Easyday is an Indian retail brand that runs chains of consumer retail department

stores.[6] The brand is wholly owned by Bharti Enterprises Limited and is operated
by its subsidiary, Bharti Retail Limited,[6] which is headquartered in New Delhi.
The technical and management support for the brand is provided by Arkansas,
United States based Wal-Mart Stores, Inc, which is the largest retailer in the world.
[6]
Bharti Enterprises announced its foray into retail in February 2007[7] and the first
store was opened in Punjab, India in April 2008.[8] Easyday presently has 220
stores across 13 states[9] The real estate, design and construction services to
Easyday are provided by Cedar Support Services, an Indian retail company
majority-owned by Bharti Enterprises, which also provides similar services to
Bharti Walmart Private Limited.[10]
Spencer's Retail is a chain of retail stores based in Kolkata, West Bengal.
Spencer's is based on the 'Food First' Format (it mainly offers fresh and packaged
food). Many outlets though sport multiple formats for retailing food, apparel,
fashion, electronics, lifestyle products, music and books. It is owned by the RPG
Group, a major business house.
For 2014;
During FY14, the economic backdrop was a key factor impacting the
performance of retail companies across various sub sectors, including that of
organized retail. Consumer sentiment and business confidence continued to be
subdued during the year with economic growth decelerating further. This is
attributable mainly to weakening industrial growth in the context of tight
monetary policy followed by the RBI through most of the year, political & policy
stability related concerns and uncertainty in the global economy.

Inflation also was an important concern

area. Persistent high inflation and
inflation expectations meant that the
RBI was compelled to maintain the
benchmark interest rates at a much
higher level than what would be needed
to encourage business and economic
sentiment. In the recent quarters
consumer sentiment has been variedwith apparel retailers reporting an

improving trend but most other retail

formats still witnessing muted off take.
Prospects:
Retail industry has been on a growth trajectory over the past few years. The
industry is expected to be worth US$ 1.3 trillion by 2020. Of this, organized retail
is expected to grow at a rate of 25% p.a. A significant new trend emerging in retail
sector is the increase in sales during discount seasons. It has been observed of late
that sales numbers in discount seasons are significantly higher than at other times.
This is prompting retailers to start discounts earlier and have longer than usual sale
season. Also, concepts such as online retailing and direct selling are becoming
increasingly popular in India thereby boosting growth of retail sector.
Need of study:
The present study is a significant attempt to examine the role of FDI on retailing
Industry. The stu
dy will prove helpful to
analyse
lacunae in the ex
isting market practice, problems and shortcomings in the field of infrastructure
development, quanti
ty of FDI etc.
Further, it can helpful to explore some untapped areas where potential for
development exists and re
ctification of the flaws
in the
present s
ystem of economic policy. The study will also prove helpful in enhancing the GDP,
earnings of foreig
n exchange,
generating employment avenues and making the country self
reliant. The study may also be equally important for all those
interested in undertaki
ng similar studies in the context of other aspects of FDI because certain methods
and approaches evo
lved

and employed should be helpful in carrying out further studies of similar nature.
The present study
is likely to provide val
uable
information to the g
overnment and policy makers about the role of FDI in the success of the retail
sector. The constrain
ts faced
and suggestions made by the study will be of immense help for policy makers and
development programm
e initiators to plan the
future programmes more
effectively.

1.2
To discuss the nature of
Retailing in India.

To study the present scenario of Retailing in India

To analyze the need of Retailing in India related to various sectors/ areas or groups.

To study the need of opening up of FDI in Multi

Brand Retail.

To analyze the positive and nega

tive impacts of the reforms to be undertaken.

To assess the market situations for the same changes in other countries.

To review the challenges to be faced by FDIs while investing in India.

