Foreign Direct Investment in Indian Retail Sector – An Analysis

BY:-Pulkit Agarwal

 Esha Tyagi



Just back from first frenzied shopping experience in the UK, a four year old ever-inquisitive daughter asked to her father, “Why do we not have a Harrods in Delhi? Shopping there is so much fun!” Simple question for a four-year-old, but not so simple for her father to explain.

As per the current regulatory regime, retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a ‘single-brand’; this condition being in addition to a few other conditions to be adhered to. That explains why we do not have a Harrods in Delhi.

India being a signatory to World Trade Organisation’s General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. There were initial reservations towards opening up of retail sector arising from fear of job losses, procurement from international market, competition and loss of entrepreneurial opportunities. However, the government in a series of moves has opened up the retail sector slowly to Foreign Direct Investment (“FDI”). In 1997, FDI in cash and carry (wholesale) with 100 percent ownership was allowed under the Government approval route. It was brought under the automatic route in 2006. 51 percent investment in a single brand retail outlet was also permitted in 2006. FDI in Multi-Brand retailing is prohibited in India.

Definition of Retail

In 2004, The High Court of Delhi[1] 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 customersRetailing 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.

Division of  Retail Industry – Organised and Unorganised Retailing

The retail industry is mainly divided into:- 1) Organised and 2) Unorganised 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 deep penetration into rural India generating more than 10 per cent of India’s GDP.[2] 

FDI Policy in India

FDI as defined in Dictionary of Economics (Graham Bannock et.al) is investment in a foreign country through the acquisition of a local company or the establishment there of an operation on a new (Greenfield) 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.[3]

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

a)      FDI 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)[6].

c)      FDI is not permitted in Multi Brand Retailing in India.

Entry Options  For Foreign Players prior to FDI Policy 

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

1.         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 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, Mango, Nike as good as Marks as good as Spencer, have entered Indian marketplace by this route.
2.         Cash And Carry Wholesale Trading 

100% FDI is allowed in wholesale trading which involves building of a large distribution infrastructure to assist local manufacturers.[7] 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.

3.         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 Radhakrishna Foodlands Pvt. Ltd

4.         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.

FDI in Single Brand Retail

The Government has not categorically defined the meaning of “Single Brand” anywhere neither in any of its circulars nor any notifications.

In single-brand retail, FDI up to 51 per cent is allowed, subject to Foreign Investment Promotion Board (FIPB) approval and subject to the conditions mentioned in Press Note 3[8] that (a) only single brand products would be sold (i.e., retail of goods of multi-brand even if produced by the same manufacturer would not be allowed), (b) products should be sold under the same brand internationally, (c) single-brand product retail would only cover products which are branded during manufacturing and (d) any addition to product categories to be sold under “single-brand” would require fresh approval from the government.

While the phrase ‘single brand’ has not been defined, it implies that foreign companies would be allowed to sell goods sold internationally under a ‘single brand’, viz., Reebok, Nokia, Adidas. Retailing of goods of multiple brands, even if such products were produced by the same manufacturer, would not be allowed. 

Going a step further, we examine the concept of ‘single brand’ and the associated conditions:

FDI in ‘Single brand’ retail implies that a retail store with foreign investment can only sell one brand. For example, if Adidas were to obtain permission to retail its flagship brand in India, those retail outlets could only sell products under the Adidas brand and not the Reebok brand, for which separate permission is required. If granted permission, Adidas could sell products under the Reebok brand in separate outlets.

But, what is a ‘brand’?

Brands could be classified as products and multiple products, or could be manufacturer brands and own-label brands. Assume that a company owns two leading international brands in the footwear industry – say ‘A’ and ‘R’. If the corporate were to obtain permission to retail its brand in India with a local partner, it would need to specify which of the brands it would sell. A reading of the government release indicates that A and R would need separate approvals, separate legal entities, and may be even separate stores in which to operate in India. However, it should be noted that the retailers would be able to sell multiple products under the same brand, e.g., a product range under brand ‘A’ Further, it appears that the same joint venture partners could operate various brands, but under separate legal entities.[9]

Now, taking an example of a large departmental grocery chain, prima facie it appears that it would not be able to enter India. These chains would, typically, source products and, thereafter, brand it under their private labels. Since the regulations require the products to be branded at the manufacturing stage, this model may not work. The regulations appear to discourage own-label products and appear to be tilted heavily towards the foreign manufacturer brands.[10]

There is ambiguity in the interpretation of the term ‘single brand’. The existing policy does not clearly codify whether retailing of goods with sub-brands bunched under a major parent brand can be considered as single-brand retailing and, accordingly, eligible for 51 per cent FDI.  Additionally, the question on whether co-branded goods (specifically branded as such at the time of manufacturing) would qualify as single brand retail trading remains unanswered.

