Foreign direct investment (FDI) plays an important role in the growth of
India's dynamism. There are many examples of benefits of FDI in India.
FDI in retail, the suppliers (farmers) benefit and improve by reducing
transaction costs and transformation of enterprises through adoption of
advanced supply chain and consumers. India is the second largest
country, which have immense possibilities for expansion in the retail
sector, as along with the time of urbanization and consumption also has
an opposite tendency. Originally India conservative FDI on respect;
imposed restrictions on foreign companies to limit their share of equity
in their Indian subsidiaries, but gradually foreign investment in various
sectors liberalized the Indian government over time. Recently in 2011
allowed India 100% FDI in single brand retail and in 2012, 51% FDI
allowed in multi-brand. In this report, we analyze the impact of this
decision on the various sectors such as food retailers, farmers, traditional
and employment and food inflation. In this context, the present work
makes an attempt, the potential impact of FDI on Indian retail, whether
good or bad, to study opportunities and challenges. It analyzes the
reasons why foreign retailers are interested in India and their prospects
in India and learn the proposals for the future growth of the retail
FDI ( Foreign Direct Investment ) is a method that allows the inhabitants of a
country to invest directly their funds in another country and acquire the ownership
of assets and control of the investment in terms of production , management ,
distribution , effective decision-making, employment , etc. exercise . "FDI is to
control an international financial power with the intension or involved in a foreign
country in the management of a company."
Retail sector is one of the largest carriers in the Indian economy and accounts for
15 percent of its GDP. The Indian retail market is estimated to be US $ 450 billion
and one of the top ten retail markets of the economic value in the world. India is
one of the fastest developing retail markets in the world, with 1.2 billion people. In
simple terms, makes retail directly the final product to the end user of the product
or a sale to the final disposal.
The Indian retail industry is the fifth largest in the world, consisting of organized
and unorganized sectors. Indian government continues to hold on the retail reforms
for multi-brand stores.
The impact of the entry of major retail chains on employment and established
mom-and-pop stores is mixed. There may be significant benefits for consumers in
terms of lower prices and reduced food price inflation. Moreover deal through
improved distribution and storage technologies, large retail chains are able to
provide a better price signals to farmers and to serve as a platform for increased
This paper discusses about the potential impact of FDI on Indian retail, whether
good or bad, opportunities and challenges and also the contribution of FDI in retail
in the economic growth of the country. It also explains the trends in FDI inflows in
various emerging markets
5. REVIEW OF LITERATURE
The study showed that barely 1.7 per cent of small businesses have closed down
from organized retail due to competition. You have successfully competed against
organized retail by adopting better technology. FDI has positive spillover effects
on the economy as his property benefits locally owned companies spread condition
to increase their productivity. All these benefits of FDI were well proven in sectors
such as automobiles, telecommunications and consumer electronics in India.
Foreign retailers work with small manufacturers for in-house labels and they offer
technologies such as packaging technologies and barcodes. Sourcing from India
has increased with the advent of foreign retailers and they also bring in an efficient
supply chain management system. Joint ventures with foreign help retailers who
get Indian industry access to finance and global best practices. In addition, a non-
tradable service in retail, there is no possibility of improved efficiency through
import competition and foreign investment is the way forward.
6. WHAT IS FDI?
If a company or organization (usually by the company and not the government of
that country) in other, their capital to invest in a country or company basis than
that. Of their hostcountry it also involves the purchase or construction of fixed
assets in a foreign country, you are to use the degree of control over the
organization and performance of different functions. The example of suchtangible
assets are investments and other income generating assets. Then that investment is
called foreign direct investment. Indirect investments are generally not included as
foreign investment, with market List of Nation shares which are invested by
foreign institutions, may the example of indirect investment portfolio flows (it is a
passive investment in securities such as public stocks or bonds in another country
or rather say it. as a purchase of securities of a country from other countries
nationals) As suggests the names of these institutions make direct investments can
access the power to control the companies in which they have invested up to a
significant extent. Stark regulated economies cannot attract foreign direct
investment, while the countries with a highly skilled workforce and open
economies attracts huge sum of foreign investments
There are a number of ways to invest in those companies to make their investments
in foreign companies and some ways as follows-
1. You can acquire the shares in a new country
2. You can merge or develop a joint venture with a company have, which is
established in another nation
7. 3. You can open a subsidiary or franchisee adjust their business in a foreign
OECD says that a company should have more than 10% of the voting shares. They
define it as a controlusing emerging voting rights to 10%, which is internationally
agreed, but the widespread companies usually have the control level small block of
shares, which is why it is a gray area. The control of technology, management and
other key inputs control over given.