To evaluate the change in the customers requirements after th

e introduction of FDI in retail

Objectives
To analyze the present trends in retail industry.
2.
To study the impact of FDI in retailing
3.
To analyze the benefits and concerns with regard to opening of the retail sector for
FDI
1)
To analyse the present structure of Indian Retail Sector and changes therein during
last few years
.
2)
To make a segment analysis of Indian Retail Sector in order to know about the ma
jor sub
sectors in
organized and traditional retail and changes in the relative share of various sub
sectors over last few years
and penetration of organized retail in various segments
.
3)
To understand and analyse the emerging challenges before Indian retail
sector in view of recent policy
changes by Government of India
.
4)
To find out some measures/steps need to be taken by Indian retailers to meet
successfully the emerging
global competition in the sector
.
1.3
Methodology
The present study is based on s
econdary data and information collected from a variety of sources. An
attempt has been made in the present study to make a systematic analysis of
changes in the size and structure of

Indian retail market over last few years. This analysis is useful to unde
rstand the expected future changes in the
Indian retail market and the implications of recent policy changes adopted by
Government of India. Collecting
and compiling data and information from various available sources, relevant ratios
and percentages have
been
calculated and analysed
Scope for Future Research
a.
Further studies need to be carried out to make a comparative analysis of role and
performance
of Indian and
foreign organized retailers so as to give some direction to future policy framing
b.
Studies
relating to retail sector may also be
conducted at
state
l
evel to find out the
variations in performance
of organized and unorganized retailers as well as Indian and foreign retailers across
state
s
. Such studies
may
also be
useful in establishing fundamental causes of
such variations.

BENEFITS OF FDI
FDI in the retail sector could bring various benefits for the country, such as:

Improvement in the sup

ply chain infrastructure

by bringing in technical know
how and
capital. FDI can be a powerful catalyst to spur competition in the retail industry. It
can
bring about an improvement in the supply chain infrastructure, investment in
technology,
up
gradation
in agriculture, manpower and skill development and may also lead to an
improvement in the overall productivity

Improvement in farmer income through the removal of structural inefficiencies.

Farmers
were found to benefit significantly from the option of dir
ect sales to organized retailers.
For instance, the profit realization for farmers selling directly to the organized
retailers is
expected to be much higher than that received from selling in the mandis.

Benefits to customers in the form of better quality

of products and lower prices. Past
trends indicate that by and large consumers have benefited from organized retail in
the
domestic market.

FDI may help address social concerns by acting as a tool to alleviate poverty
especially
as most MNEs take an intere
st in furthering social cohesion and labour standards. There
are, however, some examples, in specific countries and sectors, of the opposite
effect.

To achieve expected growth in Indian GDP by encouraging export India is

targeting for
its GDP to grow by 8
to 10 per cent per year. This requires raising the rate of investment

as well as generating demand for the increased goods and services produced.
Growth in
Indian GDP and Retail trade.

To acquire market
savvy, market
intelligent and best management practic
es Retail giant
houses such as Wal
Mart, Carrefour, A hold, JC Penny can bring their better
managerial
practices and IT
friendly techniques to cut wastage and set up integrated supply chains to
gradually replace the presented disorganised and fragmented re
tail market. India wastes
nearly Rs 50,000 crore in the food chain itself. These international retail outlets can
help
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develop the food processing industry which requires $28 billion of modern
technology
and infrastructure. Lack of latest technical experti
se, is a major handicap for Indian

business houses. Foreign direct investment can only pave the want for prosper and
professional entrepreneurship for retail value chain.
CONCERNS
Major concerns which have been expressed
with regard to opening of the retai
l sector
for FDI:

MAY LEAD TO UNEMPLOYMENT

The retail sector in India is the second largest
employer after agriculture. In 2007
08, retail trade employed 7.2 percent7 of total
workers and provided job opportunities to 33.1 million persons8. It may also
lead to
unfair competition and ultimately result in large
scale exit of domestic retailers,
especially the small family managed outlets, leading to large scale displacement of
persons employed in the retail sector

Threat to the organized retail sector

play
ers in the domestic sector The Indian retail
sector, particularly organized retail, is still underdeveloped and in a nascent stage
and
therefore it is important that the domestic retail sector is allowed to grow and
consolidate
first, before opening this s
ector to foreign investors.

FDI tends to act as a catalyst for underlying strengths and weaknesses in the host
economy, bringing to the fore both its advantages and its problems.

