Foreign Direct Investment (FDI) in retail and its scope in India

Abstract

India has been placed at first position in the category of countries with the best opportunity for investment in retail sector.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 almost three times its current levels to $660 billion by 2015. 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 and one of the major reason is that retailing is one of the few sector where foreign direct investment (FDI) is not fully allowed. Liberalizing flow of FDI into the retail sector has been a subject of active debate for a long time. 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 and has stimulated the growth in different sectors.  In order to create new & more jobs, FDI is the success mantra now. In this paper we study the impact of Foreign Direct Investment (FDI) with respect to Indian Retail Sector. We try to analyze merits and demerits, challenges and future scope of FDI.