THE ROLE OF FOREIGN DIRECT INVESTMENT IN

INDIAN RETAIL SECTOR

Research Project Submitted in Partial Fulfillment of the Requirements for the Degree of

BCOM Honors

by

AASTHA JAIN

to the

DEPARTMENT OF COMMERCE

BHOPAL SCHOOL OF SOCIAL SCIENCES

April, 2021

Submitted by Guided by

AASTHA JAIN Dr Smitha Pillai

B.com Honors 3rd year A Associate Professor

Department Of Commerce

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 CERTIFICATE

It is certified that the work contained in the project report titled THE ROLE OF FOREIGN
DIRECT INVESTMENT IN INDIAN RETAIL SECTOR by Aastha Jain, has been carried
out under my supervision and that this work has not been submitted elsewhere for a degree.

Signature of Supervisor: …………….

Name: Dr. Smitha Pillai, Associate Professor

Department: Commerce

Bhopal School of Social Sciences

April, 2021

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 DECLARATION

I hereby declare that this project report entitled THE ROLE OF FOREIGN DIRECT
INVESTMENT IN INDIAN RETAIL SECTOR was carried out by me for the degree of
BCOM Honors under the guidance and supervision of Dr. Smitha Pillai, Associate Professor of
Department of Commerce, BSSS College. The interpretations put forth are based on my reading
and understanding of the original texts and they are not published anywhere in any form. The
other books, articles and websites, which I have made use of are acknowledged at the respective
place in the text. This research report is not submitted for any other degree or diploma in any
other University.

Place: Bhopal

Name of the Student: Aastha Jain

Class & Section: B.com 3rd Honors year

Date: 30th April, 2021

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 ACKNOWLEDGEMENT

I would like to thank our Principal Dr. Fr. John P.J. and Vice Principal Dr. Sr. Sonia Kurien for
their immense support and blessings. I thank our HOD Dr. Amit Kumar Nag for his support. I
would like to express my special thanks of gratitude to my research guide Dr. Smitha Pillai,
Associate Professor of Department of Commerce for her valuable suggestions and guidance and
for giving me the golden opportunity to do this wonderful research project on the topic: THE
ROLE OF FOREIGN DIRECT INVESTMENT IN INDIAN RETAIL SECTOR Without
her help it would have been difficult for me to have reached this state of completion of my
project report. Also, I would like to thank my parents and friends who helped me a lot in the
preparation of this project.

I wish to acknowledge the help of all those who have provided me information, guidance and
other help during my research period.

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 TABLE OF CONTENTS

Chapter I: Introduction of the Topic

1.1 Rationale of the Study

1.2 Introduction to the industry

1.3 Introduction to the company

1.4 Justification of the topic

Chapter 2: Review of Literature

2.1 International Reviews

2.2 National Reviews

Chapter 3 : Research Methodology

3.1 Objectives of the Study

3.2 Research Hypothesis

3.3 Scope of the Study

3.4 Data Collection

3.5 Limitation of the study

Chapter 4 : Data representation & Analysis

4.1 Data representation & Interpretation

4.2 Hypothesis Testing

Chapter 5. Results & Discussion

5.1 Major Findings

5.2 Discussions & Suggestions
5.3 Conclusion

REFERENCES

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Chapter -1 Introduction
1.1 Rationale of the study
1.2 Introduction to the industry
1.3Introduction to the company
1.4Justification of the topic

