File Name: fdi in retail in india pros and cons file.zip
A foreign direct investment FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. The origin of the investment does not impact the definition, as an FDI: the investment may be made either "inorganically" by buying a company in the target country or "organically" by expanding the operations of an existing business in that country.
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Indian retail industry is one of the sunrise sectors with huge growth potential. However, in spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world.
Earlier, in December , Indian government removed the 51 percent cap on FDI into single-brand retail outlets in and opened the market fully to foreign investors by permitting percent foreign investment in this area.
After much dilly dallying, India recently allowed the 51percent FDI in multiband retail. The decision was criticized in the political circles and appreciated in the economic circle. Prime Minister of India in his address to the nation called the decision as a need of the economy. AT Kearney a globally famous international management consultancy recognized India as the second most alluring and thriving retail destination of the world.
Other profitable retail destinations of the world include China and Dubai. Many political parties are opposing the FDI in retail on the grounds that it eat away the employment. Since unorganized retail sector is one of the largest employment providers in the country, there are fears that it may eat away their employment. Moreover, they are also opposing on the grounds that it will negatively affect the farming community.
As far as threat to local stores is concerned, positive impact of organized retailing could be seen in USA, UK, and Mexico and also in China. Retail is the second largest industry in US. It is also one of the largest employment generators. Moreover, in China, between , number of unorganized retailers increased from 1. However, in Thailand, after the entry of foreign retailers, number of domestic retailers reduced by 60percent.
In Indian case, domestic organized retail chains like Future Group and Reliance have not affected the unorganized retailers.
Therefore, Walmart, Tesco may affect the domestic retailers in a big way. Farmers are also likely to be benefitted by the foreign investment. Coming of organized retailing will benefit farmers in big way. Big retailers sell their product at very competitive prices. So, they source it directly from the farmers. Middle man does not have any place in this format of retailing.
This will not only benefit farmers but also help in checking the food inflation. Moreover, since 50 percent of the investment must come up in the back end infrastructure, supply chain will be improved which will result in reduction in post harvest loss of agriculture commodities.
Storage is a major problem area and percent of the agri-products get wasted due to improper storage. Furthermore, if there is some substance in the threat, government had taken adequate measures to protect unorganized retailers. The advantages outweigh the disadvantages of allowing unrestrained FDI in the retail sector, as successful experiments in countries like Indonesia and China demonstrate. In both countries, the issue of allowing FDI in the retail sector was first met with incessant protests, but allowing such FDI led to GDP growth and a rise in the level of employment.
Moreover, the critics of the move neglect the impact on consumers who will ultimately respond to the incentives of convenience, price, variety and service. The states which are opposing the FDI in retail may open the doors for it after seeing its benefits in neighbor states as happened during the implementation of VAT.
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This study has analysed the impact of liberalisation of Indian economy and FDI policy on the retail sector since its implementation in the s. 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. A comprehensive and critical review of the existing evidence on the subject was carried out, and descriptive statistical analysis of data from to was performed which leads to conclude that the policy of FDI liberalisation has proved to provide diversification and sustainable development to the Indian economy and specifically retail sector which is considered to be one of the significant pillars of economy. Furthermore, for continuous growth of the economy, it seems vital to encourage more investment in other sectors by liberalising the restrictive policies. In the contemporary markets economies, retailing is a significant link between producers and consumers.
Hence one reason why the government feared the surge of the Foreign Direct Investments in India was the displacement of labour. Hence the issue of displacement of labour consequent to FDI is of primal importance. There are different viewpoints on the impact of FDI in the retail sector in India, According to one viewpoint, the US evidence is empirical proof to the fact that FDI in the retail sector does not lead to any collapse in the existing employment opportunities. There are divergent views as well. Introduction: One of the most striking developments in the last two decades has been in the FDI in the global economic landscape.
Foreign direct investment FDI is where an individual or business from one nation, invests in another. This could be to start a new business or invest in an existing foreign owned business. He invests this, creating a new clothing manufacturing firm in the country. This would classify as a FDI. However, the definition is slightly different when it comes to investing in a foreign companies assets. According to the IMF , a foreign direct investment is where the investor purchases over a 10 percent stake in the company.
c) To study the disadvantages of FDI in retail sector in India. d) To decide up to what extent opposition‟s arguments are right. Meaning of Retail.
Indian retail industry is one of the sunrise sectors with huge growth potential. However, in spite of the recent developments in retailing and its immense contribution to the economy, retailing continues to be the least evolved industries and the growth of organized retailing in India has been much slower as compared to rest of the world. Earlier, in December , Indian government removed the 51 percent cap on FDI into single-brand retail outlets in and opened the market fully to foreign investors by permitting percent foreign investment in this area. After much dilly dallying, India recently allowed the 51percent FDI in multiband retail.
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PDF | On 20th September, the Government of India has approved 51% FDI in Multiband retail and % (revised) in Single Brand retail sector through.Etrazrestsetp1992 27.03.2021 at 09:29
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