FDI
induced economic change may produce some adverse distributional and emplo
yment

effects in the host country. Both categories of problems should be temporary, but
they
can be prolonged and aggravated in the absence of appropriate policy responses
CONCLUSION
The above analysis shows that FDI has positive and negative effects on In
dia economy. It can be
concluded that to keep pace with the forecast of Indian GDP, government should
encourage
foreign investment. To avoid its negative impact on local players regulatory
framework
should
be redesigned. Government should encourage FDI on
gradual basis like currently it is
allowed for single brand. Product category wise clauses should be developed to
allow FDI like

The product categories where it can create total threat, FDI should be encouraged
in the
form of Joint Venture only e. g. Indi
a is enjoying strong agriculture base. Encouragement
to food

grocery retail would create a threat to Indian agriculture but our

poor supply
chain demands end to end distribution network to reduce gate prices. For that there
is a
need of global established
giant. So FDI should be allowed but in the form of
joint
venture to protect our interest part.

FDI should not be encouraged in the product categories where Indian players are
already
established and FDI is only detrimental. E.g. Cosmetic products do not n
eed FDI because
entry of foreign players would replace Indian established brands with
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international
brands. It would be a direct threat to our big giants HUL, P&G, Johnson &
Johnson who are consistently providing qualitative products to consumers in all ra
nges.
But craze of
international brand will induce consumers to switch to foreign brands.

For some categories of products FDI should be permitted for sourcing only not
selling in
Indian market. E.g. India needs support to increase the market share of its T
extile
products where it has capacity to produce at the lowest rates. Encouragement to
textile
export can tremendously contribute towards development of our textile sector.
Foreigners
would get attracted due to lower prices. Thus FDI should be allowed to s
ource or import
from India not to sale in India.

Entry of foreign players should be restricted by the format type and number of
stores.
E.g. Wal mart store has its different format like Super centers, Discount
departmental
store etc. with the help of diffe
rent formats it has successfully covered almost all the
locations of the city or country in which it has started its operations. Presence of
such

giants at all the location can stop the local business. Indian organized retail players
are
able to develop ma
ximum number of supermarkets not hypermarkets because of heavy
investment. So foreign players should be allowed with limited number of stores
only.
In
nutshell FDI should be encouraged with strict, feasible and mutually beneficial
regulations.
FDI and retailing are the current burning issues and several researches were
conducted in this area.
It is an interesting subject for
research scholars and policy makers. The literature review mainly focused on huge
untapped markets i
n Indian retail and the
opportunities available in the Indian market for the growth of organized retail.
Chopra (2006) repo
rts that Retailing in India is
evolving rapidly with an increasing number of global retail firms and several
foreign investors are
willing to invest in this
sector.
The sector is on a high
growth trajectory and is expected to grow by more than 27 percent o
ver the next five to six years.
Sinha (2003) viewed that traditional outlets are preferred as consumers can bargain
while modern out
lets are preferred becaus
e
they link entertainment with shopping. Joseph and Soundararajan (2009) preferred
modern outlets a
s they provide better product
quality, lower prices, one
stop shopping, choice of more brands and products, better shopping experiences
with family and fresh

stocks etc. Mukherjee and Patel (2005) opined that consumers are the major
beneficiaries of the re
tail boom as organized retailers
are initiating measures such as tracking of consumer behaviour and consumer
loyalty programmes to re
tain their market share.
Rao (1998, 2000) reported that Indian consumers recognize the value addition
made by a brand and t
here is a preference for
foreign brands. Kinra (2006) viewed that consumers perceive foreign brands to be
of better quality t
han Indian brands. Kaur a
nd
Singh (2007) found that children are becoming key decision
makers in household purchases who are much i
nterested in branding.
According to Arabi (2005) and Agarwal (2001), FDI in India has remained
domestic market seeking. It
is widely believed that t
he
type of FDI and its structural composition matter at least as much for economic
growth effects as do
es t
he overall volume of
inward FDI.
Basu ( 2012) states that as of now only ten states in the country have endorsed the
Centre's decisio
n to allow FDI in
multi
brand retail. AT Kearney, the well
known International Management Consultant, recently identified I
ndia as the Second
most attractive Retail Destination globally from among thirty emergent markets.
Singhal (2011) repo
rts that with a contribut
ion

