NATIONAL CONFERENCE

ON

Organised By:
Gujarat Arts & Commerce College, Morning,
Ahmedabad

Paper Presented On:

Foreign Direct Investment in India with Special Reference to

Retail Sector
Submitted By:

Megha Y. Bhatt
Assistant Professor
N. C. Bodiwala &
Pri. M.C. Desai Commerce College,
Ahmadabad.
Email address: bhattmegha99@gmail.com
Mob. No. : 9426843819

Foreign Direct Investment in India with Special Reference to

Retail Sector
Abstract
Indias retail sector encompassing food & grocery, apparels & accessories, footwear, electronics,
beauty products, jewellery, furniture & furnishings segments is primarily unorganized with only a
marginal percentage of the sector being organized. The unorganized retail sector comprises of small
mom & pop stores (Kirana shops) and general stores. Given Indias growing per capita income and
disposable income in the middle class in the last decade, domestic industry invested huge amounts of
money in organised retail ventures under various models such as hypermarket, supermarket,
department stores, and modernized retail stores. The domestic players engaged in organized retail
include Reliance Fresh, Big Bazaar, Spencers in food & grocery segment; Croma, Reliance Digital in
electronics segment; Pantaloon, Shoppers Stop, Provogue, Wills Lifestyle in apparels segment.
The investment by domestic industry has, however, focused primarily on front-end retail units while
significant investment in the back-end infrastructure, which is necessary for the development of the
integrated retail chain, is lacking. Being an emerging market with a enormous consumer base (both
rural and urban), India offers immense opportunity to the foreign investors. It is estimated that
organized retail will grow by about US$ 80 billion and unorganized retail by about US $190 billion
over the next 4 years.
Indian retail industry is one of the sunrise sectors with huge growth potential. The FDI in retail
sector would definitely be a mixed blessing for domestic retailers. Even though this new reform is
expected to have adverse impact on the domestic retail sectors for short run, it will weaken overtime.
FDI will help to overcome the problem of lack of experience and trained manpower. FDI is
extremely beneficial to customers as it would help in reducing the problem of adulteration, short
weighing and substandard goods. The gradual and step wise admission of MNCs in retail would
bring about three pivotal changes-modern technology, better transparency in dealings and sharing
best practices in long run. This article presents an overview of retail trade in India in the wake of the
countrys new policy that will allow foreign capital in multi-brand retailing and single brand
retailing. It discusses various advantages and disadvantages of foreign direct investment (FDI) in the
retail sector.
Keywords: Foreign direct investment (FDI), Retail Sector, Single brand retailing and multi brand
retailing, Advantages and disadvantages of FDI in Retail sector in India, SWOT analysis.

 INTRODUCTION
FDI (Foreign Direct Investment) is a process which enables the residents of one country to directly
invest their funds in another country and acquire ownership of assets and exercise control over the
investment in terms of production, management, distribution, effective decision making, employment
etc.FDI is an international financial flow with the intension of controlling or participating in the
management of an enterprise in a foreign country. Foreign investment is a means of making
foreign resources available to a developing country. Such investments can take place for many
reasons, including to take advantage of cheaper wages, special investment privileges (e.g. tax
exemptions) offered by the country.
Foreign Direct Investment (FDI) as defined in Dictionary of Economics is investment in a foreign
country through the acquisition of a local company or the establishment there of an operation on a
new site. In short FDI refers to capital inflows from abroad that is invested in or to enhance the
production capacity of the economy. There are two main types of foreign investment:
1. Portfolio investments - Portfolio investments are investments in purely financial assets such as
bonds, stocks denominated in national currency. Portfolio or financial investments take place
primarily through financial institution such as banks investment funds.
2. Direct investments - These investments are the real investments in factories, capital goods, land
and inventories where both capital and management are involved and the investors retains control
over use of the invested capital.
Foreign direct investment (FDI) is investment directly into production in a country by a company
located in another country, either by buying a company in the target country or by expanding
operations of an existing business in that country.
Retail sector is one of the biggest supports of 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
in the world by terms of economic value. India is one of the fastest emerging retail markets in the
world, with 1.2 billion people.
In simple words retailing is making the final product directly available to the final consumers of the
product or a sale to the ultimate consumer. Retail can also be defined as a link or interface between
bulk producers and individual consumers who purchase for final consumption. Retail is the last step
in the process of distribution of merchandise.
Manufacturer

