Indian Streams Research Journal - Amazon S3· ITC echoupal and Choupal Sagar – Choupal Sagar is...

ORIGINAL ARTICLE

Impact Factor : 0.2105 ISSN No : 2230-7850

Monthly MultidisciplinaryResearch Journal

Indian Streams

Research Journal

Executive Editor

Ashok Yakkaldevi

Editor-in-chief

H.N.Jagtap

Vol 3 Issue 3 April 2013

Mohammad HailatDept. of Mathmatical Sciences, University of South Carolina Aiken, Aiken SC 29801

Abdullah SabbaghEngineering Studies, Sydney

Catalina NeculaiUniversity of Coventry, UK

Ecaterina PatrascuSpiru Haret University, Bucharest

Loredana BoscaSpiru Haret University, Romania

Fabricio Moraes de AlmeidaFederal University of Rondonia, Brazil

George - Calin SERITANPostdoctoral Researcher

Hasan BaktirEnglish Language and Literature Department, Kayseri

Ghayoor Abbas ChotanaDepartment of Chemistry, Lahore University of Management Sciences [ PK ]Anna Maria ConstantinoviciAL. I. Cuza University, Romania

Horia PatrascuSpiru Haret University, Bucharest, Romania

Ilie Pintea,Spiru Haret University, Romania

Xiaohua YangPhD, USANawab Ali KhanCollege of Business Administration

Flávio de São Pedro FilhoFederal University of Rondonia, Brazil

Kamani PereraRegional Centre For Strategic Studies, Sri Lanka

Janaki SinnasamyLibrarian, University of Malaya [ Malaysia ]

Romona MihailaSpiru Haret University, Romania

Delia SerbescuSpiru Haret University, Bucharest, Romania

Anurag MisraDBS College, Kanpur

Titus Pop

Pratap Vyamktrao NaikwadeASP College Devrukh,Ratnagiri,MS India

R. R. PatilHead Geology Department Solapur University, Solapur

Rama BhosalePrin. and Jt. Director Higher Education, Panvel

Salve R. N.Department of Sociology, Shivaji University, Kolhapur

Govind P. ShindeBharati Vidyapeeth School of Distance Education Center, Navi Mumbai

Chakane Sanjay DnyaneshwarArts, Science & Commerce College, Indapur, Pune

Awadhesh Kumar ShirotriyaSecretary, Play India Play (Trust),Meerut

Iresh SwamiEx - VC. Solapur University, Solapur

N.S. DhaygudeEx. Prin. Dayanand College, Solapur

Narendra KaduJt. Director Higher Education, Pune

K. M. BhandarkarPraful Patel College of Education, Gondia

Sonal SinghVikram University, Ujjain

G. P. PatankarS. D. M. Degree College, Honavar, Karnataka

Maj. S. Bakhtiar ChoudharyDirector,Hyderabad AP India.

S.Parvathi DeviPh.D.-University of Allahabad

Sonal Singh

Rajendra ShendgeDirector, B.C.U.D. Solapur University, Solapur

R. R. YalikarDirector Managment Institute, Solapur

Umesh RajderkarHead Humanities & Social Science YCMOU, Nashik

S. R. PandyaHead Education Dept. Mumbai University, Mumbai

Alka Darshan ShrivastavaShaskiya Snatkottar Mahavidyalaya, Dhar

Rahul Shriram SudkeDevi Ahilya Vishwavidyalaya, Indore

S.KANNANPh.D , Annamalai University,TN

Satish Kumar Kalhotra

Editorial Board

International Advisory Board

IMPACT FACTOR : 0.2105

Welcome to ISRJISSN No.2230-7850

Indian Streams Research Journal is a multidisciplinary research journal, published monthly in English, Hindi & Marathi Language. All research papers submitted to the journal will be double - blind peer reviewed referred by members of the editorial Board readers will include investigator in universities, research institutes government and industry with research interest in the general subjects.

RNI MAHMUL/2011/38595

Address:-Ashok Yakkaldevi 258/34, Raviwar Peth, Solapur - 413 005 Maharashtra, IndiaCell : 9595 359 435, Ph No: 02172372010 Email: [email protected] Website: www.isrj.net

Title : IMPACT OF FDI INTERVENTION ON FAST MOVEING CONSUMER GOODS MARKET Source:Indian Streams Research Journal [2230-7850] B. NAGARAJU AND GIRISH KUMAR. M yr:2013 vol:3 iss:3

KEY WORDS:

Foreign direct investment (FDI), Fast moving consumer goods (FMCG)

INTRODUCTION

There Government of India was initially very apprehensive of the introduction of the Foreign Direct Investment in the FMCG Retail Sector in India. The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The FMCG sector generated revenues worth US$ 27.9 billion in 2010. The industry expanded at a compound annual rate of 15.4 per cent during 2006-10.Indian and multinational FMCG players can leverage India as a strategic sourcing hub for cost-competitive product development and manufacturing to cater to the international markets. The emergence of organized retail has boosted the distribution of FMCG sector. A total of 7.8 million retail outlets sell FMCG in India.

Industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 2.1

Abstract:

The Fast Moving Consumer Goods (FMCG) are popularly named as consumer packaged goods. The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy and has a market size of US$13.1 billion. FMCG industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 2.1percent of the country's total FDI during April 2000 to March 2010. Food processing is the most popular FMCG category, it attracts over 53percent of total FDI in the country. India currently allow 100percent FDI in cash and carry segment and 51 percent in single-brand retail.

