FDI IN INDIA RETAILS - BOON FOR INDIA

FDI IN RETAIL SECTOR IN INDIA WILL BE A GREAT ADVANTAGEOUS FOR INDIANS

The Indian economy has continuously recorded high growth rates over the past decade. As per the Indian Prime Minister, Dr. Manmohan Singh, the Indian economy is expected to grow at around 7.5% over the coming years. One of the major contributors to the growth shall be the Foreign Direct Investments (FDI) and it is predicted that over the next two years, India could attract FDI worth US$ 80 billion.

The latest available data from the Reserve Bank of India shows a 77 per cent jump in the FDI in the first half of the current financial year (April-September), compared to what was US$ 19.5 billion during the same period a year ago.

FDI refers to an investment made to acquire lasting or long-term interest in enterprises operating outside of the economy of the investor. It is a major source of external finance which means that countries with limited amounts of capital can receive finance beyond national borders from wealthier countries. In case of India , countries such as Singapore , the US and the UK are amongst the leading sources of FDI. The sectors which attract higher inflows are services, telecommunication, construction activities and computer software and hardware.

Another sector which is looking at benefiting from FDI is the retail sector. There have been discussions about FDI being opened up in retail which has drawn a lot of support from international retailers like Walmart and Tesco. It is also being seen as the means to put a structure in place to the highly unorganized retail structure prevalent in the country. The additional benefits in the form of lower costs and enhanced technologies make it an attractive proposition.

However, the policy decision is faced with some resistance from internal organized retailers as well as some representatives of the unorganized sector. The entry of new competitors in the retail sector is being viewed as a threat by current players in the market.

ADVANTAGES OF FDI IN RETAIL-->>

Shoppers typically wait outside the shop, ask for what they want, and can not pick or examine a product from the shelf , where as in corporate-backed hypermarkets people can choose and examine the product they want easily.

Greater competition from new companies can lead to productivity gains and greater efficiency in the host country and it has been suggested that the application of a foreign entity’s policies to a domestic subsidiary may improve corporate governance standards.

JOB OPPORTUNITIES...

Furthermore, foreign investment can result in the transfer of soft skills through training and job creation, the availability of more advanced technology for the domestic market and access to research and development resources.

The local population may be able to benefit from the employment opportunities created by new businesses.

FOREIGN CURRENCY STOCK IN INDIA WILL INCREASE...

An increase in FDI may be associated with improved economic growth due to the influx of capital and increased tax revenues for the host country. Host countries often try to channel FDI investment into new infrastructure and other projects to boost development.

What do you think about FDI in retail sector in India..?? Give your opinions...your views are appreciated.