Foreign direct investment is the transfer of ownership? No, even the transfer of
factors such as capital, technology, management and organizational skills, etc. are
also included, it is therefore not only is transfer of company property. In a narrow
sense, the building just include a new investment in foreign direct investment. FDI
is the sum of equity and long-term and short-term capital according to the balance
of payments. FDI is an example of international factor movements or currency
FDI can also be taken in the form of green field entry or as a foreign takeover.
Green field entry when the conceptin which the large companies, small parts and
all other elements of its products from the ground up for sample Honda do this
assemble manufactured in the UK.
The definition of FDI is not affected by the origin of the investment. Investments
can either way take place as inorganically by acquiring new companies in new
destination country or by the well-established business in the host country expands
in a new country that is organic.
Foreign acquisition is a term that is generally substituted with the known as
mergers and acquisitions term but the fact is that these two term are different, as in
8. the international market mergers are immensely small as they constitute less than
one percent of all foreign acquisitions.
Types of Foreign Direct Investment: An Overview
The FDI can basically be classified into three types, and they are according to the
activity and industry that companies do in a foreign country. Broad classifications
are outward and inward FDI. Classified by the restrictions imposed. If the FDI is
backed by the government against any danger is an outward FDI. This is subject to
tax incentives. "Direct investment abroad" is the term referred to as the coverage of
the domestic industry. The factors such as interest loans, tax breaks, subsidies and
restrictions removals are the factors that encourage inward FDI. The other type of
FDI given as underwritten: -
In this type companies are doing the same business, as they do in their home
country. Any foreign investment have their different motives. "Market-seeking
FDI" is the ability to search for new markets or strengthen the existing business
empire and when the companies to strengthen their productive capacity and to
explore new country, who as a better operational efficiency, what they have in their
home country, it is referred to as "resourceFDIs such" and some companies invest
in order to optimize the available opportunity and economies of scale, they are
called "efficiency-seeking FDI". Example of horizontal FDI: “Toyotabuilds its
cars in both countries (Japan and the United Kingdom)”.
9. 2. Vertical
In this type companies are working on different stages in different countries, but on
an equal division. It can be further classified assets on.
a. Forwardvertical FDI is placed in firm contact with the market and with the
appropriate example to distribute of Toyota cars in America.
b. BackwardverticalFDI, which is opposite, and is a backward shift such as
collecting or integrating Raw. Forsample to acquire a land for the
production of tires or a rubber plantation from Toyota.
Established a whole new business in abroad, which is completely independent to
business of the hostcountry. This is the most challenging and risky form of FDI
due to the two major challenges - new market, which in all together to new
10. Retailing in India
Retailing in India is one of the pillars of the economy, accounting for
approximately 22 percent of GDP. “The Indian retail market is estimated to be US
of economic value in the world $ 500 billion and one of the top five retail markets.
India is one of the fastest growing retail markets in the world, with 1.2 billion
As of 2003 India's retail sector was substantially small shops manned owners. In
2010, larger format convenience stores and supermarkets accounted for about 4
percent of the industry, and these were only available in large urban centers.
“India's trade and logistics industry employs about 40 million Indians (3.3% of the
By 2011, denied Indian central government foreign direct investment (FDI) in
multi-brand retail, prohibits foreign groups of each property in supermarkets,
convenience stores or retail outlets. Even single-brand retail limited to 51% of the
shares and a bureaucratic process.