This study helps to find out impact of FDI intervention on FMCG market and its effect on Indian economy. The FMCG sector is measuring its height pose a impact of FDI to enhance their impressions both qualitatively and quantitatively. The aim of the paper is to represent a empirical framework for measuring impact of FDI intervention on FMCG market in India. The objective of the paper is to present and critically evaluate different theoretical approaches to impact of FDI on FMCG market. The conclusions of the paper are that the effects of FDI on FMCG market can be positive. They depend upon FDI investment and concentrated on FMCG market, sector, scale, duration, location of business, density of local firms in the sector and many other secondary effects. Rather than proposing narrowly defined pro-FDI policies, attractive terms to investors should be seen as part of a country's overall industrial policy and be available on equal terms to FMCG market, foreign as well as domestic. Creating a theoretical framework for better understanding the impact of FDI on FMCG this paper might contribute establishing more realistic approach when attracting the foreign direct investment to FMCG markets.

IMPACT OF FDI INTERVENTION ON FAST MOVEING CONSUMER GOODS MARKET

B. NAGARAJU AND GIRISH KUMAR. M

Associate Professor,DoS in Commerce, Manasagangotri,University of Mysore, Mysore.Research Scholar ,DoS in Commerce, Manasagangotri, University of Mysore, Mysore.

ORIGINAL ARTICLE

Volume 3, Issue. 3, April. 2013Indian Streams Research Journal

ISSN:-2230-7850Available online at www.isrj.net

per cent of the country's total FDI during April 2000 - March 2010. Food processing is the most popular FMCG category; it attracts over 53 per cent of total FDI in the industry. India currently allows 100 per cent FDI in cash and carry segment and 51 percent in single-brand retail, which is expected to be further increased to 100 per cent. India is also expected to allow 51 per cent FDI in multi-brand retail, which will boost the nascent organized retail market in the country. Leading players of consumer products have a strong distribution network in rural India and are looking to capitalize on rising brand consciousness. Technological advances such as internet and e-commerce would enable better logistics in these areas. Indian FMCG sector is the fourth largest sector in the economy characterized by strong MNC presence, well established distribution network, intense competition between the organized and unorganized players and low operational cost. Easy availability of important raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. Penetration level and per capita consumption in many product categories is very low compared to world average standards representing the unexploited market potential. Mushrooming Indian population, particularly the middle class and the rural segments, presents the huge untapped opportunity to FMCG players.

The Indian FMCG sector is the fourth largest sector in the economy with an estimated size of Rs.1,300 billion. The sector has shown an average annual growth of about 11% per annum over the last decade. Unlike the developed markets, which are prominently dominated by few large players, India's FMCG market is highly fragmented and a considerable part of the market comprises of unorganized players selling unbranded and unpackaged products. There are approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. India FMCG sectors' significant characteristics can be listed as strong MNC presence, well established distribution network, intense competition between the organized and unorganized players and low operational cost. Easy availability of important raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage.

RECENT NEWS ON FDI IN INDIA:

Metro AG and Shorite are already in operation. Foreign retailers are in search of investing in wholesale. Wal-Mart as we have mentioned has already joined the retail market of India. Geant is also expected to start its retailing operations soon in India hence we may conclude that FDI in retailing in India would require the creation of additional jobs to compensate the resulting job loss. It would result in the reduction in the FMCG Kirana shops and Retail Stores. The consumers can benefit from such exposures; it would enhance quality, improve on the supply chain, increase exports, so on and so forth.

FDI COULD BENEFIT STRESSED COMPANIES:

FDI in multi brand will stimulate investment in the sector. There are companies in the retail sector that are reeling under debt. These companies could get fresh lease of life.

BENEFICIARYVOF FDI IN MULTI – BRAND RETAIL:

Multi Brand Retail Stores: 51% in multi brand retail.Pantaloon Retail, Vishal Retail, Shoppers Stop, Koutons, Trent,

SINGLE BRAND RETAIL 100% FDI IN SINGLE BRAND RETAIL:

Archies, Cantabil, VIP Ind, Titan, IFB Industries,REAL ESTATE: Especially mall developers. Retailers like Wal-Mart, Tesco operates in large area of 50,000 – 60,000 sqft. They generally pay to the builders certain percentage of the total revenue. Real Estate companies into retailing space to be benefitted.

2Indian Streams Research Journal • Volume 3 Issue 3 • April 2013


Company Debt (Rs Crore) Market Cap

Pantaloon 4,200 3, 867

Vishal Retail 700 42

Provogue 400 275

http://113.193.6.110:8080/jspui/

Unitech, DLF, Sobha Developers,

FMCG COMPANIES:

Big retailers generally sources from the producers, FMCG companies are going to be benefited.

· HUL · GSK · Godrej Consumer · Dabur · Marico

SIGNIFICANCE AND CONTRIBUTION OF FMCG SECTOR:

The FMCG sector in India has played a vital role in the growth and development of the country, from making efforts to reach out to the poorer section of consumers through distribution of smaller pack sizes, innovations like single use sachets, to developing innovative products to cater to regional or local tastes and the needs of niche consumers. There are many significant contributions – both direct and indirect that the industry has on the Indian economy

ECONOMIC CONTRIBUTION

Employment

The FMCG sector is one of the larger employers in the country. The total salary outlay of the sector on direct employment is estimated at approximately 6% of turnover, i.e. US$ 1.5 billion4 (Rs. 7,000 crores). There are approximately 12-13 million retail stores in India, out of which 9 million are FMCG kirana stores. Thus the sector is responsible for the livelihood of almost 13 million people5.

Fiscal contribution

Cascading Multiple Taxes (Import duty, CENVAT, Service Tax, CST, State VAT, Octroi/Entry Tax and Income Tax) are paid at multiple points (levied at Centre, State, City and mandis) by the FMCG sector. On an average therefore, almost 30%6 (and much more for liquor and tobacco categories) of the revenue of the sector goes into both direct and indirect taxes. At an estimated size of $25 billion (Rs. 120,000 crores), that would constitute a contribution to the exchequer of approximately US$ 6.5 billion (Rs. 31,000 crores).