FDI in Multi Brand Retail 

The government has also not defined the term Multi Brand. FDI in Multi Brand retail implies that a retail store with a foreign investment can sell multiple brands under one roof.

In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce   circulated a discussion paper[11] on allowing FDI in multi-brand retail. The paper doesn’t suggest any upper limit on FDI in multi-brand retail. If implemented, it would open the doors for global retail giants to enter and establish their footprints on the retail landscape of India. Opening up FDI in multi-brand retail will mean that global retailers including Wal-Mart, Carrefour and Tesco can open stores offering a range of household items and grocery directly to consumers in the same way as the ubiquitous ’kirana’ store.

Foreign Investor’s Concern Regarding FDI Policy in India
For those brands which adopt the franchising route as a matter of policy, the current  FDI Policy will not make any difference. They would have preferred that the Government liberalize rules for maximizing their royalty and franchise fees. They must still rely on innovative structuring of franchise arrangements to maximize their returns. Consumer durable majors such as LG and Samsung, which have exclusive franchisee owned stores, are unlikely to shift from the preferred route right away.
For those companies which choose to adopt the route of 51% partnership, they must tie up with a local partner. The key is finding a partner which is reliable and who can also teach a trick or two about the domestic market and the Indian consumer. Currently, the organized retail sector is dominated by the likes of large business groups which decided to diversify into retail to cash in on the boom in the sector – corporates such as Tata through its brand Westside, RPG Group through Foodworld, Pantaloon of the Raheja Group and Shopper’s Stop. Do foreign investors look to tie up with an existing retailer or look to others not necessarily in the business but looking to diversify, as many business groups are doing?

An arrangement in the short to medium term may work wonders but what happens if the Government decides to further liberalize the regulations as it is currently contemplating? Will the foreign investor terminate the agreement with Indian partner and trade in market without him? Either way, the foreign investor must negotiate its joint venture agreements carefully, with an option for a buy-out of the Indian partner’s share if and when regulations so permit. They must also be aware of the regulation which states that once a foreign company enters into a technical or financial collaboration with an Indian partner, it cannot enter into another joint venture with another Indian company or set up its own subsidiary in the ‘same’ field’ without the first partner’s consent if the joint venture agreement does not provide for a ‘conflict of interest’ clause. In effect, it means that foreign brand owners must be extremely careful whom they choose as partners and the brand they introduce in India. The first brand could also be their last if they do not negotiate the strategic arrangement diligently.

Concerns for the Government for only Partially Allowing FDI in Retail Sector 

A number of concerns were expressed with regard to partial opening of the retail sector for FDI. The Hon’ble Department Related Parliamentary Standing Committee on Commerce, in its 90th Report, on ‘Foreign and Domestic Investment in Retail Sector’, laid in the Lok Sabha and the Rajya Sabha on 8 June, 2009, had made an in-depth study on the subject and identified a number of issues related to FDI in the retail sector. These included:

It would 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. Further, as the manufacturing sector has not been growing fast enough, the persons displaced from the retail sector would not be absorbed there.

Another concern is that the Indian retail sector, particularly organized retail, is still under-developed and in a nascent stage and that, therefore, it is important that the domestic retail sector is allowed to grow and consolidate first, before opening this sector to foreign investors. 

Antagonists of FDI in retail sector oppose the same on various grounds, like, that the entry of large global retailers such as Wal-Mart would kill local shops and millions of jobs, since the unorganized retail sector employs an enormous percentage of Indian population after the agriculture sector; secondly that the global retailers would conspire and exercise monopolistic power to raise prices and monopolistic (big buying) power to reduce the prices received by the suppliers; thirdly, it would lead to asymmetrical growth in cities, causing discontent and social tension elsewhere. Hence, both the consumers and the suppliers would lose, while the profit margins of such retail chains would go up.



