Fdi in India

Topics: Retailing, Shopping mall, Department store Pages: 22 (7654 words) Published: April 25, 2013
IOSR Journal Of Humanities And Social Science (JHSS) ISSN: 2279-0837, ISBN: 2279-0845. Volume 5, Issue 5 (Nov. - Dec. 2012), PP 99-109 www.Iosrjournals.Org

The Opportunities and Challenges of FDI in Retail in India
Rajib Bhattacharyya
Assistant Prof. in Economics, P. G. Department of Commerce, Hooghly Mohsin College, India

Abstract: The spectacular and unprecedented growth of FDI in the global economic landscape over the last two decades has made it an integral part of the development strategy of both the developed and developing nations. It acts as a major catalyst in the development of a country through up-gradation of technology, managerial skills and capabilities in various sectors. Rise in purchasing power, growing consumerism and brand proliferation has led to retail modernization in India. The growing Indian market has attracted a number of foreign retailers and domestic corporate to invest in this sector. FDI in the retail can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers and suppliers (farmers). Oppositions have raised concerns about employment losses, promotion of unhealthy competition among organized domestic retailers resulting in exit of small domestic retailers from the market and distortion of urban cultural development. The present paper focuses on the overview of the Indian retail sector along with the opportunities of expansion of FDI in retail in India and the major challenges that it faces. Key Words: FDI, Indian retail sector, Opportunities and Challenges, Impact on Stakeholders.

I.

Introduction

Widespread liberalization and deregulation of financial markets, cross-border mergers and acquisitions (M&As), increasing role of investors willing to invest abroad, rapid advances in modern telecommunication and computer network – have all resulted in a tremendous upsurge of international capital flows in India, particularly private capital flows, as compared to official capital flows over the last two decades. Among the various forms of foreign investment, foreign direct investment (FDI) flows are usually preferred over other forms of external finance because they are non-debt creating, non-volatile and their returns depends on the performance of projects financed by the investors. In fact, FDI provides a win – win situation to both the host and the home countries. The „home‟ countries want to take the advantage of the vast markets opened by industrial growth. On the other hand the „host‟ countries want to acquire technological and managerial skills and supplement domestic savings and foreign exchange. Moreover, in order to overcome the deficiencies of all kinds of resources viz. financial, capital, entrepreneurship, technological know- how, skills and practices, access to markets-abroad - in their economic development, developing nations accepted FDI as a sole visible panacea for all their scarcities. Economic development, rise in purchasing power, growing consumerism and brand proliferation has led to retail modernization in India. With high economic growth, per capita income increases; this, in turn, leads to a shift in consumption pattern from necessity items to discretionary consumption. Furthermore, as the economy liberalizes and globalizes, various international brands enter the domestic market. Consumer awareness increases and consumers tend to experiment with different international brands. The proliferation of brands leads to increase in retail space. Retail modernization in India depicts a similar story. According to A.T. Kearney‟s Annual Global Retail Development Index (GRDI) for the year 2012, India has been placed at fifth rank (after Brazil, Chile, China and Uruguay) on the basis of retail investment attractiveness. The growing Indian market has attracted a number of foreign retailers and domestic corporate to invest in this sector. Being encouraged by India‟s growing retail boom many...

References: [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] AC Nielsen (2008): Consumer and Designer Brands. AC Nielsen, April 2008 A.T. Kearney (2011): “Retail Global Expansion: A Portfolio of Opportunities-2011 Global Retail Development Index”, A.T. Kearney, 2011 CBRE (2011): How Global is the Business of Retail. CB Richard Ellis, Global Research and Consulting, 2011 Edition. Department of Industrial Policy and Promotion, 2010. “Foreign Direct Investment (FDI) in MultiBrand Retail Trading,” Discussion paper. Available at http://www.dipp.nic.in. Basker, Emek, 2005a. “Job Creation or Destruction? Labor Market Effects of Wal-Mart Expansion,” Review of Economic Statistics, Vol. 87, No. 1, Pages 174-183. Basker, Emek, 2005b. “Selling a Cheaper Mousetrap: Wal-Mart 's Effect on Retail Prices,” Journal of Urban Economics, Vol. 58, No. 2, pp. 203-229. Chari, Anusha. and T.C.A. Madhav Raghavan: “Foreign Direct Investment in India‟s Retail Bazaar: Opportunities and Challenges”, March 2011. Confederation of Indian Industry (2012): “The Impact of FDI in Retail on SME Sector: A Survey Report”. Joseph, M., N. Soundararajan, M.Gupta and S. Sahu (2008): “Impact of Organized Retailing on the Unorganized Sector”, ICRIER, May, 2008. Joseph, M. and Nirupama Soundararajan (2009): “Retailing in India: A Critical Assessment”, Academic Foundation, New Delhi. Kalhan, Anuradha, (2007), “Impact of Malls on Small Shops and Hawkers,” Economic and Political Weekly, Vol.42, No.22, pp.2063-66. Kalhan, Anuradha and Martin Franz, (2009), “Regulation of Retail: Comparative Experience,” Economic and Political Weekly, Vol.44, No.32, pp.56-64. Kulkarni Keerti, Kulkarni Ramakant and Kulkarni Gururaj A.(2012): “Foreign Direct Investment In Indian Retail Sector: Issues And Implications”, Indian Journal of Engineering and management Sciences, 2012; Vol. 3(3). McKinsey & Company (2007): “The „Bird of Gold‟: The Rise of India‟s Consumer Market”, McKinsey Global Institute, 2007. Mukherjee, A, D. Satija, T.M.Goyal, M.K. Mantrala and S. Zou (2011): “Impact of the FDI Retail Policy on Indian Consumers and the Way Forward”, ICRIER Policy Series Aug,2011; No. 5. Mukherjee, A. and Nitisha Patel (2005): “FDI in Retail Sector: India”, Academic Foundation, New Delhi. Neumark, David, Junfu Zhang, and Stephen Ciccarella, 2008. “The Effects of Wal-Mart on Local Labor Markets,” Journal of Urban Economics, Vol. 63, No. 2, pp. 405-430. Sarma, E.A.S, 2005, “Need for Caution in Retail FDI,” Economic and Political Weekly, Vol.40, No.46, pp.4795-98. Sarthak Sarin, (Nov 23, 2010) Foreign Direct Investment in Retail Sector http://www.legalindia.in/foreign-direct-investment-inretail-sector-others-surmounting-india-napping. Soundararaj, J (2012): “100% FDI in Single-Brand Retail Of India- A Boon or a Bane?” International Journal of Multidisciplinary Management Studies, May 2012; Vol.2 Issue 5. http://icm.icfai.org/casestudies/catalogue/marketing. http://www.cci.in /pdf/surveys _reports/ India‟s _ retail_sector.pdf. Harsh Mariwala, Retail FDI: A Win-Win Move, The Economic Times, Delhi 30-11-2011.
www.iosrjournals.org
109 | Page
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • CHINA AND INDIA ON FDI Essay
  • Essay on FDI in India
  • Fdi in India Research Paper
  • Fdi in India Essay
  • Essay about Fdi in India
  • Essay about Fdi in India
  • Essay on FDI in India
  • Essay on Fdi in India

Become a StudyMode Member

Sign Up - It's Free