FDI in Retail Sector in India-Conceptual, Descriptive and Analytical Study

Abstract

Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 500 billion and 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. As of 2013, India's retailing industry was essentially owner manned small shops. In 2010, larger format convenience stores and supermarkets accounted for about 4 percent of the industry, and these were present only in large urban centers. India's retail and logistics industry employs about 40 million Indians (3.3 percent of Indian population). Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m)/ person is lowest in the world Indian retail density of 6 percent is highest in the world. 1.8 million Households in India have an annual income of over 4.5 million (US$74,700.00). A number of merger and acquisitions have begun in Indian retail market. PWC estimates the multi-brand retail market to grow to $220 billion by 2020. A growing and mushrooming retail sector means that its contribution to GDP would grow. It would thus help in expanding the economy, generate employment and result in more tax income. The present study made an attempt to highlights the importance of FDI in retail sector; analyze the structure of retail industry group and its market reach in India, Assess the FDI on various sectors related to the retail sector. Analyze the growth performance of retail industry over a period of time and examine the Indian retail reforms and provide some suggestions to protect and promote the interest of small, unorganized retailers and farmers in the country.