There has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Though India is the second largest producer of fruits and vegetables (about 180 million MT), it has a very limited integrated cold-chain infrastructure, with only 5386 stand-alone cold storages, having a total capacity of 23.6 million MT. , 80% of this  is used only for potatoes. The chain is highly fragmented and hence, perishable horticultural commodities find it difficult to link to distant markets, including overseas markets, round the year.  Storage infrastructure is necessary for carrying over the agricultural produce from production periods to the rest of the year and to prevent distress sales.  Lack of adequate storage facilities cause heavy losses to farmers in terms of wastage in quality and quantity of produce in general. Though FDI is permitted in cold-chain to the extent of 100%, through the automatic route, in the absence of FDI in retailing; FDI flow to the sector has not been significant.

Intermediaries dominate the value chain

Intermediaries often flout mandi norms and their pricing lacks transparency.  Wholesale regulated markets, governed by State APMC Acts, have developed a monopolistic and non-transparent character.  According to some reports, Indian farmers realize only 1/3rd of the total price paid by the final consumer, as against 2/3rd by farmers in nations with a higher share of organized retail.   

Improper Public Distribution System (“PDS”)

There is a big question mark on the efficacy of the public procurement and PDS set-up and the bill on food subsidies is rising.  In spite of such heavy subsidies, overall food based inflation has been a matter of great concern.  The absence of a ‘farm-to-fork’ retail supply system has led to the ultimate customers paying a premium for shortages and a charge for wastages. 

No Global Reach

The Micro Small & Medium Enterprises (“MSME”) sector has also suffered due to lack of branding and lack of avenues to reach out to the vast world markets.  While India has continued to provide emphasis on the development of MSME sector, the share of unorganised sector in overall manufacturing has declined from 34.5% in 1999-2000 to 30.3% in 2007-08[12]. This has largely been due to the inability of this sector to access latest technology and improve its marketing interface.

Rationale behind Allowing FDI in Retail Sector

FDI can be a powerful catalyst to spur competition in the retail industry, due to the current scenario of low competition and poor productivity.

The policy of single-brand retail was adopted to allow Indian consumers access to foreign brands. Since Indians spend a lot of money shopping abroad, this policy enables them to spend the same money on the same goods in India. FDI in single-brand retailing was permitted in 2006, up to 51 per cent of ownership. Between then and May 2010, a total of 94 proposals have been received. Of these, 57 proposals have been approved. An FDI inflow of US$196.46 million under the category of single brand retailing was received between April 2006 and September 2010, comprising 0.16 per cent of the total FDI inflows during the period. Retail stocks rose by as much as 5%. Shares of Pantaloon Retail (India) Ltd ended 4.84% up at Rs 441 on the Bombay Stock Exchange. Shares of Shopper’s Stop Ltd rose 2.02% and Trent Ltd, 3.19%. The exchange’s key index rose 173.04 points, or 0.99%, to 17,614.48.  But this is very less as compared to what it would have been had FDI upto 100% been allowed in India for single brand.[13]

The policy of allowing 100% FDI in single brand retail can benefit both the foreign retailer and the Indian partner – foreign players get local market knowledge, while Indian companies can access global best management practices, designs and technological knowhow. By partially opening this sector, the government was able to reduce the pressure from its trading partners in bilateral/ multilateral negotiations and could demonstrate India’s intentions in liberalising this sector in a phased manner.[14]

Permitting foreign investment in food-based retailing is likely to ensure adequate flow of capital into the country & its productive use, in a manner likely to promote the welfare of all sections of society, particularly farmers and consumers. It would also help bring about improvements in farmer income & agricultural growth and assist in lowering consumer prices inflation.[15]

Apart from this, by allowing FDI in retail trade, India will significantly flourish in terms of quality standards and consumer expectations, since the inflow of FDI in retail sector is bound to pull up the quality standards and cost-competitiveness of Indian producers in all the segments. It is therefore obvious that we should not only permit but encourage FDI in retail trade.

