With the intention of strengthening the Indian economy, the foreign direct investment (FDI) policy has been progressively liberalised since 1991. Over a period of time, the Indian government has opened the doors for FDI in a multitude of sectors, barring a few. FDI caps and conditionalities in a few regulated sectors have also been raised progressively, coupled with procedural simplification and introduction of measures to facilitate smooth implementation of FDI-funded projects.

In wake of these liberalisations, even the Indian retail sector has scaled an impressive growth curve over the last decade, with considerable consumer acceptance for organised retailing formats, more particularly in the urban areas. Notwithstanding the above performance, the organised retail segment is still in a nascent stage with global retailers entering India only in the last few years, constrained by regulations allowing entry primarily through cash and carry operations. Complex corporate structures and the fact that intermediaries obtain a disproportionate share of value in the supply chain have always deterred foreign investments in the retail arena.