In November 2011, the Indian central government Retailing announced reforms for
both multi-brand stores and single-brand stores. “These market reforms paved the
way for the retail innovation and competition with multi-brand retailers such as
Wal-Mart, Carrefour and Tesco as well as individual brand majors like IKEA,
Nike and Apple. The announcement sparked intense activism, both. In the
opposition and in support of reforms In December 2011, under pressure from the
opposition, Government of India laid the retail reforms on hold until it reaches a
In January 2012, approved India reforms for single-brand stores anyone in the
world welcomed in the Indian retail market with 100% ownership renew, but
imposed a requirement that the single brand retailers source 30 percent of its goods
from India. Indian government continues to hold on the retail reforms for multi-
“In June 2012, announced IKEA had applied for permission to invest $ 1.9 billion
in India and setting up 25 retail stores. One analyst of Fitch Group explained that
the 30 per cent requirement was likely to delay significantly, if not most, single-
brand Majors prevent from Europe, USA and Japan to open out of the shops and
the creation of related jobs in India,”
11. On 14 September 2012, the Government of India announced the opening of FDI in
multi-brand retail, subject to the approval of the individual states. This decision
welcomed by economists [who?] And the markets, but caused protests and an
upheaval in India's central political coalition structure of government. On 20
September 2012, the Government of India announced officially the FDI reforms
for single and multi-brand retail in order to make it effective under Indian law.
On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-
brand retail in India. The government managed to obtain the approval of multi-
brand retail in Parliament despite fierce tumult of the opposition (the NDA and
Left parties). Allow some states, foreign supermarkets such as Walmart, Tesco and
Carrefour, other states not to be opened during.
Advantages of FDI in retail
India's retail sector is one of the largest in the world when it privately owned ones
comes to. The industry has become seen some major restructuring thanks to the
FDI structure more liberal than before. The benefits of FDI in retail, as per experts,
carry greater weight than the costs associated with impact.
With FDI in retail operations in the distribution and production cycles are expected
to be better. By factors such as business transactions, the cost of production will
also come down. This will mean a greater choice of products at lower and
reasonable prices for customers.
As a result of FDI, the company can bring in the technology and skills from other
countries and to help in the development of infrastructure in India. This will also
help to create in better value for money for the buyer.
After FDI in retail, it is possible to establish a properly organized chain of retail
stores as easily accessible to the capital. The investment may be considered
provided not easily liquidated as long as one is physical capital in a domestic
company. This is its main difference from equity.
12. ICRIER had also predicted that when FDI was introduced in retail trade during
2011-12 in India, the Indian economy grew by 13 percent, the sector could
unoganised 10 growth was seen percent and the organized sector to 45 could have
increased per cent.
Disadvantages of FDI in retail
Experts say that while analyzing the positives and drawbacks of FDI in retail, both the
government and the opposition did not refer to the Parliament Committee report
where its effects had been studied in great detail. The committee had taken into
cognizance many witnesses, NGOs, individuals, and trade associations to come up
with the said report.
The Committee visited various corners of India and also went through reports and
gathered knowledge about the experience of similar decisions in other countries. It
also enquired from several government departments regarding the matter.
The Committee had surmised in its report that the number of people getting jobs will
be lesser than the amount of people losing the same as a substantial amount of
marginal and small farmers will be wiped out. Some other problems expected out of
this were aggressive pricing and prevalence of monopoly.
As per the Committee's report almost 8 percent of India's workforce is employed in
the unorganized retail sector. This comes up to roughly 40 million people. It has been
stated that FDI in retail will generate 2 million jobs. However, the Committee had
stated that it is not a proper indication as it does not take into account the number of
people who already work in the retail sector.
ICRIER had executed a second study on the effects of FDI in retail during 2011 and in
that it had stated that FDI will bring about a fantastic shopping experience for the
consumers. It had actually interviewed 300 people from the middle and high income
groups. Thus, in effect, the efforts of the Parliament Committee were overlooked for a
Experts have questioned the logic of ICRIER to question 300 people in a country with
a 1.2 billion population and more than 40 per cent who can be termed as poor.
13. The Parliamentary Committee report on FDI was never discussed in Parliament itself,
and as per experts, it is not a good sign as far as the democratic system in India is
As per ICRIER, consumerism is positive for economic growth. In 2008 the first
survey had dealt with 2020 small and unorganized retailers whereas the total count of
such entities in India at that time was 6 million.
Leading economic experts from outside India have also posed the same question.
They have also pointed at the labor practices of organizations such as Wal-Mart. Most
of these are not exactly healthy for workers. This has also led them to ask if such
processes were really required in India.
It is being said that the lobby favoring FDI in retail in India has invested at least Rs 52
crore and experts opine this could have had a major say in the way things turned out.