Lastly, it is to be noted that the Indian Council of Research in International Economic Relations (ICRIER), a premier economic think tank of the country, which was appointed to look into the impact of BIG capital in the retail sector, has projected the worth of Indian retail sector to reach $496 billion by 2011-12 and ICRIER has also come to conclusion that investment of ‘big’ money (large corporates and FDI) in the retail sector would in the long run not harm interests of small, traditional, retailers.[16]

In light of the above, it can be safely concluded that allowing healthy FDI in the retail sector would not only lead to a substantial surge in the country’s GDP and overall economic development, but would inter alia also help in integrating the Indian retail market with that of the global retail market in addition to providing not just employment but a better paying employment, which the unorganized sector (kirana and other small time retailing shops) have undoubtedly failed to provide to the masses employed in them.

Industrial organisations such as CII, FICCI, US-India Business Council (USIBC), the American Chamber of Commerce in India, The Retail Association of India (RAI) and Shopping Centers Association of India (a 44 member association of Indian multi-brand retailers and shopping malls) favour a phased approach toward liberalising FDI in multi-brand retailing, and most of them agree with considering a cap of 49-51 per cent to start with.

The international retail players such as Walmart, Carrefour, Metro, IKEA, and TESCO share the same view and insist on a clear path towards 100 per cent opening up in near future. Large multinational retailers such as US-based Walmart, Germany’s Metro AG and Woolworths Ltd, the largest Australian retailer that operates in wholesale cash-and-carry ventures in India, have been demanding liberalisation of FDI rules on multi-brand retail for some time.[17]

Thus, as a matter of fact FDI in the buzzing Indian retail sector should not just be freely allowed but per contra should be significantly encouraged. 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, Upgradation in Agriculture, Efficient Small and Medium Scale Industries, Growth in market size and Benefits to govemment through greater GDP, tax income and employment generation.[18]

Prerequisites before allowing FDI in Multi Brand Retail and Lifting Cap of Single Brand Retail


FDI in multi-brand retailing must be dealt cautiously as it has direct impact on a large chunk of population. Left alone foreign capital will seek ways through which it can only multiply itself, and unthinking application of capital for profit, given our peculiar socio-economic conditions, may spell doom and deepen the gap between the rich and the poor. Thus the proliferation of foreign capital into multi-brand retailing needs to be anchored in such a way that it results in a win-win situation for India. This can be done by integrating into the rules and regulations for FDI in multi-brand retailing certain inbuilt safety valves. For example FDI in multi –brand retailing can be allowed in a calibrated manner with social safeguards so that the effect of possible labor dislocation can be analyzed and policy fine tuned accordingly. To ensure that the foreign investors make a genuine contribution to the development of infrastructure and logistics, it can be stipulated that a percentage of FDI should be spent towards building up of back end infrastructure, logistics or agro processing units. Reconstituting the poverty stricken and stagnating rural sphere into a forward moving and prosperous rural sphere can be one of the justifications for introducing FDI in multi-brand retailing. To actualize this goal it can be stipulated that at least 50% of the jobs in the retail outlet should be reserved for rural youth and that a certain amount of farm produce be procured from the poor farmers. Similarly to develop our small and medium enterprise (SME), it can also be stipulated that a minimum percentage of manufactured products be sourced from the SME sector in India. PDS  is still in many ways the life line of the people living below the poverty line. To ensure that the system is not weakened the government may reserve the right to procure a certain amount of food grains for replenishing the buffer. To protect the interest of small retailers the government may also put in place an exclusive regulatory framework. It will ensure that the retailing giants do resort to predatory pricing or acquire monopolistic tendencies. Besides, the government and RBI need to evolve suitable policies to enable the retailers in the unorganized sector to expand and improve their efficiencies. If Government is allowing FDI, it must do it in a calibrated fashion because it is politically sensitive and link it (with) up some caveat from creating some back-end infrastructure.

Further, To take care of the concerns of the Government before allowing 100% FDI in Single Brand Retail and Multi- Brand Retail, the following recommendations are being proposed [19]:-

  • Preparation of a legal and regulatory framework and enforcement mechanism to ensure that large retailers are not able to dislocate small retailers by unfair means.
  • Extension of institutional credit, at lower rates, by public sector banks, to help improve efficiencies of small retailers; undertaking of proactive programme for assisting small retailers to upgrade themselves.
  • Enactment of a National Shopping Mall Regulation Act to regulate the fiscal and social aspects of the entire retail sector.
  • Formulation of a Model Central Law regarding FDI of Retail Sector.


