Impact of FDI on Indian Retail Sector: Challenges and Opportunities

Abstract

Retailing sector of India is an emerging sector and back bone of Indian economy. The contribution of this sector is 14 to 15 percent in the total GDP. The retail market of India is estimated to be US$ 500 billion and one of the top five retail markets in the world by economic value. Indian retail market is getting very popularity over the world with 1.2 billion people. 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 phenomenal growth and change in the India Retail Sector over the years has resulted in many issues and challenges for the retail industry, the very recent being the Foreign Direct Investment policy in India. This would change the face of the retail sector. In this context, the present paper attempts to analyze the various factors concerning the influx of foreign direct investment its repercussions as well as the opportunities for FDI in the Indian retail industry. This paper provides information about the growth of retailing in India. And also focuses on the challenges faced by organized retail sector in India. It also emphasize on major players of retailers in India and customer services provided by the retailers. This paper also deals with various retail formats and the opportunities for the growth of retail industry in India and also provides some suggestions to overcome the challenges.