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 CHAPTER – 1

INTRODUCTION TO THE TOPIC

1.1. Rationale of the study

Foreign Direct Investment (FDI) in evolving nations in the 1990's was the leading source of
external financing and has become a national developmental strategy for almost all countries
in the world as a vehicle for technology transfer and an important source of non debtinflows
for attaining competitive efficiency in creating a meaningful network of global
interconnections. FDI is an constructive way to lead developing countries in their march
towards economic development. It opens up new opportunities to home countries toenhance
their earnings by employing their inert resources. India also adopted the same strategy by
creating conducive environment for foreign capital. To ensure this, the Government
deliberately created a trade deficit within limit on current account. The Government thus
aims to enlarge the scope of FDI in India in a selective and smooth manner. India is also a
signatory in World Trade Organization and is thus bound to open market for services which
includes trade also. Liberalization, in its very philosophy, is good for consumers and
provides them the status of 'kings'. The opportunities of competition (national vs. foreign)
always matter for efficiencies .Choice, better quality and services as well as downward
pressure on prices outweigh other possible negative impacts. During 1991, whenever and
wherever competition was allowed to seep-in, this elementary proposition of economics got
its empirical proof. Retail sector today straddles as assorted segments. Food is its important
segment. Farmers should get higher prices; without consumers paying higher prices. There is
thus a need to reform the retail trade in India. There are gainers and there are losers from the
reform process. But one should try to look at that side of the picture where gains are
accruing to the maximum segments of the economy. One should also have faith in the
resilience of the system. System gradually modifies itself according to the changed
circumstances to ensure its minimum losses. The present paper evidence the ongoing debate
regarding opening of retail trade to FDI. It provides a strong analytical and rational
framework to judge the arguments regarding the liberalization process.Now India is in the
middle of a retail boom. The sector showed significant changes in the past decade from

7
slight-unorganized family-owned retail formats to organized retailing. Indian business
houses and manufacturers are setting up retail formats while real estate companies and
venture capitalist are investing in retail infrastructure. Many international brands have
entered the market. With the growth in organized retailing, unorganized retailers are fast
changing their business models. However, retailing is one of the few sectors where foreign
direct investment (FDI) is not allowed at present. There is lots of work to be done in the field
of logistics & supply chain management. It is not possible for Indian government alone to
developed world class infrastructure and other allied facilities because of huge investment
requirement. FDI in India has in a lot of ways enabled India to achieve a certain degree of
financial stability, growth and development. In order to create new & more jobs, FDI is the
success mantra now. The further step is again taken by Dr. Manmohan Singh in December,
2012 allowing the FDI in Retail sector 100% in single brand and 51% in multi brand
business. This step will encourage the foreign big and organized retailers like Cash and
Carry, Wal-Marts in India. This step will be a success stone in the economy of the India.
FDI no doubt is creating innovation in retail sector but simultaneously it may pull down the
local and domestic retailers of India which is surely a concern to worry about for Indian
government. In this research we have just tried to bring down maximum thoughts in lieu of
FDI and form a constructive view over it. There is lots of work to be done in the field of
logistics & supply chain management. It is not possible for Indian government alone to
developed world class infrastructure and other allied facilities because of huge investment
requirement. FDI in India has in a lot of ways enabled India to achieve a certain degree of
financial stability, growth and development. In order to create new & more jobs, FDI is the
success mantra now. The further step is again taken by Dr. Manmohan Singh in December,
2012 allowing the FDI in Retail sector 100% in single brand and 51% in multi brand
business. This step will encourage the foreign big and organized retailers like Cash and
Carry, Wal-Marts in India. This step will be a success stone in the economy of the India.
FDI no doubt is creating innovation in retail sector but simultaneously it may pull down the
local and domestic retailers of India which is surely a concern to worry about for Indian
government. In this research we have just tried to bring down maximum thoughts in lieu of
FDI and form a constructive view over it.

8
1.1 Introduction to the industry

As per recent regulatory regime retail trading is permitted in India. Simply put, for a company to
be able to get foreign products sold by it to the common public should be of single as well as
multi brand. India being a signatory to World Trade Organization general agreement on trade in
services which cover wholesale and retailing services had to wide up the trade sector to foreign
investment. There were initial reservation towards opening up of retail sector coming from fear
of job losses, acquisition from international market, competition and loss of entrepreneurial
opportunities however the government in a series of moves have opened up the retail sector
slowly to foreign direct investment (“FDI”) in 1997, FDI in cash and carry with 100% ownership
was allowed under the government approval route. It was brought under automatic route in
2006.Allowing FDI in multi brand retail can bring about supply chain improvement, investment
in technology, manpower and skill development, tourism development, greater sourcing from
India, up gradation in agriculture efficient, small and medium scale industry “with around 13%
contribution to GDP and 7% employment of national workforce, retailing no doubt is a strong
filler of Indian economy. What it requires is more cooperate backed retail operation that has
started to emerge over past of couples of year. “In 2004, the high court of Delhi defined the term
retail as a sale for final consumption in contrast to a sale for further sale or processing. The all
credit goes to Dr. Manmohan Singh, Prime minister, who has started the LPG program in 1991.
Indian market is one of the largest markets with high purchasing power. India in 1997 allowed
foreign direct investment (FDI) in cash and carry wholesale. Then, it required government
approval .India’s retailing industry is essentially owner manned small shops. In 2010, larger
format convenience stores and supermarkets accounted for about 4% of the industry, and these
were present only in large urban canters. India’s retail and logistics industry employs about 40
million Indians (3.3% of Indian population). Until 2011, Indian central government denied
foreign direct investment in multiband retail, forbidding foreign groups from any ownership in
supermarkets, convenience stores or any retail outlets