A Start Has Been Made 

Walmart has a joint venture with Bharti Enterprises for cash-and-carry (wholesale) business, which runs the ‘Best Price’ stores. It plans to have 15 stores by March and enter new states like Andhra Pradesh , Rajasthan, Madhya Pradesh and Karnataka.[20]
Duke, Wallmart’s CEO opined that FDI in retail would contain inflation by reducing wastage of farm output as 30% to 40% of the produce does not reach the end-consumer. “In India, there is an opportunity to work all the way up to farmers in the back-end chain. Part of inflation is due to the fact that produces do not reach the end-consumer,” Duke said, adding, that a similar trend was noticed when organized retail became popular in the US.[21]

Many of the foreign brands would come to India if FDI in multi brand retail is permitted which can be a blessing in disguise for the economy.[22]

Back-end logistics must for FDI in multi-brand retail 

The government has added an element of social benefit to its latest plan for calibrated opening of the multi-brand retail sector to foreign direct investment (FDI). Only those foreign retailers who first invest in the back-end supply chain and infrastructure would be allowed to set up multi brand retail outlets in the country. The idea is that the firms must have already created jobs for rural India before they venture into multi-brand retailing.

It can be said that the advantages of allowing unrestrained FDI in the retail sector evidently outweigh the disadvantages attached to it and the same can be deduced from the examples of successful experiments in countries like Thailand and China; where too the issue of allowing FDI in the retail sector was first met with incessant protests, but later turned out to be one of the most promising political and economical decisions of their governments and led not only to the commendable rise in the level of employment but also led to the enormous development of their country’s GDP.

Moreover, in the fierce battle between the advocators and antagonist of unrestrained FDI flows in the Indian retail sector, the interests of the consumers have been blatantly and utterly disregarded. Therefore, one of the arguments which inevitably needs to be considered and addressed while deliberating upon the captioned issue is the interests of consumers at large in relation to the interests of retailers.

It is also pertinent to note here that it can be safely contended that with the possible advent of unrestrained FDI flows in retail market, the interests of the retailers constituting the unorganized retail sector will not be gravely undermined, since nobody can force a consumer to visit a mega shopping complex or a small retailer/sabji mandi. Consumers will shop in accordance with their utmost convenience, where ever they get the lowest price, max variety, and a good consumer experience.

The Industrial policy 1991 had crafted a trajectory of change whereby every sectors of Indian economy at one point of time or the other would be embraced by liberalization, privatization and globalization.FDI in multi-brand retailing and lifting the current cap of 51% on single brand retail is in that sense a steady progression of that trajectory. But the government has by far cushioned the adverse impact of the change that has ensued in the wake of the implementation of Industrial Policy 1991 through safety nets and social safeguards. But the change that the movement of retailing sector into the FDI regime would bring about will require more involved and informed support from the government. One hopes that the government would stand up to its responsibility, because what is at stake is the stability of the vital pillars of the economy- retailing, agriculture, and manufacturing. In short, the socio economic equilibrium of the entire country.


Websites :-


  • www.retailguru.com




Reports/ Research Papers


  • A.T. Kearney’s Report on Indian Retail, 2008
  • FDI Consolidated Policy
  • Dr.R.KBalyan “FDI in Indian Retail- Beneficial or Detrimental-research paper
  • Damayanthi/S.Pradeekumar-FDI is it the Need of he Hour? Google search
  • Dipakumar Dey-Aspects of Indian Economy-Google search



  • The Economic Times
  • The Business Standard


[1]Association of Traders of Maharashtra v. Union of India, 2005 (79) DRJ 426

[2] India’s Retail Sector (Dec 21, 2010) http://www.cci.in/pdf/surveys_reports/indias_retail_sector.pdf

[3]Hemant Batra, Retailing Sector In India Pros Cons (Nov 30, 2010)http://www.legallyindia.com/1468-fdi-in-retailing-sector-in-india-pros-cons-by-hemant-batra

[4] Notification No. FEMA 20/2000-RB dated May 3, 2000

[5]FDI_Circular_02/2010, DIPP

[6] http://siadipp.nic.in/policy/changes/pn3_2006.pdf

[7] Supra Note 4

[8] Ibid.