of 14 percent to the national GDP and employing 7 percent of the total workforce
in the country, the
retail
industry is definitely
one of the pillars of the Indian economy.
Koshy Joseph (2006) described that the decision of permitting fo
reign direct investment (
FDI)
in the retail sector has been a debate in India for a cons
iderable period of time. Singh & Dr. Mandeep (2010) says that Since the
Indian retail sector is highly fragmented and domestic retailers are in the process of
consolidating
their position, the open
ing up of
the FDI regime should be in a phased manner over
5 to 10 years time frame so as to give the domestic retailers enough time to
adjust the changes. Khatore, Prashant and Parekh (2009) said that there is a need to
re
look, clarify, and further liberalize the
policy on single
brand retailing to promote inves
tments by global chains in India. Parekh and Paresh (2010) state that it is worth
debating whether it is really necessary to put conditions such as mandatory rural
employment creatio
n and mandatory investmen
t
in back
end infrastructure, etc. while permitti
ng FDI.
Kalhan (2007) indicated that there has been a severe impact of malls on the
unorganized retail shops
operating in the vicinit
y of
malls. Mukherjee and Patel (2005) carried out a broad based survey on FDI in the
Retail Sector in I
ndia, which was
sponsored

by the Indian Council for Research on International Economic Relations (ICRIER),

vehemently recommen
ded the allowing of
FDI in the organized format in the retail industry over a period of five to six years
to boost the s
peed at which the organiz
e
d retail
sector is growing.
They found that joint ventures with foreign retailers help the Indian industry to get
access to fina
nce and global
best practices.
The New FDI policy has become a key battleground in the emerging Multi
Brand Retail markets. Res
earchers like
Henley (2004); Palit and Nawani (2007); Pires, Stanton and Salavrakos (2010);
Jain and Sukhlecha (20
12); Moghe (2012) have
highlighted a number of problems related to backend infrastructure,
implementation of improved techn
ology, improvement
in
supply chains, issues of real estate and human resources. It is observed that
deficiency of appropri
ate investment in logisti
cs and
storage facilities which are two alarming factors leading to an inefficient market
mechanism. Henley
(2004) study shows
China is
in a better position in attracting FDI when compared to India. India's performance
is understated be
cause of various reasons
like
high tariffs, poor physical infrastructure, unfriendly regulatory system etc.
Fulzele (2012) examined the impact of
FDI in retailing in India on employment, consumers, capital inflow, infrastructure,
farmers

and retailers. Ranjan, (2010) suggested some recommendations to the retail

industry as well as to th
e Government to take adeq
uate
steps in order to face challenges
raised at the time of entry of global retailers. Dey (2007), took note of certain
issues related to
FDI in India. Gupta (2010) suggested that FDI in the buzzing Indian Retail should
not just be freely
allowed but should be
significantly encouraged. Malik (
2012) concluded that Indian consumers are more concerned about service quality,
store
convenience, product quality and availability of new products in retailing. Pai
(2011) says, the ope
ning of multi brand retai
l is
expected to bring down inflation and inf
low of foreign funds may help finance the current account deficit. Nayyar (2011)
welcoming the FDI in retail says the primary benefit to farmers from the growth
of organized retail
is a higher price for th
eir
produce. Guruswamy (2007) says that the retail
industry in India is of late often being hailed as one of the sunrise sectors in the
economy.
Joseph et.al (2008) study on organized retailing shows all segments of the Indian
economy could be a
ffected by the entry of l
arge
corporate giants in the Multi
B
rand Retail business. The liberalization of FDI for Multi brand retail sector would
affect
unorganized small retailers by giving rise to monopolies of large corporate houses
with respect to p
ricing and availability o
f
goods. Pires, Stanton and Salavrakos (

2010) argue that the legal, technical and socio

economic problems at the macro
level
interlink FDI and economic growth. The study stress on the importance of
prioritizing the incentives
offered to the FDI
infrastructure. Economic Survey (2011
12) for FDI i
n Multi
brand retail states that the Inter
Ministerial Group (IMG) on inflation
has recommended for leveraging FDI as it noted concerns for high rates of food
inflation and low pri
ces grasped by Indian
farmers. McKinsey Report (2012) states that the retail
productivity in India is very less compared to other International
counterparts. Moghe (2012) critically analyzed the decision of Indian government
to open retail sect
or for FDI in single
brand and
multi
brand category and it's likely to have impact on va
rious components of Indian economy. In addition, it was suggested to
have a strong enforcement mechanism to ensure that big retailers do not dislocate
small retailers by
unfair means and to buil
da
coexistence of both the arms. The high
level group which i
s to be constituted under the Ministry of Consumer Affairs is expected
to look into the aspects such as internal trade and recommendations on trade
reforms to the governme

nt.
4.4.3.
Problems
Faced By The Retail Industry In India

Stiff competition from the unorganized sector.

