Impact of FDI Reforms and IT Implications on Indian Retail Sector Dr. Gunjan Agrawal (Associate Professor) Department of Commerce Shri Varshney College, Aligarh Parveen Kumar (Research Scholar) S.V College, Aligarh Dr. Bhimrao Ambedkar University, Agra Dr . Bhimrao ambedkar University, Agra for the fulfilment of the degree of doctor of philosOphy department of Accounts & law S.V College, Aligarh 2024
INTRODUCTION The retail sector in India has undergone significant transformation and growth, primarily due to economic liberalization, technological advancements , and evolving consumer preferences . Since the early 2000s, there has been a notable expansion of organized retail formats , including hypermarkets, supermarkets, and specialty stores. This growth is driven by factors such as the rising middle class, increased urbanization, and the growing acceptance of modern retail by consumers. Foreign direct investment (FDI) acts as a powerful engine for economic growth in nations. FDI fuels economic globalization by enabling businesses to venture beyond their home countries and into international markets. Information Technology (IT) has been crucial in defining the modern retail era. Retailers are progressively embracing cutting-edge technologies such as Artificial Intelligence (AI), Virtual Reality (VR) , and the Internet of Things ( IoT ) to elevate customer experiences.
An investment made by a company or entity based in one country into a company or entity based in another country. Government Route Automatic Route Key Terms FDI
Retail O rganised Retail U norganised Retail Retail is business model that involves selling products directly to customers { Kirana Shops, vegetable and fruit shops etc.} {Supermarket, Departmental Store etc.}
Computer Technology + Communication Technology Information Technology
Evolution of Retail in India Traditional Phase (Ancient periods to Pre-Colonial Era) Prevalence of weekly markets Village fairs B arter system (exchange of goods) Post-Independence Era (1947 - Late 20th Century)- predominance of unorganized retail Small, family-owned stores S treet vendors dominated Modern Retail Era (Early 21st Century Onwards) Expansion of organized retail formats e-commerce
Regulatory Body of FDI
Phases of FDI Pre-Liberalization Era High barriers to foreign investment Stringent regulations and protective policies Liberalization and Early Reforms (1991-2000) Economic reforms introduced liberalization of the economy Reduction in import tariffs simplification of FDI approval process Gradual opening up of various sectors for FDI Early 21st Century (2001-2010) Further liberalization of FDI policies Automatic approval routes for many sectors Increased foreign investment limits in telecommunications, IT, and pharmaceuticals. Post-Global Financial Crisis (2011-2020) India emerged as one of the top destinations for FDI globally Significant inflows services, retail, construction, and technology sectors.
FDI Cap and Entry Routes for Investment SECTOR AUTOMATIC GOVERNMENT Cash & Carry Wholesale Trading (including sourcing from MSEs) 100% - Duty Free Shops 100% - E-Commerce Activities 100% - Food Product Retail Trading - 100% Multi-Brand Retail Trading - 51% Single Brand Retail Trading 100% -
NEED OF THE STUDY Analysis of FDI Factors in Retail Examination of FDI Reforms Study of Major Sub-Sectors Relating to FDI Understanding Emerging Challenges in FDI & retail Providing Suggestions for Small & Unorganized Retailers
OBJECTIVE OF THE RESEARCH To analysis the factors of FDI in retail To study the FDI reforms pertaining to retail sector of India To study the major sub-sectors in retail relating to FDI To understand the emerging challenges before the Indian retail sector in view of recent policy reforms by the Government of India. To provide some suggestions to protect and promote the interest of small & unorganized retailers in the country
HYPOTHESIS OF THE STUDY H 01 : There is no significant relationship between FDI reforms and IT implications in retail sector. H 02 : Recent FDI reforms in the retail sector have no relationship to economic development
RESEARCH METHODOLOGY Systematic scientific approach For this study, different respondents had interviewed in Delhi (NCR) and the National Capital Region (Ghaziabad, Sahibabad, Noida , and Greater Noida ). Information collected through personal visits and questionnaires was sent through E-mail Structured questionnaire were circulated to approximately 200 respondents in the National Capital Region Delhi (NCR) Selection of Respondent Respondents were selected from organized and unorganised retailers and regular visitors of retail shops.