[9] Mohan Guruswamy, Implications of FDI in Retail, (Dec 16 2010) http://www.scribd.com/doc/36888679


[11] Discussion Paper on FDI in Multi Brand Retail Trading, http://dipp.nic.in/DiscussionPapers/DP_FDI_Multi-BrandRetailTrading_06July2010.pdf

[12]  National Accounts Statistics, 2009

[13] Nabael Mancheri, India’s FDI policies: Paradigm shift, http://www.eastasiaforum.org/2010/12/24/indias-fdi-policies-paradigm-shift/-

[14] Discussion Paper on FDI in Multi Brand Retail Trading, http://dipp.nic.in/DiscussionPapers/DP_FDI_Multi-BrandRetailTrading_06July2010.pdf

[15] Ibid

[16]Sarthak Sarin, (Nov 23, 2010) Foreign Direct Investment in Retail Sector  http://www.legalindia.in/foreign-direct-investment-in-retail-sector-others-surmounting-india-napping

[17] Nabael Mancheri, India’s FDI policies: Paradigm shift, http://www.eastasiaforum.org/2010/12/24/indias-fdi-policies-paradigm-shift/-

[18] Supra Note 11

[19] Ibid

[20]Economic Times Retail News, FDI in retail to contain inflation (Dec 31, 2010) walmart http://retail-guru.com/allow-100-fdi-in-retail-to-contain-inflation-walmart

[21] Ibid

[22] Supra note 17

74 Comments on “Foreign Direct Investment in Indian Retail Sector – An Analysis”

  • sir our client having space for retail outlets please contact

  • sir my nuber of clients are having industrial spaces at ghaziabad, main meerut road area 10000sq yard and 40,000sq feet covered area and intrsted party can constuct as per their scedule and 20,000 sq yard on main gtroad near lal kuan near arya farm both area are best place for wallmart , tisco , metro and other retail outlet or hospitals any intrested parties kindly contact 099100 41799 and 09810041799




  • Divyashree. R


    Dear sir with the above good paper my question is on what protective research can be further carried on for an empirical study for future years . Pls reply. …..

  • Silvina Paul


    The report is good. I am doing a dissertation on this topic. I need to find the gap in research done. can anyone help me here on where there needs to have actual research done.
    Thank you.

    • Siddharth Sangal


      Silvina, you can contact me on sidthelawyer@gmail.com and I will try to help you out on this subject. Thanks!

  • I am going to visit USAe ,Canada,Ireland and Germany. I am trying to promote home based eco tourism. I want to raise investment for the poor villagers. Per unit requirement will be 3 Lakh. Each investor will have separate agreement with individual house holder. Is it legally viable?

  • devi sri


    i want a last 10 years retail inflow data,plz frds help to me

  • we are sme industrialist……in maharastra and gujrat we are having fectory and big godown for logistic with good land mark ready to offer to fdi people who may be interesting for ………….pl call
    pankaj gathani

  • supinder kaur


    i wanat a descriptive study of fdi that whether it si favourable in india or not pls give me discriptive study of fdi in retail sector /what are its positive effect on india economy pls provide me such information at my e mail address as soon as possible pls do me a favour

  • Nice. Very informative. Reservations aside, it will do good to us consumers, as long as controlling/facilitator machinery is in place. May be that is too much for asking.

  • Thanks 4 giving us the knowlede regarding FDI.

  • Thanks for giving us the knowlegde regarding FDI.

  • truly a good article , gives u an insight in what is truly happening , it will be fun to see how things shape up from here on

  • very good action taken by Indian Govt.

  • FDI to indian economy is a boon as vel a bane… Bt its left in d hands of our administrators to make it a successful venture..
    Info regarding d same was beneficial to me.. Thankyou!

