies in distribution. The dilemma is that when this happens it
inevitably moves to stage two, a situation where an oligopoly, and quite possibly a duopoly, emerges. In turn this implies substantial seller and buyer power, which may
operate against the public interest.
The lesson for developing countries is that effective competition policy needs to be in
place well before the second stage is reached, both to deter anticompetitive behaviour and to evaluate the extent to which retail power is being used to unfairly
disadvantage smaller retailers and their customers. The sources of retail power need
to be understood to ensure that abuses of power are curbed before they occur. The
more important debate lies in the parameters of competition policy. The benefits
brought by modern retailers must be acknowledged and not unduly hindered. While it is true that some dislocation of traditional retailers will be felt, time will prove that the
hardship brought will not be substantial
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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LIMITATIONS
The biggest limitation of this research was time. Due to time constraints, the interviews
were restricted to a very small number.
Cost was also disadvantage in the process of the research. The dealers were chosen for
interviews as it was believed that they would give a more generalized view of the whole
market.
However, their answer replicated their specific consumers base and persona choice. If
time is no limitation, the consumers should be directly contacted for the assessment.
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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BIBLIOGRAPHY
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
Page 44
BIBLIOGRAPHY
Articles/Reports 1. "The Bird of Gold - The Rise of India's Consumer Market". McKinsey
and Company. May 2007.
2. Anand Dikshit (August 12 2011). "The Uneasy Compromise - Indian
Retail".The Wall Street Journal.
3. "Winning the Indian consumer". McKinsey & Company. 2005.
WEBSITES
1. http://www.legallyindia.com/1468-fdi-in-retailing-sector-in-indiapros-
cons-by-hemant-batra
2. http://siadipp.nic.in/policy/changes/pn3_2006.pdf
3. http://dipp.nic.in/DiscussionPapers/DP_FDI_Multi-
BrandRetailTrading_06July2010.pdf
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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ANNEXURE
Q1) PRODUCTION OF AGRO PRODUCTS PER YEAR. (IN Kg’s)
a) 100-200
b) 300-400
c) More than 500
Q 2). LOANS FROM BANK AND OTHER INSTITUTION FOR THE PRODUCTION OF
THE AGRO PRODUCTS.
c) YES
d) NO
Q3) DO YOU KNOW ABOUT THE AGRICULTURAL POLICIES OF THE INDIAN
GOVERNMENT.
a) YES
b) NO
Q 4) DO YOU KNOW ABOUT THE FDI’s IN AGRICULTURAL SECTOR.
a) YES
b) NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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Q 5) ARE YOU IN FAVOUR OF FDI BY GOVERNMENT.
a) YES
b) NO
Q 6) DO YOU BELIEVE THAT LIFTING RESTRICTIONS ON FDI IN RETAIL SECTOR
WILL ALLOW MORE INVESTORS.
a) YES
b) NO
Q 7) ARE YOU IN FAVOUR THAT RESTRICTION ARE BINDING THE TECHNICAL
SKILLS.
a) YES
b) NO
Q 8) DOES THE GOVT. BOUNDARIES OF FDI EFFECTS CONSUMERS CHOICE.
a) YES
b) NO
IMPACT OF FDI ON UNORGANISED RETAIL SECTOR OF INDIA
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Q 9) ARE YOU ABLE TO AVAIL ALL THE BENEFITS OF FDI .
a) YES
b) NO
Q 10) FDI IS PROFITABLE FOR GOVERNMENT AS WELL AS AGRO SECTOR.
a) YES
b) NO