Foreign Direct Investment in Indian Retail: An Overview

FDI has become a very sensitive issue looking into its consequences on the Indian economy. The Indian government is trying to keep certain checks on the foreign investors while allowing them to invest in India. FDI in India may lead to heavy displacement of workforce in the country. Also, if proper rules and regulations are not followed, it may cause some big retailers to own a large chunk of money, leading to the financial imbalance in the country. FDI may also lead to the closure of small retail shops and manufacturers. For instance, a retailer like Walmart has the power to dictate the terms to suppliers and manufactures. Also it has the policy of pushing the prices paid to the farmers and manufacturers down to the level that most of them are not able to sustain and as such they go out of the business. In contrast, there are also some favourable results of FDI provided proper policies are followed. Retail sector will become highly organized resulting in more jobs and resulting growth of the economy. Higer competition in the market will lead to the drastic reduction in overall prices, finally benefitting the consumers. There will also be more transperancy in the Mandi system which will prevent exploitation of the farmers. Infrastrucure will also improve as a result of heavy investments from the foreign players. It is a matter of how FDI is approached, which will decide the eventual consequences on the Indian economy. The government should frame the policies very thoughtfully and carefully. Small retailers should also be encouraged get themselves organized to avoid getting wiped out due to