Shortage of quality real estate and

infrastructure in the country.

Opposition to foreign direct investment from small traders affects the retail
industry.

Very high stamp duties on transfer of property.

Shortage of retail space in central and downtown locations

Presence of strong pro

ten
ancy laws makes it difficult to evict tenants

Complex and time consuming process of Land

use conversion

Settling property disputes consume a lot of time.

Rigid building laws make procurement of retail space difficult.

Nonresidents are not allowed to ow

n property except when they are of Indian origin.

Prohibition of foreign investment in the real estate business.

Customs duties are levied on the import of goods in India.


Indian youth considers sales associate jobs to be blue collared.

State laws
for business are shaped by religion rather than global business logic.

These problems can be broadly categorized into four major heads which can be
shown in the figure giv
en below:
Availability of retail space:
Traditional Indian shops have been small, about 1000 sq. ft. Many of the inner
city buildings
are old and dilapidated and unfit for global retailers. Obtaining land to establish
retail stores is
a significant issue in I
ndia.

Establishing supply chain logistics:.

India lacks a strong supply chain when compared to Europe or the United States
(Kottoli, 2006). The existing supply chain has too many intermediaries, which at
present include Man
ufacturer

National distributor

Regi
onal distributor

Local wholesaler

Retailer

Consumer. This implies that global retail

chains will have to build a supply chain network from scratch. Transportation and
distribution are s
eriously affected by
the poor infrastructure of airports, road sy
stems, power lines, and ports.


A shortage of talent:
People with basic merchandising skills and store planning skills are very few in
India. Global retai
l
giants will have to spend substantial resources in terms of time and money to train
the local workfo
rce and bring them on
par with their global standards. The Retailers Association of India (RAI) estimates
that an addition
al 2 million workers
will be needed in the next two years in order to meet the requirements of the
existing planned expan
sion in the r
etail
sector.

Political challenges:
India is a federal state with a national government at the centre and state
governments ruling the
states (Gupta, 2005). This means that there are multiple sets of political and
governmental clearanc
es needed for retail
ers.
New retail entrants will need clearances from central and various state
governments, city corporatio
ns, and district
administrations. Negotiating these will prove to be a challenge for global retailers.
A.T. Kearney (2010): Expanding Opportunities for Global Retailers
2010 Global Retail Development Index, A.T.
Kearney, 2010 http://www.atkearney.com/
images/global/pdf/2010_Global_Retail_Development_Index.pdf.
2.
A.T. Kearney (2011): Retail Global Expansion: A Portfolio of Opportunities
2011 Global Retail Development Index,

A.T. Kearney, 2011 http://www.atkearney.

com/images/global/pdf/Retail_Global_Expa
nsion
GRDI_2011.pdf Accessed
on 02/10/2012
3.
Agarwal, P. (2011). Foreign Direct Investme
nt in
Indian Retail Sector
An Analysis: Available from:
http://www.articlesbase.com/investing
articles/foreign
direct
investment
inretailing
in
india
its
emergence
pros
pects
1354932.html (Accessed on September 22, 2012).
4.
Arpita Mukherjee & Divya (2011): Impact of the Retail FDI Policy on Indian
Consumers & the Way Forw
ard ICRIER
Policy Series, August, No.5.
5.