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1.3 Introduction to the Company

1.1DIVISION OF RETAIL INDUSTRY – ORGANIZED AND UNORGANIZED

RETAILING

The retail industry is mainly divided into: -

1) Organized and 2) Unorganized Retailing

Organised retailing refers to trading activities undertaken by licensed retailers, that is, those who
are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets
and retail chains, and also the privately owned large retail businesses.

Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing,
for example, the local kirana shops, owner manned general stores, paan/beedi shops,
convenience stores, hand cart and pavement vendors, etc.

The Indian retail sector is highly fragmented with 97 per cent of its business being run by the
unorganized retailers. The organized retail however is at a very nascent stage. The sector is the
largest source of employment after agriculture, and has deeppenetration into rural India
generating more than 10 per cent of India’s GDP.

ENTRY OPTIONS FOR FOREIGN PLAYERS PRIOR TO FDI POLICY

Although prior to Jan 24, 2006, FDI was not authorized in retailing, most general players had
been operating in the country. Some of entrance routes used by them have been discussed in sum
as below:-

• FRANCHISE AGREEMENTS
It is an easiest track to come in the Indian market. In franchising and commission agents’
services, FDI (unless otherwise prohibited) is allowed with the approval of the Reserve Bank of

10
India (RBI) under the Foreign Exchange Management Act. This is a most usual mode for
entrance of quick food bondage opposite a world. Apart from quick food bondage identical to
Pizza Hut, players such as Lacoste, McDonald’s Burger, Mango, Nike as good as Marks as good
as Spencer, have entered Indian marketplace by this route.

• CASH AND CARRY WHOLESALE TRADING

100% FDI is allowed in wholesale trading which involves building of a large distribution
infrastructure to assist local manufacturers. The wholesaler deals only with smaller retailers and
not Consumers. Metro AG of Germany was the first significant global player to enter India
through this route.

• STRATEGIC LICENSING AGREEMENTS

Some foreign brands give exclusive licences and distribution rights to Indian companies.
Through these rights, Indian companies can either sell it through their own stores, or enter into
shop-in-shop arrangements or distribute the brands to franchisees. Mango, the Spanish apparel
brand has entered India through this route with an agreement with Piramyd, Mumbai, SPAR
entered into a similar agreement with RadhakrishnaFoodlands Pvt. Ltd

• MANUFACTURING AND WHOLLY OWNED SUBSIDIARIES:

The foreign brands such as NIKE, REEBOK, ADIDAS, etc. That have wholly-owned
subsidiaries in manufacturing are treated as Indian companies and are, therefore allowed to do
retail. These companies have been authorised to sell products to Indian consumers by
franchising, internal distributors, existent Indian retailers, own outlets, etc. For instance, Nike
entered through an exclusive licensing agreement with, Sierra enterprises but now has a wholly
owned subsidiary, Nike India Private Limited

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Prospected Changes in FDI Policy for Retail Sector in India
The government, led by Dr Manmohan Singh, has announcedfollowing possible changes in the
Indian Sales Sector.

1. India will allow FDI up to 51% in multi-product sector.

2. Individual product retailers, such as Apple and Ikea, may own 100% owners in their Indian
stores, from the previous 51% repository

3. Merchants (single and plural) will have to help them at least 30 of their goods from small to
medium Indian suppliers.

4. All retail stores can open their services to the public being more than one million. About 7935
cities and cities in India, 55 are sufficient for those standards.