Process of FDI in Retail
There is no such method, the company shortlisted. International companies that are
willing to invest a single or multi-brand retail in either, can put in their applications with
the Department of Industrial Policy and Promotion. Here are the applications in an effort
to checks to determine overestimated their suitability according to the guidelines.
Subsequently, the Foreign Investment Promotion Board, Ministry of Finance will
consider the requests before the final approval provides.
14. THE NEW GOVERNMENT EMPOSED CHANGES
The BJP-led central government, the previous UPA regime decision allows foreign
retailers to open multi-brand stores has retained a 51 percent ownership, showing a
consolidated document FDI policy released.
Multi-brand retail was opened to foreign direct investment, with a 51 percent cap
in September 2012, when the Congress Party was led UPA government in power.
The BJP had been in his manifesto for last year's general elections against this, but
has not made any decisive change in policy since coming to power.
The Congress said it "rehabilitated" was, and it is now proven that the UPA
government did everything. In the national interest "We are vindicated on FDI and
on other decisions to liberalize FDI in other sectors in multi-brand retail," said the
former trade minister Anand Sharma.
The BJP, which was then in the opposition "had asked, trying to bring down the
government case our wisdom into question," he said. "Now wisdom has dawned on
the BJP, but in the process, the uncertainty of two years, the investment in India
has hurt them." The new 119-page Year FDI document details all existing policies
and the changes one year made about the past of the government modes, including
increasing the FDI cap in defense and insurance. From 26%, the boundary has
migrated to 49%.
Amitabh Kant, secretary in the Department of Industrial Policy & Promotion
(DIPP), said: "In the last eight to nine months, we opened every single aspect of
the Indian economy, we have our defense sector opens up, construction, insurance,
medical equipment. ... And other than multi-brand retail India is now the most
open economy in the world. “The DIPP, which is part of the Ministry of Trade and
Industry, is the nodal agency on FDI policy. Every year it provides all of India FDI
regime into a single document in the context of policy, to make it simple and easy
to understand for investors.
15. GROWTH OF INDIAN RETAIL
1. After the 8th annual Global Retail Development Index (GRDI) by AT Kearney, India retail
industry is the most promising emerging market for investment. In 2007, the retail trade in India
had a share of 8-10% of GDP (Gross Domestic Product) of the country. In 2009 it increased to
12%, 22% in 2010 and is expected to reach 35% by 2011-12. 2. In 2011-12, more than 1,000
supermarkets and 3,000 supermarkets projected to come. India are additional sales area of 700
million sq ft need (65,000,000 m2) as compared to today. Current forecasts for the construction
point to a supply of only 200 million sq ft (19 million m2), a gap of 500 million sq ft (46 million
m2) leaving the filled, $ 15-18000000000 3. After ICRIER to have a price of US will report that
retail business in India is estimated at 13% of $ 322 billion in 2006-07, growing to $ 590 billion
in 2011-12. The unorganized retail sector is expected that per year with a turnover of about 10%
grow from $ 309 billion in 2006-07 to $ 496 billion in 2011-12 expected to rise.
TRENDS OF FDI INFLOWS IN EMERGING MARKET ECONOMIES
The liberalization of trade, capital markets, breaking of business barriers, technological
progress and the increasing internationalization of goods, services or ideas in the past two
decades makes the world economy globalized. Consequently, with large domestic
market, low labor costs, cheap and skilled labor, high return, developing countries now
have a significant impact on the global economy, especially in the developed economies.
Trends in flows world FDI show that the incorporation of a significant proportion felt the
FDI inflows makes countries to develop their presence.
CURRENT PICTURE OF FDI IN RETAIL SECTOR
According to the announcement, FDI up to 51 per cent in retail -
1. Products to the following conditions should be covered only
16. 2. Products are sold by a single brand, should be under the same are sold brand
3. Single Brand Product Retailing would only apply to goods which are in the production
of the brand.
4. FDI would be permitted only with the prior approval of the Government, to meet
prescribed standards and conditions
5. The processing is done dept. The industrial policy and the promotion of government
The guidelines would, however, ensure that the food and grocery segment of the Indian
retail industry is not competition of capital, as this sector would face in India tend to be
multi-store units and multi-brands.
MAJOR CHALLENGES FOR RETAIL DEVELOPMENT IN INDIA
Organized retail in India is little more than a decade old. It is mainly an urban
phenomenon and the pace of growth is still slow. Some of the reasons for this slow
growth are: - The existence of traditional KIRANA transactions - The first and foremost
challenge of organized retail in India faces competition from the unorganized sector.