Social contribution

It is a sector which helps create employment for people with lower educational qualifications. Many become small entrepreneurs operating their own kirana store. Along with this, FMCG firms have also undertaken some specific projects to integrate with upcountry and rural areas for both inputs and for distribution as well as to fulfill CSR. Some examples:· ITC echoupal and Choupal Sagar – Choupal Sagar is ITC's chain of rural retail which sells both agricultural inputs and daily needs products. ITC's rural e-network enables farmer connectivity and provides an easy way for farmers to get better profitability and control through access to timely information.· HUL's Shakti Amma network – HUL pioneered a rural entrepreneurship model amongst women who became HUL distributors and through this status also gained stature in their local community and now operate as entrepreneurs for other product categories than FMCG products.· Dabur India regularly conducts rural and adult education programs and provides training in rural areas to facilitate employability.

Contribution to Other Sectors

The FMCG sector has a strong impact on several other sectors of the economy – agriculture; supply chain; ancillary industry; packaging; media.

1. Agriculture - Its intake of agricultural output as raw material is estimated to constitute roughly 9% of total

3


Indian Streams Research Journal • Volume 3 Issue 3 • April 2013

http://113.193.6.110:8080/jspui/

turnover for the sector. That would put its total value to agriculture at US$ 2.2 billion7 (Rs. 10,500crores).2. Third Party Logistics - The third-party logistics market for the FMCG sector in India has been growing at a CAGR of ~12% since 2002, and is estimated to be worth US$ 63 million8 (Rs. 300 crores). It is anticipated to double by 2011, and be worth over US$ 146 million (Rs. 700 crores) by 2012, a growth of 211% from 2002. India's infrastructure in both transportation and warehousing facilities has been lacking which enables the growth of independent third party logistics (3PL)-players to come up to bridge the gaps.3. Ancillary Industries - Ancillary industries like manufacturing and distribution are greatly boosted by the FMCG sector.

a. Manufacturing – Almost 9-10% of total sector's production is outsourced to contract manufacturing units taking the total size to $ 1.7 – 2 billion (Rs. 8,000 – Rs. 9,500 crores), approximately9.b. Distribution –i. ITC services 1.1 million outlets at an average frequency of three days down to villages with population of 2,000, and has 1,000 wholesale dealers.

ii. Marico reaches 1.6 mln outlets, through almost 900 direct distributors, 100+ super distributors, catering to almost 2,500 small stockists and 4,600van markets.iii. HUL reaches 50,000 villages through 6,000 stockists, apart from 3.5 lac direct selling agents and distributes products to a staggering 6.5 million retail outlets.

4. Packaging Industry - The packaging industry for the FMCG sector alone is worth US$ 2.9 billion10 (Rs. 14,000 crores), and is expected to grow faster due to the growth of private label FMCG products through both modern and traditional retailers as well as the increasing shift from loose to packaged goods.5. Media Industry - The media industry has a lot to gain from the FMCG sector. Around 40% of media industry earnings from advertising (US$ 5 billion) are estimated to come from the FMCG sector, a contribution of US$ 2 billion (Rs. 9,500 crores)11.6. Tourism Industry - Penetration of familiar brands across the length and breadth of the country provides comfort and reassurance of quality to both Domestic and International tourists. The state of availability and quality of these brands in some ways help increase the flow of tourism in the country.

REVIEW OF LITERATURE:

Dr. Gaurav Bisaria (Jan-2012), he found that foreign retail players is also uncertain like that of Indian retail players. The government which acts better than the one which does not. Apprehensions were raised on many such occasions in the past on virtually every measures of liberalization of Indian economy but most of the apprehensions proved wrong while many others come true. It is better to act and watch than not to act at all.

Kamaladevi Baskaran (January-2012), state that the Indian consumers have undergone a remarkable transformation. Just a decade or two ago, the Indian consumers saved most of their income, purchased the bare necessities and rarely indulged themselves. This paper speaks about the government has to proactively assist traditional retailers in competing successfully with the organized retail by modernizing themselves, remove the domestic regulatory and interstate movement restrictions on retail and allow foreign entry into multi-brand retail. This will have serious implications for the livelihood of millions of small and unorganized retailers across the country. Retailers entering the Indian market need to ensure that they have considered the opportunity along with the challenges to maximize their returns. Retailers will need to bank on the local knowledge brought in by their partners/employees/ service providers to be able to reduce the lead time required by them to set-up operations and get a foothold in the Indian market.

Preety Wadhwa, Lokinder Kumar Tyagi (June 2012), suggest that in today's world of competition, achievement of Sales & Marketing targets is not an easy task especially during economic slowdown when the largely business has faced adversity. As per the survey study it is revealed that consumers spending have been reported increased by 75% in the last four years, which indicates towards future growth of Retail Industry in India. This study is an attempt to understand the current situation of Indian Retail Industry especially organized FMCG Retailing. Knowledge on the latest development in the organized retail industry has also been shared in this paper. The study has also highlighted latest development in organized FMCG Retail Industry. The role of the key factors which can significantly contribute to beat the stiff completion and sustained the growth of organized FMCG retailing.

Jatinder Singh (June 2011), state that the rising inflows of FDI have influence on host country market structure though the direction is uncertain. Analytically, market structure has implications on the long run growth path of an economy through its effect on the allocation of economic resources among

4



http://113.193.6.110:8080/jspui/

various economic activities including innovation. In this context, the objective of this paper is to analyze the bearing of FDI on market concentration with special reference to India's manufacturing industries during the post-reform period. To examine the role of FDI in determining the market structure in India's manufacturing sector in the background of economic reforms. It suggests that the FDI inflows played an instrumental role in promoting market concentration in Indian manufacturing sector in the post reform period. It is clear that the rising FDI inflows are positively associated with industrial market concentration. Concentration is often seen as a deviation from competition. The findings of the study point towards the need for institutions involved in dealing with monopolies to be more vigilant.