5. Merchants of all kinds must bring in a minimum of US $ 100 million. More than half of this
should be invested properly the infrastructure of the procurement management system reduce
post-harvest losses and provide subsidized prices for farmers.

6. The opening of the marketing competition (policy) will be within the the limits of state laws
and regulations.

1.4 Justification of the topic

FDI in the retail industry puts a lot of pressure on its costs .Opening the retail industry to FDI
will bring four benefits in terms of pre employment ,planned retail stores, the availability of
high quality products at a better and cheaper price .This will lead to increased market growth and
continued growth

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Chapter: 2 Review of
literature

2.1 International reviews

2.2 National reviews

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 CHAPTER 2
Review of literature

2.1 International Review

The flow of money in the form of FDI is widely believed in ithas been an important source of
growth in recent years. Since the 1970's,imperfections in the commodity and commodity
markets, the presence of scaleeconomic and government restrictions on exit, trade and entrythey
have been seen as building market structures thereForeign exchange in the form of FDI
contributes to growth.((Kindleberger & Hymer)

South-East Asian experience in terms of sales is current some interest and concern in India
where rapid changes of the field is near. The retail industry in the area was heavily controlled
wet markets and small, family-owned shops operating subject to the limits of the municipal
standard in respect of their location until the end of the colonial period ((Mutebi)

sector it grew and developed gradually, especially with local finances as well sets the law at a
high or low level. This is true for India again. Traditional food and retail in India (i.e.70% of
resell accounts) can best be described as managed by small, private stores and retailers and
especially society ((Mutebi).

The 1990's 'sales' item was led by firms such as Wal-Mart, Costco, Tesco, Giant, Makro,
Carrefour, Aeon, Ahold, Aldi, Metro and others have been the result of materialism and culture
development in developed capitalist countries. Cheap access the capital, the largest economies of
commerce, continues the integration of purchasing power over suppliers, works very well
marketing, transport and refilling forecasting strategies systems (incorporating state of the art in
formulation, processing

and procurement supply plans), urban expansion demographics and widespread procurement in
all categories were the same of this development (Gereffi 1994; Arnold and Fischer 1994).

14
This is a field where almost everyone commercial trade happens to be referred to as an informal
sector. It employs 40 million people and contributes 10% of the total household income product
(Kearney, 2007).

Best-selling stores like supermarkets first emerged during the economic boom of the 1980's as
well In the 1990s, they were acquired by the South-East Asian regions by way of assembly or
local operations, sometimes with the participation of external vendors through a franchise and
technology collaboration that used salmon regulatory policies. The result of the East Asian
financial crisis in 1997 allowed a select group of multinational trading firms to locate the area
emerging markets of Indonesia, Malaysia and Thailand (also elsewhere in the region) with a
combination of mergers and acquisitions, joint ventures and collaborations like many local
company vendors have debt problems and local customers are returning to the traditional
markets (De Bandt and Davis, 2000).

In time, India gained almost one a sales area for 100 people, probably the highest selling price
the earth. In the metropolitan area, modern and formal retail is the best and had a large part of the
partnership (promoted by public policy in in the 1960s to fight profits by private traders).

The incentives announced by the exchequer are also very important in building and analyzing the
company international geographical strategies, and institutional, historical and cultural objects
must be fully incorporated analyze and frame policies, because these factors should not be
overlooked as they affect the investor's environment related decisions (Martin and Velazquez,
1997).

There are many courses that have identified technology, human skills and infrastructure as major
decisions of foreign investment. These factors are very important in defining patterns and
processes that occur in the environment the formation of FDI on a person's global income, in
relation to output and FDI income (Hummels and Stern,1994).

Other studies have also analyzed variables such as market size and variance in material costs and
were found to be important in determining FDI location as these are very important in
determining the market economy and cannot be reached and exploited until the time market

15
reaches a certain size. (Markusen and Maskus, 1999) The most important steps applied to most
studies are GDP, GDP per capita and GDP growth.