Asha Vaidehi & Alekhya (2012): Role of Foreign Direct Investm

ent in Retailing, Asia Pacific Journal of Marketing 7
Management, October, Vol.1, No.2.
6.
Basu, K. (2012, Dec 19), Basu welcomes state autonomy in FDI in retail.
7.
Chandrachud & Gajalakshmi (2013): The Economic Impact of Foreign Direct
Investment in India
International Journal
of Humanities & Social science Invention, September, Vol.2, Issue 2, pp. 47
52.
8.
Chopra,
N. 2006, Local Retailers are as Big a Threat as FDI,
Retrieved from
http://www.financialexpress.com/old/fe_full_story.php?content_id=137683
.
9.
CII, c. o. (2011), The Impact of FDI in Retail on SME Sector, A Survey Report,
Confederation of In
dian Industry.
10.
Dey, Dipankar (2007). FDI in Indias Retail Trade; So
me Additional Issues: Aspects of Indias Economy.Vol. 43, July,
pp 1.
11.
Discussion Paper on FDI in Multi Brand Retail Trading,
http://dipp.nic.in/DiscussionPapers/DP_FDI_
Multi
BrandRetailTrading_06July2010.pdf
12.
Economic Survey (2011
12). Available from:htt
p://articles.economictimes.indiatimes.com/2012
03
-

15/news/31197191_1_multi
brand
mandatorysourcing
retail
sector Accessed on 02/10/2012
13.
Gupta, R. K. 2005.
Fulfilling Indias Promise.
The McKinsey Quarterly, August special edition. Apparel retailing in
In
dia, 687 Images Yearbook on Fashion Business, Apparel, Retailing, and Garments
(2006). Retrieved Jul
y 4, 2008,
from
www.imagesfashion.com/year_book_III.html
.
14.
Gupta, A. (2012). Foreign Direct Inv
estment In Indian Retail Sector: Strategic issues and Implications, IJMMR, 1(1),
55
68, December.
15.
Guruswamy, Mohan; Sharma, Kamal; Mohanty, Jeevan Prakash and Thomas J.
Korah (2007) FDI in Indias
Retail
Sector: More Bad than Good? www.cpasind.com
16.
Henle
y, J.S.(2004). 'Chasing the dragon: accounting for the under
performance of India by comparison with China in
attracting foreign direct investment', Journal of International Development, 16(7),
1039
1052.

17.
India
sRetail Sector (Dec 21, 2010) http://www.cci.
in/pdf/surveys_reports/indias_retail_sector.pdf , Retrieved 20th
November 2012,
18.
Jain, M., Suklecha, M.L. (2012). "FDI in Multi
Brand Retail: Is it the need of the hour?', Zenith, International journal of
Multi
disciplinary Research, Vol.2(6), 108
131, June
2012.
19.
Joseph, M. and Nirupama Soundararajan (2009): Retailing in India: A Critical
Assessment, Academic
Foundation,
New Delhi
20.
Kaur, P. and Raghbir Singh, (2007): Uncovering Retail Shopping Motives of
Indian Youth, Young Cons
umers: Insight
and Ideas fo
r Responsible Marketers, Vol. 8, No. 2, pp 128
138
21.
Kinra, N. (2006): The Effect of Country
of
origin on Foreign Brand Names in the Indian market, Marketing
Intelligence & Planning, Vol. 24, No. 1, pp.15
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22.
Lina Ferndes, Ruksana & Simon (2012): Foreign
Direct Investment in Multi

brand Retail: Issues & Implications on

Indian Economy Pacific Business Review International, November, Vol.5, Issue 5.
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Sector

More Bad than Good,

Ec
onomic and Political Weekly, 12/2/05.
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Mandeep, S. (2009), Foreign Direct Investment in Retailing in India
Its Emergence & Prospects.
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Moghe, D. (2012), Critical study of foreign direct investment in Indian retail
sector with special
Organized retail in
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b.com
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Mukherjee, A. and Nitisha Patel (2005): FDI in Retail Sector: India, Academic
Foundation, New Delh
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33.
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Nayyar, Dhiraj (2011), UPAs Bitter Harvest, India Today, December 19, pp 46.
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Pai, V.T. (2011). Finally FDI Arrives in Retail
Comes with Wholesale Issues, Monthly Economic Digest, December,
Volume. XLI, no. 2, pp 41
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Paresh & Pawar (2010): Analysis of Awareness of reatil Consumers towards the
FDI: Indian Retail Con