Arun Kr. Singh and P.K. Agarwal (2012), maintains that The winds of globalization sweeping across has taken the Indian economic environment in its fold and the proposals for further integration has gained momentum, The transformation has also changed the Indian consumer from a state of conserving resources, he's now ready to accept the shopping culture. The paper scrutinizes the relationship of Foreign Direct Investments with the Indian Retail Sector. However, the Indian government must take decision to contain this revolution & safeguard the health of the Indian retail sector to stabilize themselves against competition from the giant players of the global economy in the present state of slowing growth, stubborn inflation & widening fiscal deficit in the country. India's local enterprises will potentially receive an up gradation with the import of advanced technological and logistics management expertise from the foreign entities. In our view, the government has an opportunity to utilize the liberalization for achieving certain of its own targets: Improve its infrastructure; Access sophisticated technologies; Generate employment for those keen to work in this sector. FDI would lead to a more comprehensive integration of India into the worldwide market and, as such, it is imperative for the government to promote this sector for the overall economic development and social welfare of the country.

Asta Zilinske (2010), this theoretical framework says that the attraction of foreign direct investments (FDI) is often underlined as a precondition for a successful economic venue by most governments of less developed countries. The aim of the paper is measuring economic and welfare effects of incoming FDI and critically evaluate different theoretical approaches to FDI and their economic impacts. The finally the effects of FDI can be both positive and negative. They depend on type of FDI, sector, scale, duration, location of business, density of local firms in the sector and many other secondary effects. Rather than proposing narrowly defined pro-FDI policies, attractive terms to investors should be seen as part of a country's overall industrial policy and be available on equal terms to all investors, foreign as well as domestic.

John Henley, Stefan Kratzsch, Mithat Külür, and Tamer Tandogan (March 2008), established to review the burgeoning literature on outward foreign direct investment from emerging markets has largely focused on analyzing the motives of investors as reported by parent companies. This paper, instead, focuses on firm-level investments originating from China, India or South Africa in fifteen host countries in sub-Saharan Africa (SSA). The paper concludes that while investors in SSA from the three countries are primarily using their investment to target specific markets, they are largely operating in different sub-sectors. While there appear to be specific features that firms from a given country of origin share, there are no obvious operating-level features they all share apart from market seeking. This suggests that persistence and the accumulation of operational experience over the long run yields higher capital productivity in SSA.

Mathew Joseph, Nirupama Soundararajan, Manisha Gupta, Sanghamitra Sahu(May 2008), says that the unorganized retail sector is expected to grow at about 10 per cent per annum with sales rising from US$ 309 billion in 2006-07 to US$ 496 billion in 2011-12 and the relatively weak financial state of unorganized retailers, and the physical space constraints on their expansion prospects, this sector alone will not be able to meet the growing demand for retail. This represents a positive sum game in which both unorganized and organized retail not only coexist but also grow substantially in size. The majority of unorganized retailers surveyed in this study, indicated their preference to continue in the business and compete rather than exit.

Shri Prakash, Shalini Sharma and F. Kasidi, focus on Capital/ investment and human resources are the pivots of development. FDI brings capital with foreign technology and modern managerial techniques and organizational structures. Thus, FDI has both in and out flows, since developing economies like Korea, China and India are also the suppliers of FDI. Foreign Investment Outflows (FIO) depends basically on supply of capital in the home country. Developed rather than developing countries may, therefore, be hypothesized to be the main suppliers of FDI, and hence, FIO. As against this, countries of the third world could be envisaged to be the net recipients of FDI, howsoever high their growth rate and development status may be. We postulate that market size, as manifested by population and per capita income, economic environment including macro policy; especially reforms, current growth rate(s) and future growth potential decisively affect quantum and sectoral composition of FDI in an economy.

Dr. Santanu Sarkar, he says that one of the reasons often cited to attract foreign direct investment

5



http://113.193.6.110:8080/jspui/

(FDI) and invite MNCs is that they induce competition beside the expected knowledge externalities emanating from foreign investors in the form of technology transfer, and in that way, improving the productivity of domestic firms. Suggested by the results from this study is that foreign investment in a firm significantly and positively increases the firm's output and productivity. The results suggest that there is a positive own-plant effect and the negative spillovers to domestically owned firms. The results of estimation of the model indicate that the domestic firms in the industry sectors with greater foreign presence deviate from the most efficient firm in the industry largely due to increasing competition and hence make losses in respect of their output.

PROBLEM STATEMENT:

The article focuses, why this is a need of FDI in FMCG market? What may be the impact of FDI on the Indian FMCG market? What may be the impact of FDI on customer's perception, technology, employment and economic factors of customers and what may be the impact of FDI in FMCG market on of customers in Mysore District of Karnataka.

SCOPE OF THE STUDY:

This study is relating to impact of FDI intervention on FMCG market. This study mainly covers FDI investment, opportunities is relating to FMCG market. This article was centred with the study of impact of FDI intervention on FMCG market the way of marketing reporting. Sample of the study were collected from the Academic expert (Economics, Commerce, Management), Business practitioners (Organized and Unorganized), Literate, Others (students, illiterate) in and around the Mysore city. The activities were focused on show rooms, big bajars, more, malls in around Mysore city.

OBJECTIVES OF THE STUDY

The main objectives of this paper are:

To study the importance of FDI in FMCG market.To analyze customer perception on Foreign Direct Investment in FMCG market.To analyze the Economic and Employment effect by Foreign Direct Investment in FMCG market.To develop suitable recommendations for impact of FDI intervention on FMCG market.