India's Foreign Investment is governed by FDI policy promulgated by the Government of India
and provision of Foreign Exchange Management Act (FEMA) 1999. The Reserve Bank of India
(‘RBI’) in this had issued a notice. (FEMA, 2000) containing Foreign Exchange Management
(Transfer or removal of security by a person living outside India) Regulations, 2000

16
 2.2 National Review

There are many lessons for Indian consumers, which reflect the shopping ethics of Indian
consumers. Variety parameters included in their subjects such as income level, education, and
international exposure (Ramachander1988)

In terms of Indian consumer shopping ethics in all the various retail outlets, traditional shops are
very popular because we have a lot of a chunk of middle-class buyers which are excellent deals
when selling modern stores because they connect shopping fun and now-a-days it is a pleasure
for customers to go shopping and have fun together (Sinha 2003) There are many studies done
on taking multiple parameters that affect selection

The best-selling stores are product quality, favor, low prices, better shopping experience, product
availability, playground, parking area, and on the other hand getting closer to where you live,
easy access to credit, is easy time, possible transactions, etc. a few payments for traditional stores
as stated in a study by (Joseph and Soundararajan 2009)

The study revealed that these policy changes were real aimed at drawing the FDI and decided to
grow in Pakistan and also showed a positive impact of change in Pakistan. Many of the variables
affecting FDI have been tested, a set of descriptive variables tested by several similar studies
(Chakraborty, 2001) were also found to be important.

FDI as defined in the Economic Dictionary (Graham Bannock et.al) is foreign investment on the
acquisition of a local company or the establishment of a new location (Greenfield) place. To put
it simply, FDI refers to foreign exchange earnings or development the productive power of the
economy. (Hemem Batra, 2010)

India's retail sector is heavily divided by 97 percent of its businesses owned by the informal
sector vendors. Formal sales but at a very low level. The sector is the largest source for post-
agricultural employment, and has a deep in rural India producing more than 10 percent eGD of
India. (Indian Commercial Sector, Dec 21, 2010)

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The Reserve Bank of India (‗RBI ‘) has since released notice, containing Foreign Exchange
Management (Transfer or Exit safety by a person living outside India) Regulations, 2000
Proprietary profit occurs when high technology and management knowledge allow a company to
compete in a foreign market without transaction costs. Site-specific benefits mean certain
benefits, which the firm has because it derives its production activities locally

Real Estate Problem: Most of the scheduled store players have to pay an increased amount of
their earnings in respect of the lease of the property. Level of stamp operations by transfer of
Property is also very high and varies from country to country which in turn leads to growth
Housing prices (Makol and Rajput, 2012).

The problem with the sale of goods: Indian traders face the problem of low sales (Jain and Goda,
2012).As Indian merchants are still dominated by the unorganized in the market there are
problems such as bad storage conditions, lack of cold storage for sure types of cold storage,
inability to invest in storage infrastructure, etc

Unemployment: There is a real shortage of well-trained and well-trained staff and an important
problem in Indian trade. Therefore, retailers have a hard time finding professionals staff (Handa
and Grover, 2012) The term ‘long-term’ is used in the final definition to distinguish FDI from a
fund’s investment, which ends up being naturally short-lived and incorporates high security
profits.

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Chapter: 3 Research
Methodology
3.1 Objectives of the study
3.2 Research Hypothesis
3.3Scope of the study

3.4 Research design and methodology

3.5 Limitation of the study

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 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Objectives of the study

1). To know about various sector of the sales force - Key challenges and success factors.

2) To know the FDI impact on Indian traders and consumers

3) To gain an understanding of Foreign Direct Investment, its origins in India and its types.

4) To study the trend analysis of the 4 selected sectors.

3.2 Research Hypothesis

A hypothesis is a hypothesis that indicates a translated relationship between different factors.
Depending on the effectiveness of the retrospective strategies, these ideas may or may not be
accepted. The following hypothesis was developed for evaluation according to the research
objectives

H01: There is no significant growth amongstthe different sectors in terms of FDI inflows.