Agent

Wholesaler

Retailer

Consumer

 CLASSIFICATION OF INDIAN RETAIL INDUSTRY:

Modern Format Retailers
Supermarkets (Food world)

Traditional Format Retailers

Kiranas: Traditional mom and
pop stores
Hypermarkets (Big Bazaar)
Street markets
Departmental
Stores Exclusive/Multiple
Brand
(Shoppers stop)
Outlets
Specialty Chains (IKEA)

Large Indian Retailers

Hypermarkets

Company owned
operated stores

Lifestyle

company

Big Bazaars
Giants
Departmental stores

Shoppers stop
Trent
DIVISION OF RETAIL INDUSTRY:
The retail industry is mainly divided into two parts which are as follows:
Organized Retailing - Trading activities which are undertaken by licensed retailers, that is, those
who are registered for sales tax, income tax, etc. are referred to as organized retailing. Corporate
backed hypermarkets and retail chains, and also the privately owned large retail businesses are
included in this.
Unorganized Retailing - Traditional formats of low cost retailing, for example the local kirana
shops, owner manned general stores, paan/ beedi shops, convenience stores, hand carts and pavement
vendors etc is known as unorganized retailing.
FDI Share of organized sector in selected countries.
Country

Share of organized Sector

(%)
U. S. A.

85

U. K.

80

Japan

66

Russia

36

India

04

(Source: Planel Retail & Technopak Adviser Pvt. Ltd.)

Projected Size of the Organized Retail Industry
Year

Increase in size (in crores)

2008

965

2010

1728

2015

5610

2022

17368

FDI IN INDIA

History
Till recently, FDI in retail (except under single-brand product retailing, with conditions) was not
allowed in India. In other words, for a company to be able to get foreign funding, products sold by it
to the general public needed to be of a 'single-brand'. The government has now opened a gateway for
foreign funding into the sector. In 1997, FDI in cash-and-carry (wholesale) with 100% ownership
was allowed under the Government approval route. It was brought under the automatic route in 2006.
51% investment in a single-brand retail outlet was also permitted in 2006. FDI in multi-brand
retailing was prohibited in India. This was changed to increases FDI in single-brand retail to 100%
while creating a path for FDI in multi-brand retail to the tune of 51%. Cities with populations of
more than 10 million are eligible for this. Under MBRT 51% was allowed in November 2011 but was
put on hold because of severe opposition. In Mid September 2012 FDI MBRT was allowed to the
extent of 51%.
Strategizing an entry into a foreign market, Foreign Direct Investment (FDI) is an advanced strategy
for companies that wish to operate on a global basis with an entrenched footprint. It refers to
investment to acquire a lasting interest in an enterprise operating in an economy other than that of the
investor. Entry through FDI for corporate results in footprint which gives a degree of
influence/control over the management of the enterprise relative to the structure created. It usually
involves transfer of management skills, technology, systems, processes and expertise. For a country
it is a sturdy and till date desirable source of capital inflows as opposed to FII flows which include
hot money. FDI being a feature of capital control are generally applicable in countries professing
capital control and the regulation varies from country to country.
Foreign Investment in India is governed by sub-section (3) of section 6 of the Foreign exchange
Management Act,1999 read with notification No. FEMA 20/2000- RB dated May 3, 2000. The
Ministry of Commerce and Industry, Government of India is the nodal agency for monitoring and
reviewing the FDI policy on continued basis and prevails in its sectoral investment policy/ sectoral
equity cap. The FDI policy is notified through Press Notes by the Secretariat for Industrial Assistance
(SIA), Department of Industrial Policy and Promotion (DIPP).The foreign investors are free to invest
in India, except few sectors/activities, where prior approval from the RBI or Foreign Investment
Promotion Board (FIPB) would be required.
The Department of Industrial Policy & Promotion, Ministry of Commerce and Industry, Government
of India has released the Consolidated Foreign Direct Investment Policy, 2013 (FDI Policy, 2013) ,
which is the sixth edition of the consolidated foreign direct investment policy and has been effective
from April 05, 2013. The FDI Policy, 2013, incorporates the changes made in the foreign investment
policy over the last year. The changes include investments in sectors like single and multi-brand