  • Why some people oppose FDI or may be opposition party want to oppose & remove Congress and come into power. Let it be FDI may come to India. There is no rule like that every body would have to purchase goods only from FDI shop. I will purchase our daily needs only from my local markets or FDI which ever cheap and better quality. If we will not puchase good from FDI , then this system automatically failled & closed.
    I remembered so many years ago when Mr rajiv Gandhi insisted to instroduesd Computer and computerisation in every field. Then opposition party and many “mentaly uneducated people” opposed this as they had a thinking that , it is against our local market, distroying lakhs of emploment, distroy our tradition and money would goes to foreign country and indian will become poor.

  • kannan


    good one!! thanx

  • very well written and really appreciating… pulkit…

  • Sir
    Whether 100 % FDI is allowed for housing projects in India…..

  • Ankur Pandey


    Very Good !ndeed


  • viji



  • anjali mehta


    real nice

  • kiran kumar


    After a long googling, eventually i found a site which gave accurate and elaborate infomation regarding FDI. Really very very thanks to pulkit agrawal.

  • India is not organised for manufacture of goods. Agriculture is seasonal activity. The number of small commercial establishments is larger than needed. It serves as a shock absorber for unemployment. Bringing in FDI in retail trade would cause starvation death, just like the plains of Bengal becoming white with the bones of textile weavers after East India Company started imported textile goods from factories in Manchester etc. Make haste slowly. Create jobs for those below the poverty line before you go for a higher rate of economic growth for the whole country – the benefits will not trickle down.

  • Shama Ahmad


    Dear pulkit
    i want 2 ask dat in which sector FDI’S most of the funds are invested?

  • Shailendra Saxena


    really awesome 🙂

  • adiba khan


    damn gud…………dear pulkit u hv arngd da info so nicly dat it z vry vry useful fr the user
    good job
    keep it up

  • Poonam


    Very nice article, all the points were beautifully covered. Please keep up the good work.

  • manish


    very wahiyat article, bhai ache se padhai kiya hota to ye halat nai hoti…………………

  • Thanks for such nice information.

    I m agree that the britisher gain control over us through a small trading deal, but that time situation was different. current situtation r diff. India has grown up lot and also learned the mistake which made by the govt at that point of time.
    Allowing FDI in India in retail sector has more advantages than the disadvantages. Its totally depend on the rules and regulation of the govt.(Policy related FDI retail)

  • Jyoti


    I very informative article.It covers all the points.Excellent collection of information from the sources and superbly written.Keep it up!!

  • Dear Pulkit,
    one of the my Foreign client want to open a company in India for selling it’s soft drink in India, plz note that he is selling the same in USA & he don’t want to produce it in India, he just want to “IMPORT” the soft drink in India & sell it as a Retailer…
    Is it permissible in India ?
    If yes, than Indicate reasons ??
    plz do the needful at earliest.

  • wanted to ask that if foreign markets come in india that wont it affect indian retail shops

  • dont you think India should first develop a plan for say the next 5 years to develop its organized retail sector so that it has more people under it, there is better management, better supply chains etc etc. Once the organized sector is developed to face stiff competition from their foreign counterparts only then should fdi be allowed. what do you think?


  • i think implement fdi on retail sector change the face of india , by (1)developing infrastructure , which helpfull to storage food item ,,,,(2) demand will more, where farmers gets good money,,,,(3) maintain a good relation ship with other country,,,(4),,, economy increase,,etc

  • Kruti


    Excellent work .. you people have thrown light from all possible angles on this FDI issue. Majority of Indian population including politicians may not even know about the future benefits this step would bring. I understand the concern for the SME’s but don’t you think that even rural development and consumer-faced inflation are equally important aspects which could be taken care by this initiative. And for the SME’s its the government’s area of concern too which can be dealt too with a different approach. Thanks Esha and Pulkit..

  • Bappaditya Banerjee


    Brilliant article. I just taught a “MBA” course in Bangalore and we did the Bharti-Walmart case.Thank u for giving us such of this knowledge.

  • shiwani


    wow dat z awesome )) very nicely done pulkit agrawal n esha tyagi i am jus wonderstuck !!!!!!!!!!!!!!!!

    i feel dat FDI in retail will help in upliftment of the indian GDP and will provide us all the best brands of the world at very cheaper rates .
    allthough it might bring loss to the “kirana” stores but as we all know huge developmental changes require revolutions n i am sure dat this will change the face of india

  • Anupam Prasad


    Awesome work! Thanks for your highly detailed and convincing article. I hope every Indian including the opposing politicians go through this article before voicing there opinions.