H02: There is significant growth amongst the different sectors in terms of FDI Inflows

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3.3 Scope of the Study
The purpose of this paper is to study the impact of FDI on the retail industry over the past
decade. Our learning scope is limited to 4 categories. The basis for selecting these 4 categories is
the position among the top categories in terms of foreign direct income. Data has been collected
over the past 10 years only as the retail industry has undergone significant changes since then.
India's retail industry was largely dominated by small informal sectors prior to global trade and
the introduction of FDI in India

3.4 Data collection

Type of research used here analysis research, as it fits well with the purpose of the research. An
analytical study is one in which the researcher must apply facts or existing data, and analyze it to
make a critical assessment of the issue. In this Study facts and information as obtained from
various secondary sources have been used to perform the analysis of the retail sector and FDI
that exist and those that have driven these situations. That analyzes details & it releases
important data necessary to complete the study and aligns it with the current FDI status in
industries that sell Indians

3.5 Methodology

This study contains secondary data. Secondary data is collected from published and unpublished
reports, books, application, Textbooks, Journals, Magazines, and FDI Statistics .The research
methodology used for experimental research by reviewing relevant texts in the subject. All
relevant information and information needed for the study was taken from a second source
Means the data that are already available or exists i.e., they refer to the data which have already
been collected & analyzed by someone else

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Research philosophy

There are different opinions about how information is made and judged as acceptable. According
to Saunders et al. (2003), interpretation, authenticity and positivism is a research process that
controls documentation. The translators say the world of business and corporate governance it is
complicated and because of this it is complicated according to them it is wrong to think through
business world by certain "rules". Realists believe in the existence of an independent reality of
human reasoning and beliefs. According to them, there is a great social and procedural force in
the study of a business that affects people without their knowledge of the existence of such
influences on their interpretation and behavior. Positivists work with the visible reality of society
where research results are available generalization. Our research philosophy reflects the ultimate
principles of these philosophies. A good method will be used but no standard will exist done.

3.6 Limitation of study

The limitation of the study is that it includes only one company which can restrict the results of
the study to a boundary. The notion that FDI is the only cause of India's economic development
in this freedom time is opposed. No appropriate methods were available to differentiate the FDI
effect to support performance of this thinking. Research does not affect specific industries but
rather is common place which contains transactions from all industries .Another limitation of the
study is that this study was based entirely on secondary data .The study of selected cases in this
concept may not involve the entire marketing market India. This study does not focus on online
resale. another limitation is that the data is not based on the main source

22
 Chapter-4 Data
Representation & Analysis
4.1 Data representation & interpretation

4.2 Hypothesis testing

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 Chapter 4
DATA REPRESENTATION AND ANALYSIS

4.1 Data Representation and Interpretation

Stylistic analysis of the total inflow of foreign investment into the country has been taught. The
trend concludes with an increase in foreign direct investment. The increase in direct foreign
direct investment since 2006 but increased since 2012. In 2012, Government increased its
foreign exchange earnings from 51%. The sale of bulk products was restricted to direct foreign
direct investment in India prior to 2012.

FDI inflow for housing and real estate with the highest growth rates is 152.44% for the 2016-
2017 year. There are fluctuations in the annual growth rate and between 2012-13 and 2013-14
there were -74.95%, and -71.67% growth rates were poor due to the FDI Retail industry in
certain years. FDI enters Mandla with the highest growth rate at 393.88% in 2017-2018. There
are fluctuations in the annual growth rate and between 2012-13 to 2016-17 it is 5.60%

38.03%, -85.53% and -56.71% negative growth rate due to FDI Retail industry in recent years.
The inflow of FDI Petroleum & Natural Natural with the highest growth rate is 3360.55% for the
year 2014-2015. There is a decline in annual growth rates for the year 2012-13 to 2016-17 and
there are -81.67%, -69.64%, -60.07%, and -53.86% the worst growth rate due to theFDI Retail
industry in these years.

FDI revenue in the Automotive Sector at a high growth rate is 152.44% for the 2016-2017 year.
There are fluctuations in the annual growth rate and between 2012-13 and 2013-14 there were
74.95%, and 71.67% growth rates negatively due to the FDI Retail industry in certain years.

24
Scenario of FDI in India

The wave of freedom and globalization is creating opportunities around the world and has
opened up many new markets for international business. Recent developments in the global
market show a rapidly growing business globally. The beginning of the 21st century saw the
emergence of great international financial growth, trade and financial transactions and the
opening up of international markets of which India is also a part.

