Abstract
In the post-reforms period, there has been a change in the purchase behaviour of Indian consumers. The large consumer base has attracted many global retailers and domestic corporates to invest in modern retail. The government has partially allowed foreign direct investment (FDI) in retail. At present, there is an ongoing debate on the impact of allowing FDI in retail. This chapter analyses the impact of the retail FDI policy on Indian consumers and offer policy recommendations at the national level. A primary survey of Indian consumers, aimed at examining their shopping behaviour across branded and non-branded products, knowledge of foreign brands and attitude towards liberalisation of FDI in retail brings out interesting results, including identifying factors determining the choice of modern retail outlets. It is observed that the purchase of brands varies across different product categories and for some consumers show distinct preference for non-branded products, which are purchased from traditional outlets. Hence, both traditional and modern retail coexist in India. While knowledge and use of foreign brands, especially luxury brands, is low, majority of the respondents is in favour of allowing FDI in retail. It is held that FDI in multi-brand retail would enhance brand knowledge, choices available to consumers and help promote branding even as the FDI policy should ensure consumer welfare.
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Notes
- 1.
Authors’ own calculations from Central Statistical Organisation (CSO), 2008–2009.
- 2.
Authors’ calculations from National Sample Survey Organization (NSSO). There is no official source of data for the retail sector. The NSSO has clubbed retail under ‘trade, hotels and restaurants’. In 2011–2012, the share of trade-related services in GDP was 15.5 %. This includes wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods. The share of retail is derived from the share of retail in employment.
- 3.
Authors’ calculations from NSSO. Employment in the unorganised sector is not reported.
- 4.
Images (2009) and interviews conducted by ICRIER researchers for the Italian Trade Commission Project in 2010.
- 5.
The survey was a part of the project sponsored by the Italian Trade Commission (ITC).
- 6.
SEC or Socio-economic Classification is a classification of the Indian population on the basis of occupation and education of an individual.
- 7.
Tier I cities include Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Ahmedabad. Tier II cities include Surat, Vishakhapatnam, Kanpur and Allahabad and Tier III city is Bhubaneswar.
- 8.
These findings are in line with other studies. For example, see Images (2009).
- 9.
As per the information given by Foreign Investment Promotion Board (FIPB), India.
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Mukherjee, A., Satija, D., Goyal, T., Mantrala, M., Zou, S. (2014). Impact of the Retail FDI Policy on Indian Consumers and the Way Forward. In: Das, K. (eds) Globalization and Standards. India Studies in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1994-1_3
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