International Journal of Business

Management & Research (IJBMR)

ISSN(P): 2249-6920; ISSN(E): 2249-8036
Vol. 5, Issue 6, Dec 2015, 19-28
TJPRC Pvt. Ltd.

FOREIGN DIRECT INVESTMENT AND MAKE IN INDIA POLICY

IN FOOD PROCESSING INDUSTRY AND ITS IMPACT ON
SOCIETAL LIFESTYLE OF NORTH EAST INDIA
GOURAB JYOTI KALITA
Assistant Professor, Department of Business Management, Gauhati Commerce College Guwahati, Assam, India
ABSTRACT
After introducing the liberalization Policy of 1991, FDI entered in India and it has made a remarkable change
in the economic and societal scenario of India. Foreign Direct Investment made by the companies of developed countries
is the reason for rapid industrialization, growth of consumer market and service industry in India and better standard of
living of Indian citizen in India. But Foreign Direct Investment has not properly entered in the traditional retailing sector
of India. It has been a long controversy among political parties of India whether to invite FDI in the retailing sector of
India or not. It is true that the developing economy of India need FDI in the retail sector since FDI comes with the
promises of better employment opportunities to local people, introduction of better and advanced technology in the

used, then FDI is criticized by political parties since there is danger of closing down of ineffective retail outlets, danger of
losing income for retail shop owners, danger of elimination of middlemen or broker in the distribution system etc
Similarly the Government of India introduced Make in India policy on 25th September 2014 with the objectives of
encouraging domestic companies and MNCs to produce their quality products in India. The North East retail market is
characterized by traditional unorganized marketing, ineffective customer centric marketing approach and lack of

Original Article

production and retailing process and providing better standard of living to Indian citizen. But if protectionism measure is

entrepreneurship and Government assistance especially to the marketing of perishable goods. The introduction of FDI
and Make in India policy in the retail sector of North East India is therefore essential. This paper consists of a study on
the introduction of FDI and Make in India policy in the retail sector of North East India with special reference to
marketing of perishable goods, its impact on societal lifestyle of North East India.
KEYWORDS: FDI, Liberalization Policy, Economic, Societal Lifestyle, Retail Sector, Controversy, Protectionism,
Perishable Goods, Make in India Policy

Received: Oct 13, 2015; Accepted: Oct 26, 2015; Published: Nov 07, 2015;Paper Id.: IJBMRDEC20153

INTRODUCTION
Foreign Direct Investment (FDI) is a direct investment into the business in a country by a company in
another country, either by buying a company in the host country or by expanding operations of an existing business
in that country.FDI which means making investment in the securities of another country such as stocks and bonds.
Foreign Direct Investment has many forms such as mergers and acquisitions, building new facilities, intra-company
loans etc.FDI entered in India in 1991 after the formation of Liberalization policy. The Indian parliament has
allowed FDI in retail on December 7, 2012. Manmohan Singh, the former Prime Minister of India, felt that this will
be beneficial for both consumers and farmers. Agricultural marketing is also expected to be benefited with the
introduction of new technologies.

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Gourab Jyoti Kalita

Make in India is a policy developed by Government of India with the initiative of Prime Minister of India,
Narendra Modi. This policy was introduced on 25th September, 2014 with a view to encourage MNCs and domestic
companies to manufacture their products and to produce their services in India. The major sectors under Make in India
policy are automobiles, chemicals, IT, pharmaceuticals, ports, food processing industry, leather, tourism and hospitality,
mining, bio-technology, electronics etc.
India is an agriculturists country. The farmers are basically engaged in production of fruits and vegetables that
are generally perishable in nature. Perishable goods are those that worsen in quality overtime and its ultimate value
decreases. These goods decay rapidly if some proper preservation techniques are not employed. North Eastern states of
India are also rich in the production of perishable items such as fresh fruits, vegetables, dairy products, poultry products
etc. Perishable goods need to be handled in a careful and efficient way, so that it reaches the ultimate consumers in a usable
condition. So, the business that deals in perishable items requires a well designed preservation technique and also a cost
effective method of transporting the goods before they get spoiled.
Therefore introduction of FDI and Make in India policy in the retail marketing of perishable goods is of relative
importance. Research on this topic is therefore useful.

OBJECTIVES OF THE STUDY

The objectives of the topic under the study are as follows:

To study the marketing conditions of perishable goods in North East India.

To study the impact of FDI and Make in India policy on unorganized retailing of perishable goods.

To analyze the influence or the effect of pesticides used on the perishable goods on the health of the consumers.

To offer suggestions to improve the societal lifestyle of North East region

Significance of the Study

The importance of the study is as follows:

This study would help the researcher to know about the present marketing conditions of perishable goods in the
North Eastern region.