retail, power exchanges; asset reconstruction companies (ARCs), broadcasting, civil aviation, and
non-banking financial companies. Herein as the recent earlier policy
FDI CAN COME INTO INDIA IN TWO WAYS:
a. Direct route/Automatic route: It does not require prior approval either of Reserve Bank of India
(RBI) or government.
b. Government route: Government route means that investment in the capital of resident entities by
non-resident entities can be made only with the prior approval from Foreign Investment
Promotion Board (FIPB). Allows Pakistan citizens, nationals and companies to invest in India
under the Government route, in sectors/activities other than defense, space and atomic energy.
Key changes made in the Consolidated FDI Policy, 2013, are as under:
a. Allows up to 51% inflow of foreign direct investment (FDI) in multi-brand retail sector.
b. Allows 49% stake by a foreign airline in the capital of Indian companies, operating scheduled
c.
d.
e.
f.

and non-scheduled air transport services,

Raises FDI cap in various broadcasting services to 74%.
Permits up to 49% foreign investment in the power trading exchanges.
Increases foreign investment ceiling in ARCs to 74%, up from 49%.
A new paragraph has been added with regards to the issue price of shares to person resident
outside India. It says that where non-residents (including NRIs) are making investments in Indian
company in compliance with the provisions of the Companies Act, 1956, by way of subscription
to its Memorandum of Association, such investments may be made at face value subject to their
eligibility to invest under the FDI scheme.

The passage of 51% Foreign Direct Investment in Multi-Brand Retail trading in India (MBRT)
Understanding of what retail means is imperative to appreciate the subject under discussion. It is
defined as all activities involved in selling goods or services directly to the final consumer for their
personal, non-business use via shops, market, door to door selling, or mail order. In 2004, the High
Court of Delhi defined the term retail as a sale for final consumption in contrast to a sale for further
sale or processing (i.e. wholesale).
In India, retail sector is expected to grow at significant rate in coming few years. The overall Indian
retail sector is expected to grow 9 per cent in 2012-16, with organized retail growing at 24 per cent
or three times the pace of traditional retail (which is expected to expand at 8 per cent), according to
the report by Booz & Co and RAI. The Indian retail industry has expanded by 10.6 per cent between
2010 and 2012 and is expected to increase to US$ 750-850 billion by 2015, according to a report by
Deloitte. India is the second most attractive destination for retail among thirty emerging nations,
making it the fifth most desired retail destination in the World.
In todays world Multi Brand Retail Trade (MBRT) has become a mainstay of retail business. MBRT
means marketing of similar and competing products by the same outlet under different and unrelated

brands. It implies that a retail store with foreign investment can sell multiple brands, under one roof,
as opposed to a single brand retailing in which a single brand is sold across all outlets. Say for
example Nike, Reebok stores.
The present day evolution of norms for retail in India may be reads as:

1995-World Trade Organizations General Agreement on Trade in Services, which includes both

wholesale and retailing services, came into effect.

1997-FDI in cash and carry (wholesale) with 100% rights allowed under government approval

route.
2006-FDI in cash and carry (wholesale) brought under the automatic route. Up to 51%

investment in a single brand retail permitted, subject to Press Note 3 (2006 Series).
2011-100% FDI in single brand retail permitted.
2012-51% FDI in multi-brand retail permitted.

