India is a land of retail democracy in which thousands of weekly Hafts, Bazaars are located our country by people’s owned self organizational capacities and interests. India has11shops per1000people and number around15millions, giving India the highest retail shop density in the world. Despite of that, India had severe scarcity of capital resources since independence. That welcomes foreign investment in a restricted manner, since these five year plan period since1956‐1961greater emphases was given to Industrialization which led to development of the local industries. To protect the domestic industry from foreign competition, Government adopted various restrictive measures towards FDI inthelate1960s. Inthe1980s, as a part of the industrial policy resolutions, theme assure towards FDI was liberalized in a limited manner. “The year 1991was marked with severe balance of payments deficits. Foreign exchange reserves went down to US$1.1billion in June1991less than sufficient for two weeks of import requirements” .India was on the verge of default and it got financial assistance from IMF on certain terms and conditions. This involved “Structural Adjustment Program (SAP)”by India. These “SAP” apart from bringing about changes in major change in FDI policy of India. In these circumstances, it was not possible for India to continue with its past policy of restrictions and it became essential to liberalize the economy. Liberalization involves free operations of international market forces. This led to removal of most of the restrictions in FDI.The Indian retail market variously estimated at$400to450billion,is dominated by the highly unorganized sector As a result, India is now among the top five most attractive economies for FDI.