INTRODUCTION

Retailing is the largest private industry in India and second largest employer after agriculture. Retailers not only provide consumers with a wide variety of products, but also a wide range of complementary services such as assurance of products delivery which can lead to more informed choice and greater convenience in shopping. They also provide products with much needed and information on consumer demand pattern. Productivity and efficiency in retail operations lower price levels and reduce distortions in the price structure. Through backward and forward linkages, performance of retailing service affects the performance of interlinked sectors such as tourism, recreational and culture services, manufacturing of consumer goods, agro food processing industries etc.

Retailing sector in India has undergone significant transformation in the past 10 years. The sector contributes to around 10 percent of GDP and 6-7 percent of employment. With over 15 million retail outlets, India has the highest retail outlet density in the world. This sector witnessed significant developments in the past 10 years from small unorganized familyowned retail formats to organized retailing. Traditionally Indian retail sector has been characterized by the presence of a large no of small-unorganized retailers. However, in the past decade there has been development of organization retailing, which has encouraged large private sector players to invest in this sector. Liberalization of the economy, rise in per capita income and growing consumerism have encouraged large business houses and manufactures to setup retail formats, real estate companies and venture capitalist are investing in retail infrastructure. Many foreign retailers have also entered the market through different routes such as wholesale, cash-and carry, local manufacturing, franchising, test marketing etc. with the growth in organized retailing, unorganized retailers are fast changing their business models and implementing new technologies and modern accounting practice to face competition.

In spite of the recent developments in retailing & its immense contribution to the economy, retailing continues to be one of the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world. Over a period of 10 year, the share of organized retailing in total retailing has growth from 10 percent to 40 percent in Brazil and 20 percent in China, while in India in it is only 4-5 percent, one Impact of FDI on Retail Industry Page 6