HYPOTHESES OF THE STUDY

H0: “There is no significant influence by intervening of Foreign Direct Investment in FMCG market”.H0: “There is no significant change in technology by intervention of Foreign Direct Investment in FMCG market”.H0: “There is no significant influence between Employment and Foreign Direct Investment in FMCG Market”.H0: “There is no significant influence between Economic factors and Foreign Direct Investment in FMCG market”.

IMPORTANCE OF FDI IN FMCG MARKET:

The retailing industry is one of the biggest around the world when it comes to the privately owned ones. The industry has seen some major restructuring thanks to the FDI structure becoming more liberal than before. The benefits of FDI in FMCG retail, as per experts, carry greater weight age than the cost related implications. With FDI in FMCG retail, operations in distribution and production cycles are expected to become better. Owing to factors such as economic operation, the cost of production facilities will come down as well. This will mean a greater choice of products at lesser and justifiable prices for the customers. As a result of FDI, companies will be able to bring in technology and skills from other countries and this will help in infrastructural development of India. This will also help in creating more value for money for the buyers. After FDI in FMCG retail, it will be possible to set up a properly organized chain of FMCG retail stores as the capital to do so will be there readily. The investment can be regarded as a long term one as the physical capital put into a domestic company is not liquidated easily. This is its main difference from equity capital. Industry has witnessed heavy foreign direct investment (FDI) inflows as they accounted for 2.1 per cent of the country's total FDI during April 2000 - March 2010. Food processing

6



http://113.193.6.110:8080/jspui/

is the most popular FMCG category; it attracts over 53 per cent of total FDI in the industry and 51 percent in single-brand retail, which is expected to be further increased to 100 per cent. India is also expected to allow 51 per cent FDI in multi-brand retail, which will boost the nascent organized retail market in the country.

RESEARCH METHODOLOGY:

The study is designed as descriptive one based on the survey method. Both primary and secondary data were used for the smooth conduct of the study.

Primary DataPrimary data were collected from 100 respondents through a structured questionnaire covering customers in the FMCG market in Mysore District. Judgment sampling was used for selecting the sample respondents from the population.

Secondary DataSecondary data were collected from Business Magazines like The Economist, Business India, Journals namely Indian Journal of Marketing, Books written by various Foreign and Indian authors on Foreign Direct Investment in Indian FMCG marketing and through data available on internet.

Sampling DesignJudgment sampling was used for sample selection.

LIMITATION OF THE STUDY:

The study is restricted only to Mysore city.In this study questionnaire is used as an instrument for a sample population; therefore this study may not gather all the information from the whole population of Mysore city.

DATA PROCESSING AND ANALYSIS:

The collected data were processed and presented in the form of tables and figures and the analysis was made with help of relevant statistical and mathematical tools such as Frequency, percentage and ANOVA.

INTERPRETATION AND ANALYSIS:

Table- 1 Gender wise distribution

Table 1above and Chart 1 below, shows that 52.0 per cent of the respondents are males and the rest 48.0 per cent are females

7

Gender Number of respondents Percentage

Male 52 52.0

Female 48 48.0

Total 100 100.0

Source: Primary data



http://113.193.6.110:8080/jspui/

Chart -1 Gender wise distribution

Table 2 above and Chart 2 below, shows that among the total respondents, 48.0 per cent belong to the age group of less than 25 years , 44.0 per cent of the respondents are under 25to 40 years and only 8 per cent of the respondents are under 40 to 60 years.

8


Table – 2 Age wise Distribution

Age Number of respondents Percentage

Less than 25 48 48.0

25 to 40 44 44.0

40 to 60 8 8.0

Total 100 100.0


Chart 2 Age wise Distribution




http://113.193.6.110:8080/jspui/

In Table 3above and Chart 3 below, 34 per cent of the respondents earn below Rs.50000, 18 per cent of the respondents earn 50000 to 100000 annually, 22.0 per cent of the respondents have an annual income between 100000-200000, 14.0 per cent of the respondents have an annual income between 200000 to 500000, 6.0 per cent of the respondents have an annual income between 500000 to 1000000 and only 6.0 per cent of the respondents have an annual income above 1000000

9

Table -3 Income Wise Distribution

Annual Income Number of respondents Percentage

Less than 50000 34 34.0

50000 to 100000 18 18.0

100000 to 200000 22 22.0

200000 to 500000 14 14.0

500000 to 1000000 6 6.0

Above 1000000 6 6.0

Total 100 100.0


Chart -3 Income Wise Distribution


Table –4 Status Wise Distribution

Social status Number of respondents Percentage

Academic expert 58 58.0

Business practitioner 8 8.0

Others 34 34.0

Total 100 100.0




http://113.193.6.110:8080/jspui/

Table 4 above and Chart 4 below, shows that among the total respondents 58.0 per cent are academic expert people and all others towards business practitioner and others.

Table 5 above and Chart 5 below, reveals that 50 per cent of the respondents' awareness level from news paper, 30 per cent of the of the respondents are having awareness from TV channel, 10.0 per cent of the respondents are having awareness form Friends and only 10.0 per cent of respondents are having knowledge from studying books.

10

Chart 4 Status Wise Distribution


Table – 5 Awareness Wise Distributions

Awareness about FDI Number of respondents Percentage

News paper 50 50.0

TV channel 30 30.0

Friends 10 10.0

Studying books 10 10.0

Total 100 100.0


Chart 5 Awareness Wise Distributions




http://113.193.6.110:8080/jspui/

Table 6 above and Chart 6 below, reveals that 8 per cent of the respondents' are strongly disagree for allowing Foreign Direct Investment in Multi Brand Retailing in FMCG, 18 per cent of the of the respondents are disagree for allowing Foreign Direct Investment in Multi Brand Retailing in FMCG, 16 per cent of the respondents are neutral, 54 per cent of respondents are agree for allowing Foreign Direct Investment in Multi Brand Retailing in FMCG and 4 per cent of respondents are strongly agree for allowing Foreign Direct Investment in Multi Brand Retailing in FMCG.