This study would help the marketers or the local entrepreneurs to know about the various benefits that would be
imparted by FDI and Make in India policy such as better and sophisticated storage facilities, improved
transportation facilities, reduced number of middlemen etc in the distribution channel of perishable goods.

Moreover, this study will also help the consumers to know about the different perishable goods that are produced
by using different kinds of pesticides and its negative impact on their health.

RESEARCH METHODOLOGY
Research Methodology is a way of solving research problems. It includes the various steps that are generally
adopted by a researcher in studying their research problem along with the logic behind them.
Taking into account the importance of the topic, the researcher has used both primary and secondary methods for

Impact Factor (JCC): 5.3125

NAAS Rating: 3.07

Foreign Direct Investment and Make in India Policy in Food Processing

Industry and its Impact on Societal Lifestyle of North East India

21

collection of reliable data.

Primary data are collected by making personal Interview with customers, marketers or retailers, farmers
producing perishable goods and also with the doctors. Secondary data are collected through websites,journals and
newspapers.
The unorganized markets of Guwahati as a part of North East are the sampling frame. Statistical tool such as pie
diagram (double dimension) is used in the study. The sampling technique used for study is fact finding and exploratory
technique.
FDI in India
During the deregulation in July 1991, the government abolished the industrial licensing system, except in 15
critical industries and reduced the number of industries reserved for the public sector. Prior government approval for the
expansion and diversification of large firms including foreign firms has been ended. Foreign firms are allowed to invest in
51% equity capital in 35 high priority industries with automatic approval. Foreign investments is also permitted in 22
consumer goods industries, subject to conditions of dividends being plough back. The manufacturing of readymade
garments, earlier reserved exclusively for the small-scale industrial undertakings, has been open to large-scale undertakings
including foreign companies, subject to export obligation of 50% and investment limit of Rs. 30 million.
The new investment policy provided some incentives for attracting FDI. Special incentives are provided in
telecommunication, transportation, petroleum refining and marketing, power generation etc industries
The Indian parliament has allowed FDI in retail on December 7, 2012. Manmohan Singh, the former Prime
Minister of India, feels that this will be beneficial for both consumers and farmers. Agricultural marketing is also expected
to be benefited with the introduction of new technologies in the agriculture sector; international companies will now be
able to increase their presence in the multi brand retail sector of India. However, they will not be allowed to acquire more
than 51% stakes in these establishments.
Make In India policy
The Make in India policy includes major new initiatives designed on 25 september, 2014 by Prime Minister,
Narendra Modi mainly to foster investments, encourage innovations, protect intellectual property and build best in class
manufacturing infrastructure. The major sectors under Make in India policy are automobiles, chemicals, IT,
pharmaceuticals, ports, food processing industry, leather, tourism and hospitality, mining, bio-technology, electronics etc.
Under the initiative, brochures on the 25 sectors and a web portal were released. Before the initiative was launched, foreign
equity caps in various sectors had been relaxed. The application for licenses was made available online and the validity of
licenses was increased to three years.
Organized Marketing and Unorganized Marketing -Brief Description
Retailing in India is one of the important industry of the economy which accounts for 14 to 15% of its GDP. The
Indian retail market is estimated to be US $450 Billion and one of the top 5 retail markets in the world by economic value.
India is one of the fastest growing retail markets in the world, with 1.2 billion people.
Organized retail is nothing but a retail place where all the items are stored and marketed under one roof. In India
organized retailing refers to trading activities undertaken by licensed retailers, that is those who are registered for sales tax,
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Gourab Jyoti Kalita

