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ABSTRACT
The current regulations on retail allow 100% FDI in wholesale cash-and-carry trading. In single-brand retailing, 100% FDI is permitted while it is prohibited in multi-brand retailing. The question arises whether opening up of FDI in multi-brand retail will create problems or provide opportunities. There is no clear answer and ample views have been expressed by that in favour and against FDI. The aim of the paper is to get insights regarding the retail industry of the India and its role for the economy. The paper also wants to explore the advantages as well as the disadvantages of allowing 100 % FDI in the retail sector. The FDI in retail sector would incorporate the economy with the rest of the world, but in buzzing Indian retail sector it should not be freely allowed but should have significant rules regulations and the monitoring authorities.
Keywords: FDI, Retail Sector, Single-brand, Multibrand.
INTRODUCTION
Liberalization of trade policies during the last one and half decade has led India to become an investment friendly country. Foreign direct investment (FDI) in this country assumed critical importance in the context of this liberalization. Though India is the tenth most industrialized country in the world, it is well known that it is mainly agro-based with around 70% population engaged in the farm sector. However, in the initial stage of liberalization, FDI was centered on the urban manufacturing sectors because of its civic infrastructure, labour availability, flexible taxation mechanism etc. The success story of FDI in these sectors is known to us. But now the government of India moved from general FDI to FDI in retail.
Retailing in India is one of the business firm it contribution 14-15% to the GDP (Anand Dikshit 2011) and 7 percentage of labour force. The India retail market is estimated to be us$ 450 billion and one of the top five retail markets in the world. India is one of the fastest going retail markets in world. Until 2011, Indian central government denied foreign direct investment (FDI) in multibrand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. Even single-brand retail was limited to 51% ownership and a bureaucratic process.
In November 2011, India's central government announced retail reforms for both...