11

Table – 6 Allowing 51% FDI in Multi brand retailing in FMCG

Allowing51% FDI in Multi brand retailing Number of respondents Percentage

Strongly disagree 8 8.0

Disagree 18 18.0

Neither disagree nor agree 16 16.0

Agree 54 54.0

Strongly agree 4 4.0

Total 100 100.0


Chart 6 Allowing 51% FDI in Multi brand retailing in FMCG


Table – 7 Allowing100% FDI in Single brand retailing in FMCG

Allowing100% FDI in Single brand retailing in FMCG Number of respondents Percentage

Strongly disagree 22 22.0

Disagree 50 50.0

Neither disagree nor agree 8 8.0

Agree 12 12.0

Strongly agree 8 8.0

Total 100 100.0




http://113.193.6.110:8080/jspui/

Table 7 above and Chart 7 below, reveals that 22 per cent of the respondents' are strongly disagree for allowing Foreign Direct Investment in Single Brand Retailing , 50 per cent of the of the respondents are disagree for allowing Foreign Direct Investment in Single Brand Retailing , 8 per cent of the respondents are neutral , 12 per cent of respondents are agree for allowing Foreign Direct Investment in Single Brand Retailing, 8 per cent of respondents are strongly agree for allowing Foreign Direct Investment in Single Brand Retailing.

CUSTOMER PERCEPTION:

H0:“There is no significant influence by intervening of Foreign Direct Investment in FMCG market”.H1:“There is significant influence by intervening of Foreign Direct Investment in FMCG market”

12

Chart – 7 Allowing100% FDI in Single brand retailing in FMCG


ANOVA

Sum of Squares Df M ean Square F Sig.

FDI improves competit ion in

FM CG.

Between Groups 24.434 4 6 .109 11.395 .000

Within Groups 50.926 95 .536

Total 75.360 99

FDI develops the FMCG

market ing in India.

Between Groups 17.602 4 4 .400 8.820 .000


Total 65.000 99

FDI would lead to

development of different

FM CG formats and

moder nization of the sector.

Between Groups 10.179 4 2 .545 4.169 .004


Total 68.160 99

High cost of borrowing

forces the domestic players

to charge higher prices for

the products.

Between Groups 11.639 4 2 .910 2.278 .067

Within Groups 121.361 95 1.277

Total 133.000 99

Small far mers can undertake

contract farming, but they

have no bargaining power

and will be at the mercy of

their buyers.

Between Groups 5 .946 4 1 .486 1.018 .402


Total 144.640 99

Loss of cultural and ethical

due to more influence of the

other cu ltures.

Between Groups 12.697 4 3 .174 2.615 .040


Total 128.040 99



http://113.193.6.110:8080/jspui/

Interpretation- Analysis of variance revealed significant influence between customer perception and Foreign Direct Investment in FMCG market. FDI improves competition in FMCG (F=11.395; P=.000), FDI develops the FMCG marketing in India (F=8.820; P=.000), FDI would lead to development of different FMCG formats and modernization of the sector (F=4.169; P=.004) and Loss of cultural and ethical due to more influence of the other cultures (F=2.615; P=.040) p value are less than .05 it is significant hence we accept alternative hypothesis. But the p value of High cost of borrowing forces the domestic players to charge higher prices for the products (F=2.278; P=.067) and Small farmers can undertake contract farming, but they have no bargaining power and will be at the mercy of their buyers (F=1.018; P=.402) are more than .05 hence the result shows that there is equal relationship and equal difference in relation to customer perception and Foreign Direct Investment in FMCG market.

TECHNOLOGY:

H0: “There is no significant change in technology by intervention of Foreign Direct Investment in FMCG market”.H1: “There is significant change in technology by intervention of Foreign Direct Investment in FMCG market”

Interpretation- Analysis of variance revealed significant relationship between the technology and Foreign Direct Investment in FMCG market FDI bring improves business practices and technology up gradation in FMCG (F=5.993; P=.000) p value are less than .05 it is significant hence we accept alternative hypothesis. But the p value of FDI bring quality standard in FMCG(F=2.369; P=.058), FDI impact on sales and profit(F=1.474; P=.216), FDI helps to organized retail has boosted the distribution of FMCG sector(F=1.165; P=.331), FDI investment on FMCG sector consumers are highly adaptable to new and innovative products(F=.538; P=.708), FDI brings advanced technology to improve productivity(F=1.745;

13

ANOVA

Sum of Squares Df Mean Square F Sig.

FDI bring improves business

practices and technology up

gradation in FMCG

Between Groups 15.990 4 3.997 5.993 .000


Total 79.360 99

FDI bring quality standard in

FMCG

Between Groups 7.170 4 1.792 2.369 .058


Total 79.040 99

FDI impact on sales and

profit

Between Groups 3.667 4 .917 1.474 .216


Total 62.760 99

FDI helps to organized retail

has boosted the distribution

of FMCG sector

Between Groups 4.520 4 1.130 1.165 .331


Total 96.640 99

FDI investment on FMCG

sector consumers are highly

adaptable to new and

innovative products

Between Groups 1.379 4 .345 .538 .708


Total 62.240 99

FDI brings advanced

technology to improve

productivity.

Between Groups 2.366 4 .591 1.745 .147


Total 34.560 99

FDI in FMCG can easily

assure the quality of product,

better shopping experience

and customer services.

Between Groups 3.656 4 .914 1.342 .260


Total 68.360 99




http://113.193.6.110:8080/jspui/

P=.147) and FDI in FMCG can easily assure the quality of product, better shopping experience and customer services(F=1.342; P=.260) are more than .05 hence the result shows that there is equal relationship and equal difference in relation to technology and Foreign Direct Investment in FMCG market.