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2568
Khare, 2013) opines that FDI in retail segment would be
beneficial for India. However, the government should pro
tect the interests of millions whose livelihood is dependent
on small and medium retail market. The author contents
that FDI in retail would contain inflation by better connect
ing famers and customers.
(Bhattacharyya, 2012) suggests that since Indian Govern
ment recommends retail firms to source a percentage of
manufactured products from small and medium domestic
enterprises, Foreign Direct Investment will provide a boost
to these small and medium enterprises. The author argues
that FDI in retail sector will generate significant employ
ment opportunity for rural and semi-urban youth thereby
helping Indian economy.
(
Singh Kr. Arun and Agarwal P.K., (2012) Foreign direct investment: The big bang
in Indian retail. Inthis article they have studied the relation of foreign investment
and Indian retail business. The study is based on different literatures, case studies
and analysis of organised retail market. The author discussesthe policy
development for FDI in the two retail categories: single brand and multi brand. The
author concludes that FDI in multi brand retail should be considered, better

technology and employment. The paper also concludes that openness of FDI in
India would help India to integrate into worldwide market.2.
Dr. Mamata Jain and Mrs. Meenal Lodhana Sukhlecha, (2012), FDI in multi
brand retail: Is it the needof the hour? The paper studies the need of the retail
community to invite FDI in retailing. The study isunder taken through analysis of
positive and negative impacts of reforms. The study shows variousadvantages of
FDI, which suggests for foreign participation in retailing, but the author also
suggests thatthe ceiling should not exceed 51% even for single brands to ensure
check and control on businessoperations.3.
Rajalakshmi K. and Ramachandran F., (2011), Impact of FDI in Indias
automobile sector withreference to passenger car segment. The author has studied
the foreign investment flows through theautomobile sector with special reference
to passenger cars. The research methodology used for analysisincludes the use of
ARIMA, coefficient, linear and compound model. The period of study is from
1991to 2011. This paper is an empirical study of FDI flows after post liberalisation
period. The author hasalso examined the trend ad composition of FDI flow and the
effect of FDI on economic growth. Theauthor has also identified the problems
faced by India in FDI growth of automobile sector throughsuggestions of policy
implications.

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(Paper) ISSN 2222-2855 (Online)Vol.4, No.3, 2013
27
4.
Bose Kanti Tarun, (2012), Advantages and disadvantages of FDI in India and
China. The study has been done on evaluation of advantages and disadvantages of
FDI in China and India based on literaturereview. The study was based on two
major companies: Wal-Mart operations in China and Hyundaioperations in India.
The study concludes that both China and India has been a hotspot for
foreigninvestment due to its unsaturated market conditions, cheap labour,
demographic factors, consumer behaviour, etc.5.
Dr. S N Babar and Dr. B V Khandare, (2012), Structure of FDI in India during
globalisation period.The study is mainly focused on changing structure and
direction of Indias FDI during globalisation period. The study is done through

analysis of benefits of FDI for economic growth. The study has beendone through
sect oral analysis of FDI participation, as well as through study of country wise
flow of foreign inflow in India till 2010.6.
Chakraborty Chandana and Basu Parantap, (2002), FDI and growth in India: a co
integrationapproach. The study is explored through a structural co integration
model with vector error correctionmechanism, by a two way link between FDI and
long run relationship exists between FDI and GDP, i.e.unit labour cost and import
duty in total tax revenue.7.
Park Jongsoo, (2004), Korean Perspective on FDI in India: Hyundai Motors
Industrial Cluster. Thearticle studies the flow of FDI in India through industrial
cluster: with special reference to HyundaiMotors. The article concludes that the
attitude of Indian government towards foreign investment hasshown a drastic
change after 1991. The new reforms of FEMA have been attracting the FIIs but
thearticle also concludes that two principal deterrents to investment in India are
bureaucracy and showing pace of reforms. The article suggests that the growth of
India has increased through joint ventures andGreenfield investments.
Journal of Economics and Sustainable Developmentwww.iiste.org ISSN 2222-1700
(Paper) ISSN 2222-2855 (Online)Vol.4, No.3, 2013
27
4.
Bose Kanti Tarun, (2012), Advantages and disadvantages of FDI in India and
China. The study has been done on evaluation of advantages and disadvantages of
FDI in China and India based on literaturereview. The study was based on two
major companies: Wal-Mart operations in China and Hyundaioperations in India.
The study concludes that both China and India has been a hotspot for
foreigninvestment due to its unsaturated market conditions, cheap labour,
demographic factors, consumer behaviour, etc.5.
Dr. S N Babar and Dr. B V Khandare, (2012), Structure of FDI in India during
globalisation period.The study is mainly focused on changing structure and
direction of Indias FDI during globalisation period. The study is done through
analysis of benefits of FDI for economic growth. The study has beendone through
sect oral analysis of FDI participation, as well as through study of country wise
flow of foreign inflow in India till 2010.6.