The government has currently approved 100% FDI in Single Brand Retail under the Government
approval route subject to certain conditions.
It is said that India is a land of Retail democracy. The Indian retail industry is generally divided into
two major segments organised retailing and unorganised retailing . Given the demographics, rate of
GDP growth, consumer spending for many, India is an inevitable destination for entities having
global footprint. According to the 2013 A.T. Kearney Global Retail Development Index (GRDI)
report, which is an annual study that ranks the top 30 developing countries for retail expansion
worldwide, ranks six Asian Countries including India on the GRDI 2013 report. India ranks 14th on
the GRDI 2013 report. The report says that consumer spending growth, continued adoption of
modern retail and solid economic fundamentals keep Asian markets attractive to global retailers.
The Indian retail market is estimated to exceed US$ 750 billion by 2015, according to the India
Retail Report 2013 (IRIS Research), presenting a strong potential for foreign retailers planning to
enter India.
For the mandate to permit FDI in MBRT and with the furor entire nation as well as the political
parties did not expect the Indian Government to permit 51% FDI by foreign multi brand retailers.
India however, took safer and slower steps towards FDI. It permitted 51%
FDI in Multi-brand retail trading, with caveats, they are as follows:
1. There should be a minimum investment of US $ 100 million by the foreign investor.
2. 50% investment is to be in backend infrastructure development. Backend infrastructure includes
activities like processing, manufacturing, distribution, design improvement, quality control,
packaging, logistics, warehousing etc.

3. 30% of all raw materials have to be procured from Indias small and medium industries, which
have a total investment in plant & machinery not exceeding US $ 1.00 million
4. The permission to set up malls should be given to only those cities with a minimum population of
5.
6.
7.
8.

10 lakhs.
The government has the first right to procure material from farmers.
Products should be sold under same brand internationally.
Foreign investors should be the owner of the goods? (Just check it should be brands).
The above policy is an enabling policy only and the State Governments/Union Territories would
be free to take their own decisions in regard to implementation of the policy.

Post the release of 2013 circular 1the Department of Industrial Policy and Promotion (DIPP) has
brought out certain clarifications on FDI policy into MBRT. On the issue relating to sourcing, the
government has clarified that sourcing pertains only to manufactured and processed goods and that it
applies only in relation to front-end stores. Further, the term small industry has been explained.
As regards back end infrastructure, it is clear that acquisition is not an option and the retail entity
would necessarily have to invest into green-field assets. Similarly, front-end stores would need to be
additional units and acquisition of existing stores is not permitted.
Back-end infrastructure in non-FDI permitting States would also be counted as compliance with the
conditions for FDI in MBRT under the FDI Policy Circular. Additionally, existing investments by
investors into infrastructure or service companies will not be accumulated or be counted towards
investment in back-end infrastructure.
The wholesaling entity and the retailing entity should be different units. The entity carrying on cash
and carry business will not be allowed to enter into retailing even where all conditions for FDI are
satisfied. No franchising would be allowed. All front end stores would have to be MBRT company
owned and company operated only.
Clarification in relation to State Policy
Any amendment in the FDI policy itself would fall under the domain of the Central Government.
However, the investor would be required to comply with State laws/ regulations. One would think
such a clarification should give foreign investors some relief.
However, immediately thereafter another clarification provides that FDI policy in MBRT is subject
to the applicable State/Union Territory laws/ regulations. The State Governments have the
prerogative of imposing additional conditions accordingly. Which is nebulous, What is the
framework within which State/ Union Territory Governments can impose additional conditions? Do
the States have unfettered discretion in imposing conditions? The clarifications would seem to
suggest so.