Retail is not a new concept for India; It has been established here for centuries. It is a low
cost structure, in particular operated owner, has a negligible real estate and labor costs
and to pay little or no taxes. Consumer familiarity that runs from generation to
generation, is a great advantage for the traditional retail. On the other hand, the organized
sector who have to meet large expenses and yet keep prices low enough to compete with
the traditional sector. The lack of recognition as an industry - Lack of recognition as an
industry hampered the availability of funds for the existing and new players. This affects
the growth and expansion plans. High cost of real estate - real estate prices in some cities
in India are among the highest in the world. Renting property is so high that it reduces the
profitability of the project. High cost stamp Duties- stamp duty on the transfer of
ownership are also very high, which varies as a Declaration 12.5% in Gujarat and 8% in
Delhi by the state. The problem is compounded by problems with the clear title to the
property, while the use of conversion time country is time consuming and complex as the
legal process for settling property disputes. The lack of infrastructure-Poor roads and
transport hampered the development of food and food retailing in India. The existing
supermarkets and grocers have a significant amount of time and money to invest in the
construction of a cold chain network. have many diverse and complex control system -
The tax rates from state to state and organized retail players a more octroi with the
17. introduction of VAT (VAT) on to causing the error in the supply chain management.
Price war is the price competition between the various retail organizations. Each and
everyone says, offer goods at low cost and offers various support programs. In such a
case, it is difficult to keep a customer with themselves.
Indian market has a high complexity with respect to a wide geographical spread and
different consumer preferences by each region requires different needs for localization
within the geographic zones. While India is a large market opportunity, the number and
rising consumer purchasing power gifts are given, there are also significant challenges
given that more than 90 percent of trade is carried out by independent local shops.
Challenges are: Geographically dispersed population, small ticket sizes, complex
distribution network, little use of IT systems, limits the mass media and the existence of
OPPORTUNITIES FOR RETAIL DEVELOPMENT IN INDIA
Retail Marketing gets different ways in the Indian market to grow. Not only in
retail, but manufacturers and suppliers and buyers have lower number of ways,
some of which are mentioned-
Provides visibility organized retail with the customer to Brands- needed visibility
brands and a platform for interaction provides. It also helps in the introduction of
new products or product variant and market penetration. It has wider range of
products and more frequent, faster delivery. Urbanization- as large percentage of
population, retail marketing will grow more opportunities in the Indian market. Not
only in the retail, advertising manufacturer Owls suppliers and buyers have
different possibilities mentioned by the few companies
Provides visibility organized retail requires visibility brands and a platform for
interaction with the customer Brands- dying provides. It also helps new products or
product variants and market penetration in the introduction. It has wider range of
products and more frequent, faster delivery. Urbanization- As large percentage of
the population has now in die urban areas by increasing job opportunities and more
facilities for your children and family moved Worden is, know that they die
importance of brands and in addition you want everything under one roof, so a
retail company has can to catch more customers. went nuclear family as time joint
families came in a new form, the nuclear family. Also, the income levels of these
nuclear families increased since scoring members earn Started. This in an increase
the power of purchase and time are lacking. Now they want everything under one
roof. This brought the concept of organized retail. Plastic Revolutions use of credit
cards for retail marketing increases. It creates demand, even if it is not necessary.
18. Indian organized retail Consumers- pressure on the right infrastructure, as well
preserved buildings, air conditioning, trained personnel, electronic machine,
parking and correct display of the Category instance. Customers feel good to see
all of them die purchase to check for them easier. You do not need to wait for
everyone to see the products. SelfSelect saves you time and more opportunities and
satisfaction. Fix costs eliminates risk of misleading die. Operate various discounts
and promotional submitted by the manufacturers projects. You could also product
from different grades and the right quality. High availability of jobs - it is in the
country good employment opportunities to be (in crores), as it will open halls. The
entry of modern retailers to offer the market is to expand large amount additional
jobs in retail. Opportunities arise from the ordinary workers vary to specialized
officials. are the employment opportunities are retail, retail manager, cold chain,
warehousing and logistics. The contracts for urban and rural youth Will Office.
