FDI IN INDIAN RETAIL SECTOR: OPPORTUNITIES AND CHALLENGES

Ritika, Neha Dangi

Abstract


Foreign Direct Investment (FDI) is considered to be the lifeblood of economic development especially for the developing and underdeveloped countries. It plays an important role in the long-term development of a country not only as a source of capital but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities.  Allowing FDI proves good as improvements in supply chain technologies and informational externalities to local players and competitive dynamics that could benefit consumers and suppliers. Competition is best for consumers as it gives them variety, better prices and better quality. It may give domestic producers an incentive to become more efficient. FDI in retail sector can expand markets by reducing transaction and transformation costs of business through adoption of advanced supply chain and benefit consumers and suppliers. FDI in multi-brand retail will support the government’s role of achieving remunerative prices for farmers and will also increase quality and choice for India’s increasingly sophisticated consumer base. An incredibly high percentage, 40% of food is lost in India due to the lack of cold storage and the lack of quick transportation. This is one of the very important benefits of multi-brand retail that they brought across the world in supply chain. FDI is expected to bring the investment and expertise necessary to modernise and develop the farm and manufacturing sector. The prospect of higher growth in the food and grocery is particularly attractive because over fifty per cent of India’s workforce is employed in the farm sector. FDI increases the level of competition in the host country. Other companies will also have to improve on their processes and services in order to stay in the market. FDI enhanced the quality of products and services. FDI has also ensured a number of employment opportunities by aiding the selling up of industrial units in various corners of India.


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