One of the most important aspects on which clarity is awaited and has not yet been provided is
sourcing restrictions among group companies. The term group companies has been defined by
Press Note 2 of 2013 issued by DIPP on June 3, 2013.
The other clarifications that are pending are in relation to:

Requirement of 50% investment in backend infrastructure within three years of the first tranche

of FDI; and
Requirement of 30% sourcing from small industry. Whether sourcing from such small
industry can be allowed towards fulfillment of this conditionality, if it outgrows, and if so, till
what period?

Controversies that are feared to emerge with the introduction of FDI in MBRT:
Issue 1: FDI will lead to closing down of small retail stores, leading to unemployment:
Retail is a growing sector, there is no empirical data to suggest that small retail stores would
collapse, the entry of pure Indian operatives did not create such a scenario, neither has such scenario
been seen in evolved markets as France, the policy conditions of Thailand and South Africa are
different from that of India. Organised retail will need more workers and may be an employment
generator and would be in larger cities. Further it is mandatory in the FDI policy 2013, that 50% of
any investment over a $100 million would be in the backend infrastructure which India lacks would
create further jobs as well as infrastructure for developing country like India. It is important to note
here that in many European countries and Japan, which are densely populated with high real estate
costs, the small retail stores has thrived and flourished even in the face of big retail outlets.
Issue 2: The global players like Wal-Mart, Tesco will have a monopoly over the Indian retail
market: Wal-Mart and Tesco will not be a threat to India. As per the FDI policy 2013, Wal-mart and
other such stores can come in cities in India with a minimum population of 10 lakhs. In India there
are only 53 cities with a minimum population of 10 lakhs. Another mandatory rule is that more than
30% of the raw materials will have to be procured from Indias small and medium industry which is
a boon to local farmers and suppliers. This may eliminate middlemen who cheat government by not
paying tax and create layering which results in a huge differential on price from the farm gate to the
retail store.
Issue 3: India doesnt need foreign retailers; traditional markets and companies exist:
This is an argument of erstwhile Bombay group for their vested interest and avoids competition;
this has only facilitated the middlemen. With the growing population of India, its economy is

comparatively smaller, added with the disadvantage of the limited capital that is available. FDI will
not only provide adequate capital for a developing country like India, it will also introduce new
technology.
Issue 4: Only foreigners will benefit from FDI: Another misconception, that has propped up with
the introduction of FDI is that Indians will work for foreign retail companies and all the benefit will
go to them. But with only 51% limit in multi brand retail sector, most of the profit will remain in
India which is another advantage to our economy. Further if FDI is permitted in other arena MBRT
cannot be carved out.
Issue 5: Comparing foreign retail companies with East India Company: Another strange
controversy that has come with FDI is that as East India Company came as a trader and then captured
India, foreign Retail Companies will follow the same policy. It is interesting to note here that South
East Asia has long been a focal point for FDI by OECD (organization for economic cooperation and
development) based firms. They even attracted investments from rest of the OECD, particularly of
United States and Europe. As a result, in the 1990s South East Asia was collectively among the
worlds largest recipients of FDI. So, South Eastern tigers evolved with FDI, so has upcoming
powers as China, it emerged in 1990 as a magnet for FDI with its large and dynamic market and low
cost of production. It can be further said that with Current account deficit and looming Indias credit
rating, FDI inflows are a preferred route of foreign investments to hot monies.
ADVANTAGES OF FDI IN RETAIL SECTOR IN INDIA
Government has encouraged by the economic policy 1991, has adopted retail reforms mainly as
100% FDI in the retail sector in India. It may benefit by bringing investment in complete backend
infrastructure and helps rural and agricultural sectors with a better go to market scenario. They also
safeguard the health of the Indian retail sector against competition from the player of global
economy.
India is ranked as the third most attractive nation for retail investment among 30 emerging markets
with domestic companies like the Future Group, Tatas Westside, Reliance Fresh, Raheja Group and
Bharti Retail competing for market share. Market liberalization sowing the seeds for a retail
transformation that will bring more MNCs players and big Indian retail players which are looking to
expand their operations which include Pantaloon, Reliance, Lifestyle, Food world, Raymond, Titan,
Bata etc. Global players access India market through the licensee/franchisee route includes
McDonalds, Pizza Hut, Dominos, Levis, Lee, Nike, Adidas etc. There are so many advantages of
FDI in retail sector.

