EXCEL International Journal of Multidisciplinary Management Studies
Year : 2012, Volume : 2, Issue : 5
First page : ( 132) Last page : ( 146)
Print ISSN : 0000-0000. Online ISSN : 2249-8834.

100% FDI in single-brand retail of India- A boon or a bane?

Soundararaj J.J.

Assistant Professor, PG & Research Department of Commerce, Loyola College, Chennai-600034

Abstract

One of the most important developments during the last two decades is the notable growth of FDI in the global economic landscape. This unprecedented growth of global FDI from 1990 around the world make FDI an important and vital component of development strategy in both developed and developing nations and the policies are designed in order to stimulate inflows of FDI. Perhaps, FDI provides a win-win situation to both host and home countries as well. The home countries take the advantage of vast market potential accelerated by industrial growth, whereas host/targeted countries want to acquire technical know-how and managerial skills and supplement domestic savings and foreign exchange. According to AT Kearney’s Annual Global Retail development Index for the year 2010, it is found in the annual study, made among 30 Countries based on their retail investment attractiveness, India has been placed at third rank which is next to China and Kuwait. It is also mentioned that the Indian retail market is worth $410 billion as of now and only 5% sales are through organised retail whereas, the rest is in the unorganised retail. Such a major unorganised segment of Indian retail could be perceived to be the opportunities for domestic and international Companies. Moreover, it is estimated that the Indian retail will grow very fastly to become worth of $535 billion in 2013, with 10% from organised retail due to the effect of growing middle class which will demand better shopping environment and quality brands. The Indian Government has now allowed 100% FDI in the single-brand retail in addition to 100% FDI in the cash and carry B2B/wholesale segment that already exists. Till today, FDI in Indian multi-brand retail has not been permitted due to the resistance from the opponents and the allies of the central govt. Perhaps, the UPA government might take it up again after the five state assembly elections that are scheduled between January 30, 2012 and March 03, 2012. This paper primarily makes an attempt to critically evaluate whether allowing 100% FDI in Single-brand retail of India is a boon or a bane.

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Keywords

Retail, Organised Retail, Unorganised Retail, Retailer, Multi-Brand Retail, Single-Brand Retail.

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