FOREIGN DIRECT INVESTMENT AND RETAIL SECTOR IN INDIA

Commerce

Foreign direct investment (FDI) plays an important role in India’s growth dynamics. There are several examples of the benefits of FDI in India. FDI in the retail sector can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers and suppliers (farmers). India being second most-populous country has immense scope for retail expansion as along with time urbanization and consumerism has also been increasing. Initially India was conservative regarding FDI; it imposed restriction on foreign companies to limit their share in equity capital of their Indian subsidiaries but over the time Government of India gradually liberalized foreign investment in various sectors. Recently in 2011 India permitted 100% FDI in single brand retail and in 2012, 51% FDI permitted in multi brand. In this paper we are analyzing the impact of such decision on various sectors like food retail sector, farmers, traditional & employment and food inflation. In this context the present work makes an attempt to study the likely impact of FDI on Indian retail sector whether good or bad, opportunities & challenges. It analyses the reasons why foreign retailers are interested in India and their prospects in India and also find out the suggestions for the future growth of the retail industry.

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