Primary Source For this study, the information collected by administering the questionnaire. Secondary Source The secondary data were collected from published materials such as Books , Journal, Newspaper, Magazine and FDI regulating authority websites DIPP, RBI etc.
THESIS COMPOSITION CHAPTER 1 Background of Retail, FDI and IT History and Phases of FDI Post Independence and Modern Era in Retail Objective of the study Hypothesis of the study Research Methodology Need of the study
CHAPTER 2 Literature Review For the proper understanding of the study, literature Review has been further classified in five different areas to review and conceptualize it more strategically. (A ) Literature Pertaining to the Foreign Direct Investment Practice in Indian Retail and Reforms (B) Literature Pertaining to the Indian Retail Sector: Development and Growth (C) Literature Pertaining to the Entry of Global & International Players in Indian Retail Sector (D) Literature Pertaining to the Regulatory Framework & Environment Practice of Retailing in India (E) Literature Pertaining to the Information Technology and Its Implication in Indian Retail Sector
CHAPTER 3 Retailing at a Glance In India Development Scenario and Government Initiative or Schemes Key Trends in Indian Retail and future prospects of retail Challenges Faced By Retail Sector In India Popular Retail Formats Top Retailers In India
CHAPTER 4 Forms Foreign Direct Investment Entry Routes For Investment Prohibition On Investment In India Calculation Of Total Foreign Investment Global Trends In FDI Flows Current Trends In FDI Flows
CHAPTER 5 Market Entry Strategies and Barriers for Foreign Players In Retailing FDI Policy and Entry Routes In The Retail Sector Perception Of Foreign Players About The Indian Market FDI In Multi-Brand Retail In India: Present Scenario Rationale For FDI In Retail Trading
CHAPTER 6 Need, Importance, Significance of Information Technology In Retail Sector ICT In Indian Perspective Emerging Technical Trends In Retail Information Technology In Retailing Operations Digital Transformation in the Retail Industry and IT challenges for retailers Retail Information Technology Security
CHAPTER 7 Analysis Of The Survey, Responses from the Consumers and retailers . Analysis of Important Issues Uniqueness of Indian of Indian Retail Market Identification of Major Beneficiaries of FDI – The Push and Pull Factors Possible Impact on Marginal Producers and are Work Force the Experience of other Countries. Impact of Existing Labour Laws Safeguard Options Available with the Government to Protect the Interest of Small Producers and Suppliers
CHAPTER 8 Key Findings Arguments relating to Favour and against FDI in Retailing Impact of FDI and Information Technology in Retail. Conclusions Limitations Of The Study
DATA ANALYSIS AND INTERPRETATION Question1- India is the midst of a retail boom; at present 100% FDI in multi brand retailing is not allowed. Do you think that the government should allow 100% FDI in multi brand retailing?
Question2 What are the likely impacts on the following, if 100% FDI is allowed in multi branding retailing? It would bring in technical know-how & skill?
SUMMARY AND FINDINGS The debate over foreign direct investment (FDI) in retail has highlighted several issues that need careful consideration by policymakers before the sector is opened to foreign investors. If Indian manufacturers can produce high-quality products at competitive prices, global retailers are likely to source from India. Study shows that FDI in retail could have a more extensive economic impact compared to other sectors. The retail sector is poised for significant growth in the coming years, with the organized retail segment expanding as new cities undergo urbanization . However, substantial investments will be necessary to drive this growth
CONCLUSION Study conclude that the arrival of foreign retailers is expected to enhance the quality of employment , though its effect on job creation will hinge on various factors, including the overall economic growth , expansion of related industries such as food processing, and advancements in logistics services Study also examined the effects of information technology on the retail sector, noting a rapid adoption of computerized technologies driven by increasing international competition and the liberalization of markets. Study shows that there is significant relationship between FDI reforms and IT implications in retail sector. FDI reforms in the retail sector have positive relationship to economic development of India.