income tax etc. Organized retailing in India includes corporate hypermarkets, chain stores, supermarkets, shopping malls
etc Organized retail stores are basically available in metro cities.
Unorganized retail means here selling different things in different shops. It refers to the traditional formats of lowcost retailing like the local corner shops, owner manned general stores, paan-beedi shops, convenience stores, handcart and
pavement vendors. Vast majority of the unorganized retail shops in India employ family members. They have no sufficient
fund for to purchase or transport products at high volume, have no usage of safe and hygienic storage facility, improvised
packaging or logistics. The source of their products from a chain of middlemen who purchase the products from producers
and sell it to them and they typically offers no after-sales support or service. Moreover, unorganized retailers have
significant competitive strengths that include consumer goodwill, credit sales, convenient timings, bargaining, ability to
sell loose items, home delivery etc. Finally, most transactions at unorganized retail shops are done with cash, with all sales
being final.
Food Processing Industry of India
The Indian food industry is well known for huge growth. It has made a remarkable contribution to the world food
industry. In India, the food sector is characterized by high growth opportunity and it offers for value addition, particularly
with the food processing industry getting recognised as a high-priority area.
The food processing industry accounts for about 32 per cent of the countrys total food market. The food
processing industry is one of the largest industries in India and is ranked fifth in terms of production, marketing and
consumption, export and expected growth. The total food production in India is likely to double in the next 10 years and
the countrys domestic food market estimated to reach US$ 258 billion by 2015.
The Indian food and grocery market is the worlds sixth largest food market, with retail contributing 70 per cent
of the sales. It is expected to grow at the rate of 104 per cent by 2020 with US$ 482 billion
In order to promote and diversify food processing industries, Vision Document-2015 was prepared by the
Ministry, which envisaged trebling the size of investment in the processed food sector by increasing the level of processing
of perishables from 6 per cent to 20 per cent, value addition from 20 per cent to 35 per cent and share in global food trade
from 1.5 per cent to 3 per cent by 2015. Further The Government of India is trying to develop food processing industry
under the Make in India policy.
The Government of India is now giving concentration on the adoption of food safety and quality assurance
mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical
Control Points (HACCP), Good Hygienic Practices (GHP) , Good Manufacturing Practices (GMP) etc. using of hygiene
and quality norms and thereby protect consumer health, prepare the industry to face global challenges, introducing
customer centric market with modern marketing avenues, enhance product acceptance by foreign buyers and keep the
industry technologically upgraded.
Retail Marketing Scenario of Perishable Goods in North East India
Perishable means can go bad. It usually refers to short shelf life items such as fruit and vegetables, fresh meat
and fish and other fresh foods.
The retailing of perishable goods in North-East India is based on unorganized marketing. Unlike organized
Impact Factor (JCC): 5.3125

NAAS Rating: 3.07

Foreign Direct Investment and Make in India Policy in Food Processing

Industry and its Impact on Societal Lifestyle of North East India

23

marketing, marketing is not done under one roof. The retailers purchase such goods in large quantities from brokers or
middlemen (who purchase goods from farmers) and sell them to customers at busy areas like nearby bus stops, railway
stations or other market places. But, the unorganized marketing of perishable goods have a negative impact to the public of
North east because of the following reasons

The agricultural firming technique of food corps of North-East India is traditional and backward. To meet the vast
requirement of perishable goods of the increased population, farmers have started of using pesticides in the food
corps. Pesticides are a substance used for destroying insects or other organisms harmful to cultivated plants or to
animals. They help the farmers in making increase of production of food corps. But improper or mass use of
pesticides in the food corps is harmful to health. Using backward firming technique; farmers are now increasingly
using pesticides to food corps to meet the vast demands of perishable goods. As an impact, consumers or the
public of North East are affected by pesticides foods and deceases like high pressure, diabetes etc are increasing
among public.

The unorganized retail shops of perishable goods do not follow the general safety measures in storing or placing
the food corps. Foods are even placed near by busy roads, without any glass or plastic cover which may be
injurious to health.

Since farmers are given very low price to their food corps by the middlemen, farmers of food corps are
dissatisfied and it affects their morality.

The government department especially in Assam is giving less attention, exercising less control to the retail
market of perishable goods. Therefore the prices of daily needed vegetables and fruits and other perishable goods
are inflating excessively and the middlemen are steadily controlling the retail market of vegetables goods.

The retail marketing of perishable goods is fully under the control of middlemen. These middlemen purchase
perishable goods from farmers at very low price and sell these goods to retailers at a higher price. Therefore the
retailers of perishable goods, after adding their profits to their investment, have to sell such goods at very high
price to the consumers.

Some problems of North East region like increase in population, improper production of perishable goods as per
the requirement caused by flood etc also affected customers or the public.
Some important photographs- (Source Secondary data)

Figure 1: Using Pesticides in Food Corps

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Gourab Jyoti Kalita

Figure 2: Traditional Firming Technique in Assam

Figure 3: Unorganized and Unhealthy Retailing

Figure 4: Organized Retailing of Perishable Goods

Figure 5: Statistic about Diabetes

Data Analysis
Analysis of data is a process of inspecting, cleaning, transforming and modeling data with the goal of highlighting
useful information, suggesting conclusions and supporting decision makings. Accordingly personal interview analysis is
made with some customers of perishable goods or public, some farmers of North East, some retailers of perishable goods
and with some doctors. The personal interview is made by asking some specific questions to the respondents and it were
revealed that
Impact Factor (JCC): 5.3125

