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FDI in Indian Retail Sector

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FDI is defined as investment in a foreign country through the acquisition of a local company or the establishment there of an operation on a new 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
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TABLE OF CONTENTS

Chapter NoTitlePage No

1EXECUTIVE SUMMARY9-10

2OBJECTIVES OF THE STUDY11-12

3RESEARCH METHODOLOGY13-17

3.1Primary data

3.2Secondary data

4LITERATURE REVIEW18-19

5INTRODUCTION OF FDI20-83

5.1Overall view

5.2Inter country /industry studies

5.3Trends and patterns of fdi

5.4Sorces of fdi

5.5Distribution of fdi

6FDI IN INDIAN RETAIL SECTOR84-95

6.1Indian scenario

7INDIAS POLICY ON FDI96-115

7.1evolution

8CASES OF FDI IN INDIAN RETAIL SECTOR116-125

8.1Foreign retail regroup in india

8.2India to ease rules for foreign companies

CONT..

Chapter NoTitlePage No

8.3India suspends plan to let in foreign retail

India opens retail sector to foreign

8.4companies

FDI INDIAN RETAIL BIDS FOR

9BRIGHT FUTURE126-130

9.1Evolution of Indian retail

9.2Policy framework

9.3Impact on retail sector

9.4Road ahead

10ANALYSIS OF QUESTIONNAIRE131-136

11CONCLUSION137-138

12SUGGESTION139-141

13BIBLIOGRAPHY142-143

14ANNEXURE144-146

143

LIST OF ABBREVIATIONS

FDIFOREIGN DIRECT INVESTMENT

FPIFOREIGN PORTFOLIO INVESTMENT

FTZSFREE TRADE ZONES

IPINVESTMENT PROMOTION

MNCSMULTINATIONAL CORPORATIONS

FEMAFOREIGN EXCHANGE MANAGEMENT ACT

RBIRESERVE BANK OF INDIA

FIPBFOREIGN INVESTMENT PROMOTION BOARD

DEPARTMENT OF INDUSTRIAL POLICY AND

DIPPPROMOTION

BITSBILATERAL INVESTMENT TREATIES

SEBISECURITIES AND EXCHANGE BOARD OF INDIA

FIIFOREIGN INSTITUTIONAL INVESTORS

IPRINDUSTRIAL POLICY RESOLUTION

LIST OF CHARTS

1AMOUNT OF FDI INFLOW

2FDI INFLOWS IN THE WORLD

3SHARE OF INDIA IN WORLD FDI

4DISTRIBUTION OF RETAIL SECTORS SHARE

CHAPTER 1

EXECUTIVE SUMMARY

Definition of Retail

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 (i.e. wholesale). A sale to the ultimate consumer.Thus, retailing can be said to be the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. A retailer is involved in the act of selling goods to the individual consumer at a margin of profit.

FDI Policy in India

FDI is defined as investment in a foreign country through the acquisition of a local company or the establishment there of an operation on a new 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,[4] 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.

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 2010 which provide the sector specific guidelines for FDI with regard to the conduct of trading activities.

a) 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.

CHAPTER 2

OBJECTIVE OF THE STUDY

1.TO STUDY THE TRENDS AND PATTERNS OF FLOW OF FDI IN INDIAN RETAIL SECTOR .

2. TO ASSESS THE DETERMINANTS OF FDI INFLOWS IN INDIAN RETAIL SECTOR .

3. TO EVALUATE THE IMPACT OF FDI ON THE INDIAN ECONOMY AND RETAIL SECTOR.

CHAPTER 3

RESEARCH METHODOLOGY

3.1PRIMARY DATA

The primary data is collected through personalized interview and the questionnaire from the respondents who is the common public.

3.2SECONDARY DATA

The research done on the desktop research by visiting various web sites and referring some of the books for understanding various concepts in fdi which is very important for this project. The consideration on some annual fdi inflow in India .As mentioned in bibliography.

CHAPTER 4

LITERATURE REVIEW

1) Foreign Direct Investment in India

by Lata M Chakravarthysummary: Foreign Direct Investment in India

Foreign direct investment is the catalyst to economic growth in developing countries. Countries should attract FDI for those areas in which they have a competitive edge. This book is a lively compilation of articles, dealing with this concept, trends and strategies in this area. Read about FDI in the print media, power sector, banks, retail and real estate in India.

2) Foreign Direct Investment in India 1947 to 2007 : Policies, Trends and Outlook

BookDetailsAuthor: Gakhar, Kamlesh

Contents : Preface / Foreign Direct Investment (FDI): nature and Scope / Motives and determinants of FDI: A Theoretical Survey / FDI in India: Policies and trends since Independence / Determinants and Deterrents of FDI Inflow in India / FDI Inflow in India: Sectoral and Firm Level determinants and Motives / FDI Policy Implications and Future Outlook / Sector-wise FDI Policy and Business Opportunities in India / Concluding Observations /

3) Foreign Direct Investment : Contemporary Issues

Usha Bhati, Deep

Contents: Preface. 1. Foreign Direct Investment: a theoretical and policy framework. 2. Studies on Foreign Direct Investment. 3. Problem and research. 4. Emerging trends in FDI: Indian evidence. 5. Emerging trends in FDI: global evidence. 6. Determinants of Foreign Direct Investment. 7.

An appraisal for Foreign Investment climate in India. Conclusions. Bibliography. Index."This book provides a comprehensive description and in-depth analysis of various contemporary issues in Foreign Direct Investment (FDI) in India. Divided into eight parts, the book discusses the following issues:Prevailing FDI policy framework in India since independence and how it is placed in terms of openness, competitiveness and other important aspects; Emerging dimensions of FDI inflows in India; Emerging scenario of FDI at the global level; Performance of India in comparison to developed ,developing ,Asian and SAARC countries withrespecttoFDIinIndia;

FactorshavingbearingonFDIflows;

Legal, procedural, socio-economic and other important aspects influencing FDI in India; Foreign business investors' perceptions about India as an investment destiny. The book proves to be invaluable to the students of International business. Further it will be beneficial to the multiple group of people like the economic policy-makers related to institutions economy and regulatory bodies and the corporates willing to take advantage of foreign financial inflows." (jacket)

CHAPTER 5

INTRODUCTION OF FDI

INTRODUCTION

One of the most striking developments during the last two decades is the spectacular growth of FDI in the global economic landscape. This unprecedented growth of global FDI in 1990 around the world make FDI an important and vital component of development strategy in both developed and developing nations and policies are designed in order to stimulate inward flows. Infact, FDI provides a win win situation to the host and the home countries. Both countries are directly interested in inviting FDI, because they benefit a lot from such type of investment. The home countries want to take the advantage of the vast markets opened by industrial growth. On the other hand the host countries want to acquire technological and managerial skills and supplement domestic savings and foreign exchange. Moreover, the paucity of all types of resources viz.financial, capital, entrepreneurship, technological know- how, skills and practices, access to markets- abroad- in their economic development, developing nations accepted FDI as a sole visible panacea for all their scarcities. Further, the integration of global financial markets paves ways to this explosive growth of FDI around the globe.

5.1 AN OVERALL VIEW

The historical background of FDI in India can be traced back with the establishment of East India Company of Britain. British capital came to India during the colonial era of Britain in India. However, researchers could not portray the complete history of FDI pouring in India due to lack of abundant and authentic data. Before independence major amount of FDI came from the British companies. British companies setup their units in mining sector and in those sectors that suits their own economic and business interest. After Second World W

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