12 Sep 2015

e-Khaliyan

FDI in Indian retails- Boon or Bane?

India as developing country need Investment which has become the need for hour, however few areas about which government is very peculiar to Allow the FDI in Retail, FDI in Defense. So this article will list out from points in the favor and opposite of the FDI in Retail Sector in India.

Introduction

What is FDI ? 

 -  FDI Stand for Foreign Direct Investment  which means non-indian entities, companies, establishments would able to invest money in the Indian Retail Market.


Points In Favor of the Topic

1. FDI in the Retail sector:
Retailing is one of the worlds largest private industry. Liberalizations in FDI have caused a massive restructuring in retail industry. The benefit of FDI in retail industry superimposes its cost factors. Opening the retail industry to FDI will bring forth benefits in terms of advance employment, organized retail stores, availability of quality products at a better and cheaper price. It enables a countrys product or service to enter into the global market.

2. Cheaper production facilities:
FDI will ensure better operations in production cycle and distribution. Due to economies of operation, production facilities will be available at a cheaper rate thereby resulting in availability of variety products to the ultimate consumers at a reasonable and lesser price.

 3.  Availability of new technology:
FDI enables transfer of skills and technology from overseas and develops the infrastructure of the domestic country. Greater managerial talent inflow from other countries is made possible. Domestic consumers will benefit getting great variety and quality products at all price points.

4. Long term cash liquidity:
FDI will provide necessary capital for setting up organized retail chain stores. It is a long term investment because unlike equity capital, the physical capital invested in the domestic company is not easily liquidated.


Negative impacts on Indian Market to be noted:

1. FDI will lead to job losses. Small retailers and other small ‘Kirana store owners’ will suffer a large loss. Giant retailers and Supermarkets like Walmart, Carrefour, etc. will displace small retailers.

2. Supermarkets will establish their monopoly in the Indian market. Because of supermarket’s fine tuning, they will get goods on low price and they will sell it on low price than small retailers, it will decrease the sell of small retailers.

3. Jobs in the manufacturing sector will be lost because foreign giants will purchase their goods from the international market and not from domestic sources. This has been the experience of most countries which have allowed FDI in retail. Although, our country had made a condition that they must source a minimum of 30% of their goods from Indian micro and small industries, we can’t stop them from purchasing goods from international markets as per WTO law. So after coming to India, they can reduce this 30% by litigating at the WTO.

4. Foreign companies will get acclaim capital from our country. Outflow of Capital.

5. Local producers will suffer or go vanished completely due to competition with foreign brands.

Videos for the Live Group Discussion for the FDI in Retail in India.






Other Important Online Links for Further Reading Regarding FDI In retails










5 comments

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payal jhanwar
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26 May 2017 at 03:17 delete

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Anonymous
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11 August 2017 at 22:24 delete

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