It is widely believed that FDI is a source of economic growth, modernization, job creation, aids
in human capital, contributes to the integration of international trade and helps create a more
competitive business environment. But it is not the only thing that can help sustainable growth.
Emerging countries; emerging economies and transition countries, release their FDI policy and
follow best policies to attract investment. In 1991, India also liberated its highly regulated FDI
regime. Indeed, the 1991 reforms marked a major breakthrough in a previously closed economy
when the participation of foreign companies and their performance were difficult. The economic
revolution of 1991 would change all that. In line with the actual abolition of the industrial
licensing system, foreign trade control and foreign investment have been greatly relaxed.

India is still releasing its FDI policy, so that they can attract more foreign investors. India has
increased its FDI inflation gradually after more agreement and government commitment to invite
continued foreign investment. The trend line below shows the number of FDI inflow trends in
India from 1989 to 2014.

25
Annual FDI inflow trend of India

It is clear from the above figure that FDI's entry into India before 1991 was less than $ 1 billion.
The trend line slipped steadily to the top after 1992, more than double that of $ 2billion in 1995.
But back in 2005, the reported figures show a significant increase in revenue: from $ 20 billion
in 2006 to about $ 43 billion in 2008. The FDI entry is found as a quiet silence; decreased to
almost 28 billion in 2010 and rose to 35 million in 2011. This volatility after 2007 is due to the
global financial crisis which has also affected the Indian economy.

In general, FDI inflows have been on the rise since 1991. It is clear that there is a steady increase
in foreign investment in India after the country has reviewed its foreign investment policies .

26
Top Investing Countries in India

The pie chart above shows the percentage of FDI imports from various countries collected from
2006 to 2014. In terms of investing countries, Mauritius continues to respond to the highest
number of FDI inflows. Due to lower corporate taxes and an agreement with India to avoid
double taxation, Mauritius attracts investors who set up shell companies called “overseas trade
associations” in India, as a means of reducing their tax debts in India (Saadiam et al., 2014).
About 10 to 14 percent of FDI comes from Mauritius and other tax-free states estimated to be
around1 by Indian companies or foreign investors based in India (Rao and Dhar, 2011).
Singapore is in second place in terms of FDI entry followed by the U.S.A, Japan, the Netherlands
and the UK. International co-operation and FDI inflows acquired after 1991 show that
investment from Mauritius has increased significantly.

27
Sector-wise FDI Inflow in India
Stylistic analysis of the total inflow of foreign investment into the country has been taught. Habit
results in an increase in direct foreign direct investment. External direct rise funding was based
on 2006 but has increased since 2012. Reason for promoting change in government policy, India
emerges as a global market and development technology. In 2012, the Government increase
foreign direct imports from 51% to 100% on the sale of a single product and more often product
sales increase to 51%. The sale of most products was restricted to direct external entry
investment in India before 2012.

Service sector

From the chart above, FDI inflows have begun to grow rapidly in the service sector since 2012
but without in the year 2013. Once again, in 2014, FDI inflation increased as the government
took steps to improve ease of doing business and attracting investment.

28
Pharmaceutical sector

From the chart above, FDI's entry into the sector has seen significant growth over the year 2011
but since then there has been steady growth over the years. The reasons for such steady growth
could be price control and strict labor laws, a weak state of ownership The government is
expected to raise FDI's entry into the sector is expected to attract more foreign investment
through continued policy freedoms.

Telecommunication Sector

29
The Telecommunications sector has seen a sudden increase in FDI inflows over the past two
years. With the rapid growth of technology and the introduction of services such as 3G, 4G & 5G
and massive increase in the number of users of telecommunications services due to the entry of
Reliance JIO, the entry of FDI in the telecommunications sector it aims to grow rapidly in the
coming years.

Automotive Sector

The automotive industry has seen tremendous growth in 2014 and has been growing steadily
since then there. Since car production in Japan and South Korea has become more expensive in
the last few years, many car companies have chosen to change their bases in countries like India
and China with the goal of getting cheap services

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4.2 Hypothesis testing
Hypothesis is an equal statement about one or more collections of facts or an object.hypothesis is
defined as a concept that attempts to explain something but has not been tested or proved to be
correct. In other words, they are more or less speculation before they are called facts. Statistical
hypotheses are the null hypothesis (H0) and a separate hypothesis (H1). The concept of this
study will be evaluated using retrospect.

H01: There is no significant growth between the various sectors in terms of FDI inflows.