Chakraborty Chandana and Basu Parantap, (2002), FDI and growth in India: a co
integrationapproach. The study is explored through a structural co integration
model with vector error correctionmechanism, by a two way link between FDI and
long run relationship exists between FDI and GDP, i.e.unit labour cost and import
duty in total tax revenue.7.
Park Jongsoo, (2004), Korean Perspective on FDI in India: Hyundai Motors
Industrial Cluster. Thearticle studies the flow of FDI in India through industrial
cluster: with special reference to HyundaiMotors. The article concludes that the
attitude of Indian government towards foreign investment hasshown a drastic
change after 1991. The new reforms of FEMA have been attracting the FIIs but
thearticle also concludes that two principal deterrents to investment in India are
bureaucracy and showing pace of reforms. The article suggests that the growth of
India has increased through joint ventures andGreenfield investments.From the
above literature review it has been found that FDI has been beneficial for India and
its economicgrowth. Although the studies are more theoretical rather than
analytical, still they have been of immense help informing the base for the
following work.
OBJECTIVE
The objective of this paper is to represent the present and future scenario of FDI in
India. The other objectivesare:1.
Study the present situation of FDI in retailing.2.
Study the effect of FDI (equity inflow) on total FDI flow in India.3.
Forecasting the trend of FDI flow in India up to 2016.
RESEARCH METHODOLOGY
The study is analytical in nature and covers a period of 12 years (2000-2012), to
have a clear picture of the statusof FDI in India. The study is divided into 8 parts:
Introduction, literature review, an overview of FDI in India,FDI in retailing, FDIas an international perspective, investment scenario of companies, analysis
andinterpretation and conclusion. The data is secondary in nature and is collected
from RBI annual publications,website of Department of Industrial Policy and
Promotion, Government of India, UNCTAD publications, etc.The analysis of the
hypothesis: effect of FDI equity inflow on FDI flow has been done with the help of
variousstatistical tools: regression analysis; trend is measured through analysis of
time series; and the presence of autocorrelation is tested through Durbin Watson
test.1.

Regression analysis is calculated through the following formulae:

Y = a+bX
Where, parameters a and b is calculated through simultaneous equations:
Y = Na+bXXY = a X + b X
2
Regression coefficient of Y on X:
r
y
/
x
= xy/x
2
2.
Trend analysis is calculated on the basis of second degree parabola as the series is
affected throughcorrelation, calculated as below:
Y
c
= a+ b X + c X
2

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(Paper) ISSN 2222-2855 (Online)Vol.4, No.3, 2013
28
3.
Autocorrelation is tested through Durbin-Watson test, discussed as below:
d= (e
t
e
t-1
)/e
t2
There are two limits to test the autocorrelation, i.e. an upper limit (d
u

) and a lower limit (d

L
). If the d value < d
L
,then positive autocorrelation of first order is present. If the d value > (4 - d
L
) there is negative autocorrelation of first order. If d
u
<d< (4 - d
u
), there is no autocorrelation. If d
L
<d< d
u
, the test is inconclusive.HYPOTHESESThe study tests the following
hypotheses:H
O
= FDI Equity inflow does not affect the flow of FDI in India.H
1
= FDI Equity inflow affects the flow of FDI in India.
ANALYSIS AND DISCUSSION
The data used for interpretation is based on secondary sources: website of DIPP,
UNCTAD and RBI. Theanalysis is done in two parts:

The first part, analyses whether the FDI equity inflow affects the total FDI inflows
into India for a period of 12 years (2000-2012).

The second part, is an examination of the trend of FDI flows into India, as well as
forecasting the futuretrend till 2016: calculated on the basis of time series analysis.