There are huge amount of MBA be, as is know for its world-class chain of retailers
to estimate work. Indian Farmers: The main advantages of FDI in retail is his
dignity for farmers to get in a position to get a good return for their crops BY
deliver by binding long-term contracts with them organized retailers die, they are
not in a position in the local Mandi to die sale. The payments will be paid directly
into bank accounts and his commission. The major retailers will even save 10-15%
in commissions by buying directly fruits and vegetables. Reduced Supply Chain
Management - The big players of retail marketing and die manufacturing
companies to come into direct contact, to reduce as many intermediary chains.
Manufacturers also many incentives for their product GIVE dies die for consumer
benefit. Proper control: to die in order to increase tax revenue and service tax. The
organized distribution with computerized billing system also takes more by
commodity taxes as and Service Tax will die from the government resign. Would
tax buoyancy of the economy to increase. Inflation control: inflation is curbed.
Now in urban areas more employment opportunities and more facilities for their
children and family is that they know due to postponed. The importance of brands
and beyond all under one roof they want to make a single retail to catch more
customers Nuclear Family- Over time common families came passed in a new
form, the nuclear family is. Also increased the income of these nuclear families
because both members began to earn. This leads to an increase in the performance
of the purchase and the lack of time. Now they want everything under one roof.
This brought the concept of organized retail. Plastic Revolutions use of credit cards
for retail marketing increases. It creates request, even if it is not necessary.
Indian organized retail Consumers- stress on the right infrastructure put how well
preserved buildings, air conditioning, trained personnel, electronic machine,
parking and correct display of the Category instance. The customers feel good,
everything seems to see it that the purchase easier for them. You do not need to
19. wait for everyone to see the products. SelfSelect saves you time and more
opportunities and satisfaction. Fix costs eliminates the risk of misleading. They use
various discounts and advertising by manufacturers drafts presented. You also
obtain product of different varieties and the right quality. High availability of jobs -
it will be great job opportunities in the country (in crores), as its opening of
shopping centers and warehouses. The entry of modern retailers is to provide the
market to expand large amount of additional jobs in retail. Opportunities arise from
ordinary workers vary to specialized officials. Employment opportunities will be
retail manager, cold chain, warehousing and logistics in retail. The jobs will be for
urban and rural youth. There will be huge scope of MBA as they will appreciate
working with world-class chain of retailers. Indian Farmers: The main benefits of
FDI in retail would for farmers will be able to get a good return on their crops by
providing organized by tying long-term contracts with them retailers that they are
unable, in the local Mandi for sale. The payments will be paid directly into bank
accounts and be free of commission. The big retailers are also save 10-15% in
comissions, buy by directly fruits and vegetables. Reduced Supply Chain
Management - The big players of retail marketing and production companies come
in direct contact, to reduce as many intermediary chains. Manufacturers also
provide many incentives for their product, which is beneficial to consumers. Proper
control system: to increase tax revenues such as VAT and service tax. The
organized distribution with computerized billing system is also more revenue result
from commodity taxes such as VAT and service tax to the government. So tax
would increase buoyancy of the economy. Inflation control: inflation be curbed.
Reasons for promotion of FDI in Retail
The great advantage of FDI is that it is both supplementary and complimentary in terms
of local investments. FDI can a company get a better access to top-class technology and
additional resources. They are also exposed to management practices in fashion around
the world and also get the chance to be a part of the global market system.
The Indian government had commissioned on International Economic Relations
(ICRIER) Indian Council for Research to carry out a study on the impact of organized
retail practices to its unorganized counterpart.
ICRIER submitted the report in 2008. The study on the benefits indicated that the growth
of organized retail for different subscribers, such as consumers, producers will have, and
20. The government has decided, based on the results in other countries and the ICRIER
study that this decision would result in the two rear and front end infrastructure to a
greater influx of FDI. It was expected that the agricultural sector would be more efficient
and to use in a better position technology.
It was also expected that this decision will be provided in more and better jobs and the
best practices would be introduced in the world in India. Both farmers and consumers
will see more convenient prices and higher quality in the future, and this will both help
The government also for the procurement of 30 percent returns from local producers to a
mandatory condition before foreign companies provide a significant boost to the
manufacturing sector in India to create. Jobs are expected in rural and urban areas
through more back and are frontally operations of more FDI resulting available.
