Volume : 2, Issue : 1, January - 2013

Impact of Fdi in Indian Economy with Special Reference to Retail Sector in India

Dr. R. Renuka, Dr. M. Ganesan, Dr. M. K. Durgamani

Abstract :

India being a signatory to World Trade Organization’s General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. Given that 95% of the sector constitutes unorganized retail consisting largely of “mom and pop” stores, the Government has treaded cautiously by building adequate safeguards for the domestic stakeholders in the unorganized sector. Only those foreign retailers who first invest in the back–end supply chain and infrastructure would be allowed to set up multi and retail outlets in the country. The idea is that the firms must have already created jobs for rural India before they venture into multi–and retailing. It can be said that the advantages of allowing unrestrained FDI in the retail sector evidently outweigh the disadvantages attached to it and the same can be deduced from the examples of successful experiments in countries like Thailand and China where too the issue of allowing FDI in the retail sector was first met with incessant protests, but later turned out to be one of the most promising political and economical decisions of their governments and led not only to the commendable rise in the level of employment but also led to the enormous development of their country’s GDP.