(1) Boost Economic Life: Due to foreign companies entering into retail sector, new infrastructure
will be built thereby bolstering the jagging real estate sector. In turn, banking sector will also grow as
the funds needed to build infrastructure will be provided by banks. A remarkable inflow of FDI in
various industrial units in India has boosted the economic life of country.
(2) Job Opportunities: It has been estimated according to government, that approximately ten
million jobs will be created mostly in retail and real estate sectors.
(3) Beneficial for Farmers: By FDI, farmers might get contract farming, where they will be able to
supply an organized retailer based upon demand and will get a better price; easy credit availability
will help to tackle the problem of farmer suicides.
(4) Beneficial for consumers: Consumers will get variety of good quality products at low prices
compared to market rates and will be able to choose from various international brands at one place.
(5) Increase level of competition: FDI increases level of competition in market. They have to
improve quality of products and service in order to stay in market. They enter into Indian market
through Joint venture and collaboration
(6) Infrastructure facilities: Allowing FDI might help India have better logistics and storage
technologies resulting in avoiding wastage. Due to FDI foreign companies will invest around $ 100
million in India. Thereby, infrastructure facilities, refrigeration technology, transportation sector will
get a boost.
(7) Cheaper Production facilities: FDI will assure operations in production cycle and distribution.
Due to economies of operation, production facilities will be available at a cheaper rate and thus
resulting in availability of variety products to the ultimate consumers at a reasonable and cheaper
price.
(8) Availability of new technology: FDI allows transfer of skills and technology from abroad.
Improved technology in the area of processing, grading, handling and packaging of goods and further
developments in areas like electronic weighing, billing, barcode scanning etc.
(9) Maximum Opportunity: FDI norms will open up strategic investment opportunity for global
retailers, who have been waiting to invest in India. This may have a significant impact on the current
arrangement of foreign players. Employees are well-versed with globally valued skills.
(12) Other benefits:

Inflation is controlled.

Tax revenue collected by the government can be used for infrastructure development.

India will become more integrated with regional and global economies in terms of quality
standards and consumer expectations.

Increased efficiency

Cost reduction

Implementation of IT in retail.

DISADVANTAGES OF FDI IN RETAIL IN INDIA

FDI feels that liberalization would endanger retail sector and mainly affect the small retailers,
farmers and consumer and give rise to monopolies adversely affect the pricing and availability of
goods. The entry of large global retailers such as Wal-Mart wipes out local shops and millions of
jobs. There are so many disadvantages of FDI in retail sector.
(1) Impact on the Kirana shops: The unorganized market provides the second largest employment
opportunities to 3.95 million people. It is argued that opening FDI in retail sector will have an impact
on sales in the unorganized sector. As a result of this, employment provided by the unorganized
sector will be affected. Small retailers and other Kirana Stores may close down.
(2) Limited Employment opportunities: It is said that FDI might provide employment
opportunities, but it is argued that it cannot provide employment opportunities to semi-illiterate
people. This argument gains more importance because in India, large number of semi-illiterate
people is present.
(3) Fear of lowering of prices: There is a fear that allowing FDI in retail would result in lowering of
prices, as FDI will bring in good technology, supply chain etc. If prices are lowered, then it will
lower the margin of unorganized players also. As a result of this, the unorganized market will be
affected. This in turn will have an impact on the employment opportunities provided by the
unorganized market.
(4) FDI in retail will drain out the countrys share of revenue to foreign countries, which may cause
negative impact on Indias economy
(5) Fears that domestic organized retail sector might not be competitive enough to tackle
international players might not only result in loss of market share for them but in closure of their
units.
(6) There is a possibility of small business owners and workers from other functional areas, as lot of
people are involved in unorganized retail business, may lose their jobs.
(7) Supermarkets will establish their monopoly in the Indian market. Due to supermarkets fine tuning
and higher accessibility they will be able to buy goods at lower prices and therefore will be able to
sell at lower prices to consumers. This will result in closing of many small retailers.
(8) Other disadvantages:

Giving rise to cut throat competition rather than promoting incremental business.