Domestic retail units and distributors to pull their socks up and improve efficiency, since
this decision. Consequently, consumers will expect better services and the producers to
obtain, which also receive better pay are the source products.
Strengths of India to attract FDI
1. India has the tenth largest economy in the world and has a great
2. India is ranked third in terms of purchasing power parity PPP,
which is eradicate the comparison problem.
3. India is not saturated unlike China and other countries, so
companies can develop easily.
4. India is second largest country in relation to population, so there is
great availability of cheap and skilled labor.
5. “India’s GDP has increased 2900% from 1970 to 2012 and counts
6. India’s demography suits the best and the 50% of the population is
less than 25 years of age.
21. 7. Great relaxation is given by government which is beneficial for
8. Political situation is well as government of India itself
encouraging the foreign investment.
9. RBI regulates the stocks and debt market of India, no chances of
10.Balance sheet of India reveals its quality and the strong corporate
The conceptof FDI is now a part of India's economic future, but the concept
remains vague to many, despite the great impact on the economy. FDI means
Foreign Direct Investment to make in which to invest in India foreign investors.
FDI in India's retail sectorhas both advantages and disadvantages. It is
advantageous to be collected to the government as tax revenues for infrastructure
development is used, not only makes it easier for farmers and consumers and to a
large extent an advantage. It will also provide job opportunity is for developing
countries is crucial. On the other hand, it is cut-throat competition to promote
cartels especially in the organized retail, the creation of monopolies, housing prices
rise, lead etc. Higher competitive advantage, make it like any productbetter by
others trying to increase their profits, which ultimately lead is in high quality
products at low prices. Opponents of FDI in retail argue that it will bring a massive
job losses, but frankly, it will only lead to sproutand new redistribution of jobs
with some drying up (as an intermediary). The argument that farmers are suffering
due to the formation of monopolies, is weak. Stores like Wal-Mart and Tesco are
very few, (to keep propertycosts down) on the outskirts of cities and in the
surrounding area local kiranas can not penetrate.
FDI is an advantage and disadvantage at the same time but it just depends on the
way we implement it in our country, so that FDI have no bad influence on the
Indian business. Government must make some rules so that it is advantageous to
obtain for the Indian market, retailers and customers the necessary services. Can
this may be Indian economy, in terms of employment is rising helpful. The
experience of successfulASEAN countries clearly shown how FDI can play a
leading role in creating fast, export-led growth. In the retail sectorare frequently
changes therefore survive in retail will depend on the ability to change, adapt. The
Indian retailers need to develop the unique nature of the country, taking into
account the right systems and processes. FDIwould on the world market result in a
broader integration of India and as such it is imperative that the government
promote the general economic development and social welfare of the country in
23. this sector. So FDI should be implemented to a limited extent, so that it frees a
good effect on India market. If done in the right way, it can prove to be a blessing
and not a curse.
The performance of FDI is exposed to today around the satisfactory level, the
specific problems and challenges. Todaywe have more than $ 303.48 billion as
foreign exchange reserves and foreign debt of about$297.5 billion, which we
further improved by Promotions Export, liberal investment opportunities for
The future of foreign retail players is also uncertain how the Indian retail players.
No doubt the opening of investment opportunities for the foreign investor is the
Indian industry more competitive and to make some of them, the remains as small
retailers and shopkeepers can be used to fight. It was revealed from the above
analysis that FDI approval given by the Government to benefit almost all sectors of
the economy. There are some people who try to deceive people for their own
benefit and the entry of foreign retailers in India opposite. FDI not only benefit
society in the retail sector, but also helps in the economic development of the
country. The India Retail Industry is to be do according to his way toward the next
24. SUGESTIONSFOR THE GROWTHOF RETAIL INDUSTRY :
FDI since 1991 has proven to be game changer for wide segments of Indian industry. FDI
has the quality, productivity and production changed in areas where it is allowed.
1. India has in the development of infrastructure as India to invest only on the missing,
which majorly our trade sector will affect.
2. India to increase investment capacity.
3. India should make FDI policy more liberal, so that they face competition with other
4. Bureaucratic delays and various government permits and approvals, the various
ministries must be fastened.
5. Restrictions on caps and registration in areas other than those of national importance
sector must be further liberalized and ongoing policy review needs to be done.
6. Government needs to ensure coherence of the policy to improve the economy and