FDI - A BOOA 1O IADIAA ECOAOMY..

FDI can be a powerIul catalyst to spur competition in the retail industry, due to the current
scenario oI low competition and poor productivity. The policy oI single brand retail was adopted
to allow Indian consumers access to Ioreign brands. Since Indians spend a lot oI money shopping
abroad, this policy enabled them to spend the same money on the same goods in India. FDI in
single brand retailing was permitted in 2006, up to 51 per cent oI ownership. Retail stocks rose
by as much as 5. Shares oI Pantaloon Retail (India) Ltd ended 4.84 up at Rs. 441 on the
Bombay Stock Exchange. Shares oI Shopper`s Stop Ltd rose 2.02 and Trent Ltd, 3.19. The
exchange`s key index rose 173.04 points, or 0.99, to 17,614.48. But this is very less as
compared to what it would have been had FDI up to 100 been allowed in India Ior single
brand.
The policy oI allowing 100 FDI in single brand retail can beneIit both the Ioreign retailer and
the Indian partner - Ioreign players get local market knowledge, while Indian companies can
access global best management practices, designs and technological knowhow.
Permitting Ioreign investment in Iood-based retailing is likely to ensure adequate Ilow oI capital
into the country & its productive use, in a manner likely to promote the welIare oI all sections oI
society, particularly Iarmers and consumers. It would also help bring about improvements in
Iarmer income & agricultural growth and assist in lowering consumer prices inIlation.
In light oI the above, it can be saIely concluded that allowing healthy FDI in the retail sector
would not only lead to a substantial surge in the country`s GDP and overall economic
development, but would inter alia also help in integrating the Indian retail market with that oI the
global retail market in addition to providing not just employment but a better paying
employment, which the unorganized sector (kirana and other small time retailing shops) have
undoubtedly Iailed to provide to the masses employed in them.
The international retail players such as Walmart, CarreIour, Metro, IKEA, and TESCO share the
same view and insist on a clear path towards 100 per cent opening up in near Iuture. Large
multinational retailers such as US-based Walmart, Germany`s Metro AG and Woolworths Ltd,
the largest Australian retailer that operates in wholesale cash-and-carry ventures in India, have
been demanding liberalisation oI FDI rules on multi brand retail Ior some time.|16|

Allowing FDI in multi brand retail can bring about supply chain improvement, investment in
technology, manpower and skill development, tourism development, greater sourcing Irom India,
up gradation in agriculture, eIIicient MSME, growth in market size and beneIits to Government
through greater GDP, tax income and employment generation. Apart Irom this, India will
signiIicantly Ilourish in terms oI quality standards and consumer expectations, since the inIlow
oI FDI is bound to pull up the quality standards and cost-competitiveness oI Indian producers in
all the segments.

Conclusion
Walmart has a joint venture with Bharti Enterprises Ior cash-and-carry (wholesale) business,
which runs the 'Best Price' stores. It plans to have 15 stores by March and enter new states like
Andhra Pradesh, Rajasthan, Madhya Pradesh and Karnataka.
Duke, Wallmart`s CEO opined that FDI in retail would contain inIlation by reducing wastage oI
Iarm output as 30 to 40 oI the produce does not reach the end-consumer. "In India, there is
an opportunity to work all the way up to Iarmers in the back-end chain. Part oI inIlation is due to
the Iact that produces do not reach the end-consumer," Duke said, adding, that a similar trend
was noticed when organized retail became popular in the US.
Many oI the Ioreign brands would come to India iI FDI in multi brand retail is permitted which
can be a blessing in disguise Ior the economy.
The government has added an element oI social beneIit to its latest plan Ior calibrated opening oI
the multi brand retail sector to FDI. Only those Ioreign retailers who Iirst invest in the back-end
supply chain and inIrastructure would be allowed to set up multi brand retail outlets in the
country. The idea is that the Iirms must have already created jobs Ior rural India beIore they
venture into multi-brand retailing.
It can be said that the advantages oI allowing unrestrained FDI in the retail sector evidently
outweigh the disadvantages attached to it and the same can be deduced Irom the examples oI
successIul experiments in countries like Thailand and China; where too the issue oI allowing FDI
in the retail sector was Iirst met with incessant protests, but later turned out to be one oI the most
promising political and economical decisions oI their governments and led not only to the
commendable rise in the level oI employment but also led to the enormous development oI their
country`s GDP.
The Industrial policy 1991 had craIted a trajectory oI change whereby every sectors oI Indian
economy at one point oI time or the other would be embraced by liberalization, privatization and
globalization.FDI in multi-brand retailing and liIting the current cap oI 51 on single brand
retail is in that sense a steady progression oI that trajectory. But the government has by Iar
cushioned the adverse impact oI the change that has ensued in the wake oI the implementation oI
Industrial Policy 1991 through saIety nets and social saIeguards. But the change that the
movement oI retailing sector into the FDI regime would bring about will require more involved
and inIormed support Irom the government. One hopes that the government would stand up to its
responsibility, because what is at stake is the stability oI the vital pillars oI the economy-
retailing, agriculture, and manuIacturing. In short, the socio economic equilibrium oI the entire
country.