NAAS Rating: 3.07

Foreign Direct Investment and Make in India Policy in Food Processing

Industry and its Impact on Societal Lifestyle of North East India

25

Interview with the Customers of Perishable Goods or Public in Guwahati as a Part of North East India
To achieve the objective of the study, interview is made with 50 numbers of customers. During the interview with
customers, it is revealed that majority of customers want introduction of FDI and Make in India policy for the food
processing industry and organized marketing of perishable goods in North East India. Because in North East India, in one
hand prices of essential perishable goods are inflating at excessive rate and Governments of North East India are allowing
more control to the middlemen in the distribution system of perishable goods. As an impact, prices are increasing.
Unscientific and excessive using of pesticides in food corps is harmful to health and therefore customers are unsatisfied
with the present production and marketing system of perishable goods. Moreover benefits of organized marketing such as
advanced storage system, marketing facilities and parking facilities under one roof, introduction of customer centric
marketing approach to the marketing of perishable goods and benefit of enjoying advanced lifestyle compel them to accept
FDI and Make in India. Policy in North East India in the perishable goods marketing
Interview with Retailers of Perishable Goods in Guwahati as a Part of North East India
For achieving the objectives of the study, an interview was made with 20 numbers of retailers of perishable goods.
During the conversation it was revealed that retailers do not want the introduction of FDI and development of organized
marketing in India. The main reasons for their rejection of FDI are the fear of losing income affected by FDI and organized
marketing, fear of competitive pressure caused by technological difference. They suggested other measures for the removal
of difficulties of the marketing of perishable goods like better Governmental control on retail marketing of perishable
goods, development of better marketing infrastructure by government, providing of better subsidy to farmers of perishable
goods.
Interview with Farmers
During the study interview was made with 10 numbers of farmers of perishable goods. It was revealed that
Farmers want the introduction and development of FDI and Make in India policy and organized retailing since they are
very much dissatisfied with the low amount of money paid to their crops by the marketing agent like middlemen. They
want a better return for their hard labour and therefore they want FDI and organized marketing since they have the hope
that foreign retailers will purchase their food corps by giving better amount of money to their corps. Moreover, they want
to avail the benefits of modern technologies to their firming process which will come to NE India through FDI and Make in
India policy.
Interview with Doctors
Interview was made with 5 numbers of doctors for finding their opinion regarding the affection of pesticides used
in perishable goods and the acceptability of FDI and Make in India policy for Food processing industry in North East India.
They informed us about a serious threat that affects the health of majority people of North East India that is the affect of
pesticides used in perishable goods. These pesticides used perishable goods harm the health of the people and deceases like
heart attack, diabetes, cancer and high pressure etc are increases day by day among people. They want the introduction and
development of FDI and Make in India policy for food processing industry in North East India as they want better healthy
and hygienic system of retailing of perishable goods.

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Table 1: Showing Respondents Preference to Organized Retailing of Perishable Goods

Type of Respondents
Customers
Retailers
Farmers
Doctors
Source: Field study

No of Respondents
41/50
4/20
9/10
5/5

No of Respondents in %
82%
20%
90%
100%

Figure 6: Diagram Representing Respondents Preference to

Organized Retailing of Perishable Goods

Source: Field study

Suggestions
It is tried to give some suggestions as under

FDI and Make in India policy will bring new technology to NE India. This technology serves as a tool for
increasing the production of perishable products, better scientific storage facility of perishable goods and thereby
public of this region will be benefitd since possibility of reduction of price of perishable goods increases.

FDI and Make in India policy will bring improved firming technique of organic food and thereby reduction of
production of presticide used food which will be beneficial to society.

Firmers will gain confidence if FDI comes because they will get reasonable benefit to their hard labour. Again
FDI and organised retailing will contribute in the elimination of unnecessary middlemen in the distribution system

Reduction and closing of unscientific, unhealthy perishable outlets and introduction and development of improved
organised retail stores will contribute in the lifestyle development of the people of NE India.

Employment opportunities to educated youths will be increased.

FDI will result in increasing competitiveness among retail outlets of NE India and it will contribute in the
establishment of modernised customer centric marketing approach especially to the marketing of perishable
goods.

CONCLUSIONS
A better and growing economy needs to make proper liberalisation of its econmic policies to keep pace with
global developed economies. Globalisation or assuming globalised quality is the key for modernised business sector
Impact Factor (JCC): 5.3125

NAAS Rating: 3.07

Foreign Direct Investment and Make in India Policy in Food Processing

Industry and its Impact on Societal Lifestyle of North East India

27

especially to retailing sector. Therefore it is essential to introduce FDI and Make in India policy properly in the retailing
sector of India after analysing its benefits and drawbacks to the societal, economic and corporate scenario of India by
experts. North East India as a part of the growing economy of India also need such upliftment. These upliftment includes
development of organized marketing in the retailing of perishable goods, benefits of better standard of living to public,
benefits of advanced technology to the agriculture aw well as retailing sector, increasing employment opportunities to
young generation etc. For this is to be possible, controvercies should be avoided and political parties of India should look
foreward towards a new rising sun of Modern developed India.Z
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Impact Factor (JCC): 5.3125

NAAS Rating: 3.07