Promoting cartels and creating monopoly.

Increase in real estate prices.

Profit distribution, investment ratios are not fixed.

It can expand only by destroying traditional retail sector.

It is true that it is in the consumers best interest to obtain his goods and services at the lowest
possible price. But collective well being should take precedence.

SWOT ANALYSIS FOR OPENING THE FDI IN INDIAN RETAILING

Strengths:

Eliminates links in the purchasing chain

Technology driven

Consulting selling

Presence of big industry houses

Consumer service

Variety of products under one roof

Authentic products with Guarantee

Pleasant shopping ambience

Research driven plus competent manpower

Weaknesses

Lowest per capita space in the world

Prices more as compared to specialized shop

Reluctance of people

Non availability of land spaces at prime slots

High overhead and labor costs

Opportunities

Lifestyle changes or status consciousness

Ready availability of real estate in smaller towns

Improved sourcing options

Increasing time pressure for Indian woman

Focus on more quality, variety and easy availability under one roof

Increase in disposable income

Feel and touch shopping

No foreign competition

Increasing media exposure to brand

It can become one of the largest industries in terms of numbers of employees and
establishments.

Threats

Roadside bargains

Other retail outlets

Personal and homely attention at smaller shops

Availability of credit at other retail outlets

Competition from unorganized sector

Government policies and regulations

Lack of adequate infrastructure and inadequate investment

Lack of uniform tax system for organized retailing.

Labor rules and regulation are also not followed in the organized retails.

CONCLUSION
The concept of FDI is now a part of Indias economic future but the term remains vague to many,
despite the profound effects on the economy. FDI means Foreign Direct Investment in which foreign
investors can make investment in India. FDI in Indias retail sector has both advantages as well as
disadvantages. It is advantageous to the government as the tax revenue collected can be used for
infrastructure development, not only this it will be beneficial to the farmers and consumers also to a
large extent. It will also provide job opportunity which is a crucial factor for developing countries.
On the other hand it will cause cut throat competition specially in the organized retail sector
promoting cartels, creation of monopolies, increase real estate prices etc. Increased competition will
be beneficial as everyone will try to make its product better from others to increase their profits
which will ultimately result in quality products at reasonable prices. Opponents of FDI in retail argue
that it will bring major job losses but frankly it will cause only redistribution of jobs with some
drying up (like middlemen) and new ones sprouting up. The argument that farmers will suffer due to
creation of monopolies is weak. Stores like Wal-Mart and Tesco are very few, on the outskirts of
cities (to keep real estate costs low) and cant intrude in the local territory of local kiranas.
FDI is advantageous and disadvantageous both but it depends only on the way we implement it in
our country so that FDI does not have a bad impact on India's Business. Government must make
some rules so that it is beneficial for Indian market retailers and the customers get the required
benefit from this. May be by this Indian economy may rise which is helpful in the employment field.
The experience of successful ASEAN countries amply demonstrates how FDI can play a leading role

in bringing about rapid, export-led growth. In the retail sector changes are very frequent therefore
survival in retail will depend upon the ability to adapt to change. The Indian retailers need to develop
proper systems and processes keeping the unique nature of the country in mind. FDI would lead to a
more comprehensive integration of India into the worldwide market and as such, it is imperative for
the government to promote this sector for the overall economic development and social welfare of
the country. So FDI should be implemented in a limited way so that it releases a good impact on
India market. If done in the right manner, it can prove to be a boon and not a curse.
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