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After the liberalisation and economic reforms in 1991, the sector started evolving; imposed restrictions were relaxed leading to the development of the economy.Thus, consumer good industry exhibited significant growth in the limited span of time.
Further, the development of scale was also limited due to restriction on interstate movement of goods and stock.
Overall the growth of retail sector was constrained due to low income of the consumers followed by high taxation and poor government support.
This study has analysed the impact of liberalisation of Indian economy and FDI policy on the retail sector since its implementation in the 1990s.
It also further analyses sub-categories by investigating its impact on the unorganised retail sector and the flow of FDI in single-brand retail and multi-brand retail sectors.
Since the liberalisation of FDI policies started in the early 1990s, the Indian economy has welcomed many multi-national corporations (MNCs) to invest and was ascertained to receive the humongous amount of foreign investment in the future.
The retail sector of India went through a gigantic transformation in the last two decades.
Currently, India’s retail sector is at a nascent stage where 92% of the retail sector is unorganised retail such as vendors, street markets, hole-in-wall shops, mom-n-pop stores and roadside hawkers.
Unorganised retailing is categorised based on lack of knowledge about inventory control, supply chain management, government policies, taxation rules and standardisation of product.
The growth in export sector turned negative, and industrial production recorded negative growth.
Thus, an attempt to liberalise economy in 1987 was made to overcome balance of payment issue, but that did not succeed.