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Impact of Fdi in Multi-Brand Retailing

In: Business and Management

Submitted By amitdodwani
Words 3579
Pages 15
The 1991 reforms marked a paradigm shift in India's policy vis-à-vis foreign capital. The 19 years of reforms era has seen progressive liberalization of the policy particularly with respect to Foreign Direct Investment (FDI) whose role in economic development is acknowledged by policy makers. India cautiously opened up to FDI with the hope that it could act as a catalyst for growth as it is believed to fill up the critical gaps of capital and technology and also be a facilitator for transfer of managerial and technical skills, for employment generation and export promotion. Keeping with the policy of progressive liberalization the Government of India has now initiated a debate of allowing FDI in multi- brand retail.

100% FDI in wholesale cash-and-carry trade was opened in April 2006 followed by further liberalizing by allowing 51% FDI in single-brand retail in 2008. The impact of this has been an FDI flow of Rs. 7799 crore into the retail sector. The issue of FDI in multi- brand retail had been put on the backburner for so long as it had a direct impact on the strong 1.3 crore small retailers in the unorganized sector. The giant multinational retail players are pushing for the opening up of India's retail trade as the growing middle class with rising disposable incomes means huge market potential. Even domestic retailers such as Future Group, Reliance, Birla, etc are lobbying hard for FDI. By initiating the current debate the Government has made its intention of removing multi-brand retail from the 'restricted list' very clear and the need is to safeguard all the stakeholders' interests.

FDI in Multi-Brand Retail – A Step in the right Direction

The strongest argument in favour of retail is that it is in the interests of the Indian farmer and consumers. Despite the rising food inflation the Indian farmer gets only one-third of the consumer...

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