Fdi (Foreign Direct Investment) in Retail Essay

1249 WordsApr 23, 20135 Pages
Introduction The spectacular and unprecedented growth of FDI in the global economic landscape over the last two decades has made it an integral part of the development strategy of both the developed and developing nations. It acts as a major catalyst in the development of a country through up-gradation of technology, managerial skills and capabilities in various sectors. 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). This paper focuses on the overview of the Indian retail sector along with the opportunities of expansion of FDI retail in India and the major challenges/disadvantages that it faces Decoding Retail in India The Indian retail industry is generally divided into two major segments – organized retailing and unorganized retailing. (a) Organized Retailing - refers to trading activities undertaken by licensed retailers who registered for sales tax, income tax, etc. This includes the corporate-backed hypermarkets, retail chains and also the privately owned large retail businesses. (b) Unorganized Retailing - refers to the traditional formats of low-cost retailing. For example: local grocery shops, owner manned general stores, hand cart and pavement vendors, paan shops etc In the developed economies, organized retail is in the range of 75-80 per cent of total retail, whereas in developing economies, the unorganized sector dominates the retail business. For statistics in India 2006, total retail sales for 322 US$ bn where share of organized retail is only 4%. Types of retailing in India a) Single Brand - Single brand implies that foreign companies would be allowed to sell goods sold internationally under a “single brand” viz., Reebok, Nokia and Adidas. FDI in “Single brand” retail

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