EMPLOYMENT:

H0: “There is no significant influence between employment and Foreign Direct Investment in FMCG market”.H2: “There is no significant influence between employment and Foreign Direct Investment in FMCG market”

Interpretation- Analysis of variance revealed significant relationship between the employment and Foreign Direct Investment in FMCG market. FDI bring Employment opportunity in FMCG (F=11.210; P=.000) p value is less than .05 it is significant hence we accept alternative hypothesis. But the p value of Encourage the investment and employment in supply chain management. (F=3.420; P=.012) and FDI creating jobs opportunities at various levels (F=2.281; P=.066) are more than .05 hence the result shows that there is equal relationship and equal difference in relation to employment and Foreign Direct Investment in FMCG market.

ECONOMIC FACTORS

H0: “There is no significant influence between Economic factors and Foreign Direct Investment in FMCG market”.H3: “There is no significant influence between Economic factors and Foreign Direct Investment in FMCG market”

14

ANOVA

Sum of Squares Df Mean Square F Sig.

FDI bring Employment

opportunity in FMCG

Between Groups 21.240 4 5.310 11.210 .000


Total 66.240 99

Encourage the investment

and employment in supply

chain management.

Between Groups 11.701 4 2.925 3.420 .012


Total 92.960 99

FDI creating jobs

opportunities at various

levels.

Between Groups 6.225 4 1.556 2.281 .066


Total 71.040 99


ANOVA

Sum of Squares df Mean Square F Sig.

FDI Rising disposable

income of the young

population in FMCG

Between Groups 4.757 4 1.189 1.567 .189


Total 76.840 99

Entry of large FMCG’s will

ensure a reliable and

profitable market for local

suppliers, farmers and

manufacturers.

Between Groups 3.616 4 .904 .698 .595


Total 126.560 99



http://113.193.6.110:8080/jspui/

Interpretation- Analysis of variance revealed significant relationship between the economic factors and Foreign Direct Investment in FMCG market. FDI in multi-brand retail can give a big push to the country's social agenda, too(promote tourism, computerization and systemization) (F=11.670; P=.000), Foreign players enjoy a monopoly position which allows them to increase prices and earn profits (F=10.659; P=.000) and FDI in FMCG can upset the import balance, as large international retailers may prefer to source majority of their products globally rather than investing in local products (F=3.443; P=.011) p value are less than .05 it is significant hence we accept alternative hypothesis. But the p value of FDI Rising disposable income of the young population in FMCG (F=1.567=; P=.189), Entry of large FMCG's will ensure a reliable and profitable market for local suppliers, farmers and manufacturers(F=.698; P=.595), FDI promote India's manufacturing and export sectors, leading to a double bonus for the economy(F=1.097; P=.363) and The FMCG revolution can change country's perception across the globe, integrating it seamlessly into world trade and economy (F=1.138; P=.344) are more than .05 hence the result shows that there is equal relationship and equal difference in relation to economic factors and Foreign Direct Investment in FMCG market.

SUMMARY OF FINDINGS:

The respondent's male group consists of i.e. 52per cent and remaining 48 per cent are female out of 100 respondents.Majority of the customer i.e. 48 per cent belong to the age group be less than 25 years, 44 per cent belong to the age group be 25-40 years and 48 per cent belong to the age group be less than 40-60 years. The income of the respondents is 34 per cent belongs to less than Rs. 50,000, 18 per cent belongs to 50000 to 100000, 22.0 per cent belongs to 100000-200000, 14.0 per cent belongs to 200000 to 500000, 6.0 per cent

15

FDI promote India’s

manufacturing and export

sectors, leading to a double

bonus for the economy.

Between Groups 3.540 4 .885 1.097 .363


Total 80.160 99

FDI in multi-brand retail can

give a big push to the

country’s social agenda,

too(promote tourism,

computerisation and

systemisation).

Between Groups 43.873 4 10.968 11.670 .000


Total 133.160 99

The FMCG revolution can

change country’s perception

across the globe, integrating

it seamlessly into world trade

and economy.

Between Groups 5.282 4 1.321 1.138 .344


Total 115.560 99

FDI in FMCG can upset the

import balance, as large

international retailers may

prefer to source majority of

their products globally rather

than investing in local

products.

Between Groups 17.162 4 4.290 3.443 .011


Total 135.560 99

Foreign players enjoy a

monopoly position which

allows them to increase

prices and earn profits.

Between Groups 27.867 4 6.967 10.659 .000


Total 89.960 99




http://113.193.6.110:8080/jspui/

belongs to 500000 to 1000000 and 6.0 per cent belongs to above 1000000.The customers belong to academic experts are 58 per cent in the survey.The awareness level of Foreign Direct Investment in FMCG market is very high in News paper i.e. 50 per cent followed by TV channel i.e. 30 per cent.54 per cent of the respondents have agreed to allow Foreign Direct Investment in FMCG market.50 per cent of the respondents have disagreed to allow Foreign Direct Investment in FMCG market.As per the data collected regarding Foreign Direct Investment in FMCG market has been identified that majority of the respondents agreed for allowing 51% FDI in Multi Brand Retailing and disagreed for allowing 100% FDI Single Brand Retailing.Analysis of Variance (ANOVA) test has conducted to identify the relationship between the various factors such as Customer perception, Technology, Employment and Economic factors. Overall customer revealed that there is a significant change in Customer perception after introduction of Foreign Direct Investment in FMCG market, there is a significant change in Technology factors after introduction of Foreign Direct Investment in FMCG market, there is a significant change in employment after introduction of Foreign Direct Investment in FMCG market and there is a significant change in economic factors after introduction of Foreign Direct Investment in FMCG market.