    • Anupam Prasad


      their opinions.

  • samiran das


    discuss about the future of 97% unorganized retailer and what is the impact of FDI in our GDP.

  • I is best for medium and poor public. Bad for those who are do not want to develop it-self as well as countrty(INDIA).

  • Devang


    I think FDI in retail is good for the nation, provided the interest of the farmers and consumers is safeguarded. The Banias in india should wakeup to the changes and provide good quality food items and other items at a reasonable price. Walmart should not go the way other malls in india are doing they sell items at a exorbitant price in the name of Brand.
    Shoppers stop sells shirts at rs1000 and above and same thing can be purchased in the shop opposite it at rs300. Walmart has to strike the lower and middle class

  • vishal


    hey dude also write on fdi of 2011……….

  • Brilliant article. I just taught a “MicroMBA” course in Bangalore and we did the Bharti-Walmart case. I talk about the FDI retail issue in my blog: http://www.learningbursts.com

    Thanks for the in-depth study.

  • vivek jain


    are bhag ye sir kharab topic hai sir log to pagal hai jo is par project banane diye hai.

  • Recently I was in USA, when she lost her AAA gradation. It was not surprising for me for two reasons.
    1) I was aware of Prof. Sheldon Glashow’s comment, made in Physics Today in April 1983. Although he is a Nobel Physics Winner, he does not sit in the ivory tower and does care for the society – especially through Physics Education. But, it seems Americans did not take his lesson seriously and naturally met with the status evident in the loss of AAA gradation.
    2) We used to get many common items in the malls, which were frequently made in India, China and even Bangladesh.

    This means, American retailers will purchase OUR goods and of China, Bangladesh and “resell” us to us. For Indians, this is a meaningless and loss-making act. Our political leaders do not wish to realize this simple fact – in a sense Americans are happy because of our insane act. Finally, I firmly believe winning / loosing the vote of confidence in parliament is also an insane act.

  • sunil


    how farmer will benefited investment in FDI. 99% ITEM WERE sold which was not produce by farmer. whether farmer produce electronics good FMCG items. farmer produce paddy ,wheat and sugarcane which were not sold by walmart. all items were sold after processing and they made good packagind and take 10 times of actual price. do you know what is costing of lux soap and what price it was sold in market. please go through balance sheet of hindustan uniliver and you found that these companis has invested in india only 1599 crore and sendin every year outside india as dividend and royalty of Rs more than 3000 crores

  • SHIV


    wow, A must read article for every Indian before expressing their views on FDI…


    • riddihma


      dont u remeber how Britishers gain control over us….only through a small trading deal East india company…n v were ruled by them for more than 300 years….so still do u promote…?

  • I think all indian should protest this Policy of FDI.

    • Anupam Prasad


      And y do u think so? Give reasons otherwise plz dont draw conclusions on what is to be done.

  • thank you so much Pulkit Agarwal and Esha Tyagi for providing this precious information to ous. actually I m Professor in Engineering College and most of the students are not aware about FDI and how FDI will Capture our indian markets by their single brand policy. I will tell my all students about Foreign Direct Investment (FDI). I feel sooner or later our INDIA lost its freedom once again.

  • This is what is called an ” ARTICLE “….. Excellent..

  • Prasahnt


    very best and detailed Report..I did not find any other report in comparigen of this

  • chanakya


    very helpful . Thanks a lot mate .

  • raveena galande


    thanks!lot of difficulties cleared by reading this article.

  • Nitin


    Thanks for such a nice article covering all aspects of FDI into retail. Well Done !

  • The article is quite informative, especially when I now see a trend where Indian Economy is moving on to the next phase of FDI in the Retail Sector. Looking forward for more articles.

  • Mahesh


    This is a brilliant article. Thank you!

    Havent come across an article that explains this stuff in a more layman friendly way 🙂

  • Pranav


    Very informative report. I’ve not found any other report on the web which is so detailed and easy to understand. Thanks a ton.

  • When the swiss retail company Migros is launching stores in india

Leave a Comment

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

Cookies help us deliver our services. By using our services, you agree to our use of cookies. More Information   
%d bloggers like this: