Impact of the Retail FDI Policy on Indian Consumers and the Way Forward

In the post-liberalization period, with increase in GDP, rising per capita income and proliferation of brands, there have been changes in the purchase behaviour of Indian consumers. The large consumer base has attracted many global retailers and domestic corporates to invest in modern retail in India. The government has partially allowed FDI in single-brand retail to give consumers greater access to foreign brands. At present, there is a debate in India on whether FDI should be allowed in multi-brand retail. In this context, this paper analyses the impact of the retail FDI policy on Indian consumers and make policy recommendations for the Indian government. Based on a primary survey of Indian consumers, the paper examines their shopping behaviour across different product (branded and non-branded) categories, knowledge of foreign brands and attitude towards further liberalizing FDI in retail. The factors determining the choice of modern retail outlets are also examined.