SUGGESTION AND RECOMMENDATIONS:

FDI in order to promote competitive FMCG markets developing nations must reduce restrictions on FDI. We need to learn from the experiences of successful countries. No conditional restrictions should be imposed such as location/ category/ number of outlets or brands FDI encouraging co-operatives, associations of unorganized retailers and organized retailers.Foreign Direct Investment is a boom to us. It also contributes positively with regard to Liberalization, Privatization and Globalization. Anything that is useful and leading us towards improvement or development of the country. So that in future our India can become “THE INDIA” Each and every aspects has both positive and negative impact.Foreign Direct Investment is advantages and improves the Economic development of our country.

CLOSING THOUGHTS:

FDI has proved to stimulate economic growth and development in many of the countries. It not only promotes capital formation but also improves the quality of capital stock. In order to promote competitive markets developing nations must reduce restrictions on FDI. We need to learn from the experiences of successful Countries. The ultimate motive should be to minimize the “bads” and maximize the “benefits”. The benefits from FDI increased market concentration , economic implications, improve economic growth, improve import and export, increase the investment, cost control, provide a more overall employments opportunity, Improved Technology and Logistics, Impact on Real-Estate Development,

In light of the above, it can be safely concluded that allowing healthy FDI in the FMCG market 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 FMCG market with that of the global FMCG market in addition to providing not just employment but a better paying employment, which the unorganized sector (Kirana and other small FMCG shops) have undoubtedly failed to provide to the masses employed in them. Thus, as a matter of fact FDI in the buzzing Indian FMCG 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, Up-gradation in Agriculture, Efficient Small and Medium Scale Industries, Growth in market size and Benefits to Government through greater GDP, tax income and employment generation.

REFERENCES:

Newspapers

The Economic Times The Business Standard

16



http://113.193.6.110:8080/jspui/

Websites

www.Legalserviceindia.com www.Manupatra.com www.Scribd.com www.cci.in www.rbi.org.in www.dipp.nic.in www.legallyindia.com www.icsi.edu www.retailguru.com

Research papers\reports

FDI Consolidated Policy FMCG Annual ReportsMathew Joseph, Nirupama Soundararajan, Manisha Gupta, Sanghamitra Sahu(May 2008) “Impact of Organized Retailing on the Unorganized Sector” Indian Council for research on international Economic relations.Preety Wadhwa* Lokinder Kumar Tyagi** (June 2012) "A Study on Organized FMCG Retailing in India - Road Ahead” ISSN: 2277-4637 (Online) | ISSN: 2231-5470 (Print) Opinion Vol. 2, No. 1, Dr. Gaurav Bisaria Assistant Professor, Faculty of Management & Research, INTEGRAL UNIVERSITY, Lucknow, INDIA(Jan-2012) “FOREIGN DIRECT INVESTMENT IN RETAIL IN INDIA” International Journal of Engineering and Management Research, Vol. 2, Issue-1, Jan 2012 ISSN No.: 2250-0758 Pages: 31-36Kamaladevi Baskaran Research Scholar, Dravidian University, Kuppam, Andhra Pradesh, India (January-2012), “The FDI Permit for Multi Brand Retail Trading in INDIA - Green Signal or Red Signal” Business Intelligence Journal Pages 176 TO 186, Vol.5 No.1 Dr. Santanu Sarkar, Ph.D. Associate Professor, “Impact of Inward FDI on host Country – Case of INDIA”Pages1 to 28John Henley, Stefan Kratzsch, Mithat Külür, and Tamer Tandogan (March 2008), Foreign Direct Investment from China, India and South Africa in sub-Saharan Africa: A New or Old Phenomenon? Research Paper No. 2008/24Arun Kr. Singh and P.K. Agarwal(2012), “Foreign Direct Investment : The Big Bang in Indian Retail”VSRD International Journal of Business & Management Research Vol. 2 (7), 2012, Pages 327-337Shri Prakash, Shalini Sharma and F. Kasidi “ INPUT OUTPUT MODELING OF IMPACT OF FDI ON INDIAN ECONOMIC GROWTH”Asta Zilinske (2010), “NEGATIVE AND POSITIVE EFFECTS OF FOREIGN DIRECT INVESTMENT”ISSN 1822-6515 ISSN 1822-6515 EKONOMIKA IR VADYBA: 2010. 15 ECONOMICS AND MANAGEMENT: 2010. 15 Jatinder Singh (June 2011), “Inward Investment and Market Structure in an Open Developing Economy: A Case of India's Manufacturing Sector” Journal of Economics and Behavioral Studies Vol. 2, No. 6, pp. 286-297,

17



http://113.193.6.110:8080/jspui/

Publish Research ArticleInternational Level Multidisciplinary Research Journal

For All Subjects

Dear Sir/Mam, We invite unpublished research paper.Summary of Research Project,Theses,Books and Books Review of publication,you will be pleased to know that our journals are

Associated and Indexed,India

¬

¬OPEN J-GATEInternational Scientific Journal Consortium Scientific

Associated and Indexed,USA

?Google Scholar?EBSCO?DOAJ?Index Copernicus?Publication Index?Academic Journal Database?Contemporary Research Index?Academic Paper Databse?Digital Journals Database?Current Index to Scholarly Journals?Elite Scientific Journal Archive?Directory Of Academic Resources?Scholar Journal Index?Recent Science Index?Scientific Resources Database

Indian Streams Research Journal 258/34 Raviwar Peth Solapur-413005,Maharashtra

[email protected]/[email protected]

Website : www.isrj.net

Indian Streams Research Journal - Amazon S3· ITC echoupal and Choupal Sagar – Choupal Sagar is...

Documents

Transcript of Indian Streams Research Journal - Amazon S3· ITC echoupal and Choupal Sagar – Choupal Sagar is...