Impact of FDI with reference to Indian Retail Sector

Marketing Management

International Conference on "Innovative Management Practices"

Indian retail industry is one of the sunrise sectors with huge growth potential. According to the investment Commission of India, the retail sector is expected to grow three times its current levels, however, in spite of the recent developments in retailing and its immense contribution to the economy, retailing countries 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 . Indian retail sector today is valued at $450 billion, and is increasing day by day due to its increasing middle class population and their spending power. Indian retail sector has two parts: organized and unorganized sector. Organized sector which forms around 20 -30 % in other countries , here in India it forms only about 6% while rest is all unorganized consisting of small retailers called as ‘kirana shops’, paan / beedi wala, convenience stores, departmental stores, pavement vendors etc. Organized retail consists of supermarkets, hypermarkets and modern retail outlets, malls, exclusive brand outlets etc which are located in urban areas or metros. Undoubtedly, this dismal situation of the retail sector, despite the on- going wave of incessant liberalization and globalization stems from the absence of an FDI encouraging policy in the Indian retail sector. In this context , the present paper attempts to analyze the strategic issue concerning the influx of foreign direct investment in Indian retail industry .Moreover with the latest move of the government to allow FDI in the multi brand retailing sector , the paper analyses the effects of these changes on farmers and agri – food sectors along with all economic factors . The findings of the study point out that FDI in retail would undoubtedly enable India to integrate its economy with world economy.

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