H02: There is significant growth between the various sectors in terms of FDI inflows.

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Chapter - 5 Results and
Discussion
5.1 Major findings
5.2 Discussions & suggestions
5.3 Conclusion

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 Chapter 5
Result and Discussion

5.1 Major finding

DISCOVERING AND SUGGESTING

Foreign direct investment has a major impact on sector growth and development. FDI inflows
into the retail sector have increased during the 10 years ago. With this paper it is considered non-
existent significant growth among selected sectors. The analysis led to the determination of the
relationship among the five sectors of India's retail sector with 10-year period, changes in FDI
distribution between sectors are common. Even India's share in Global FDI is bigger than ever.
the FDI entry step has been slower than China, Singapore, Brazil as well Russia. Due to lasting
economic independence since 1991, India saw a period of more than 7% of economic growth. In
fact, in India the economy is growing at a remarkable rate of over 9% for three consecutive years
since 2007 making the country do 9 skills who performs within the global economy.

India is currently the 4th largest and fastest growing economy 4 the earth. According to industry
results, it is the 11th leading economy. In addition, it has the third largest pool of science and
technology power. Since 1991, there has been a large flow of FDI in India. It doesn't matter of
the ruling party, its overall performance is repeated in the same way years.

India's biggest decline in revenue gains from 4.3% in 2002-03 to 2.7% in 2007 and 1.15% in
2009-11. FDI plays a very important role in promoting economic growth as well land
development in addition, FDI as part of the strategy Investment is needed by India to achieve its

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second goals a generation of economic reforms .Due to continued economic independence since
1991, India has seen 10 years of 7 percent and economic growth. In fact, the Indian economy has
already done so has been growing at more than 9 percent for three consecutive years since 2007
which makes the country more efficient in the global economy. Although India's share in
international FDI has grown significantly, but FDI entry rates have been slower than in the USA,
JAPAN, NETHERLAND and the UK

5.2 Suggestions

The provincial government must create awareness among people by emphasizing the benefits of
FDI to their resistance can be prevented. The provincial government must identify certain sectors
there Big investment is needed as road construction, survival bridges, airports, etc. where in FDI
it can help as well request FDI in these specific fields. There should be a clear policy regarding
FDI and it should be working in the spirit of truth.

About today’s sales offer that means organized employment of thousands of people, still has to
fund employment for thousands of people, still has to support the self-employment of Kirana
shops by making them more efficient and effective. competition.

There is a strong case for establishing a national youth federation merchants and Kirana, with
some assistance from the government, a cooperative businesses can profitably ensure that small
retailers enjoy it the benefits of today's big retailers as a combined purchasing power, access to
technology to provide better technology, processes and no small business owners who work well
and help achieve the goals of employment, independence and sustainability that FDI cannot
promote Government. And banks need to simplify the availability of patient funding needed to
achieve a larger domestic economy vendors need.

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5.3 Conclusion

India's Commerce Sector has grown exponentially and has been restricted by IT in recent years.
very much. Changes in government policies, the introduction and adoption of technology, the
availability of staff and huge investments have contributed to high performance in the Indian
retail industry which has also increased FDI inflows into the country. This has led to the
fragmentation, expansion and silence of various businesses in the retail industry. Amendments to
2012, allowing 51% FDI in bulk sales and the latest policy allowing 100% FDI in the sale of a
single product in a straight line led to lower prices and better inflation, job creation, investment
generated and empowerment Project enables us understanding the role of FDI in the
development of the retail sector over the years. Therefore according to statistics and analysis it is
determined that FDI is a major stimulus in the Indian economy.

In conclusion, FDI in the retail sector will definitely be able to improve youth employment in
India. For those who are afraid of the effects of FDI on sales in India, the examples of UK and
JAPAN should provide comfort. The influx of foreign players from UK and JAPAN has given
great impetus to trade and exports to both countries have been shot in the arm. Despite growing
pressure from left-wing groups, the current Indian government has decided to allow FDI in
specialized single-store stores, which means that the world could invest up to 51% in joint
ventures to market its premier products.

Major foreign traders were initially banned from making money in India. But now 51% FDI is
approved in India only for single-brand retail stores. Many product stores are still beyond their
reach. And they can only enter the market through franchisees,

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36
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