Impact of 100% Fdi on Indian Consumers and Indian Market

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Impact of 100 % FDI in Retail Sector on Indian Market and Consumers

ABSTRECT:-
Foreign Direct Investment- “FDI is an investment which has involves the investment of foreign funds into enterprises that operates in a different country of origin from the investor”. The Indian government’s department of industrial policy and promotion has passed a proposal to allow up to 51% FDI in multi-brand retail and 100% in single brand retail. It is a measure of foreign ownership of domestic productive assets such as factories, lands and organizations. The recent survey done by United Nations Conference on Trade and Development.(UNCTAD) suggested that India is the second country (after China) for transnational corporation during 2009-2012.The most attracted sectors for FDI in India is Education, Service, Telecommunication, Construction and in the New technologies. In Indian context, the objective of this paper is to understand the major role of FDI impact on retail sector as well as on the Indian consumers. Keywords: Organized retail, sunrise sector, globalization, foreign direct investment. Definition of Retail

In 2004, The High Court of Delhi defined the term ‘retail’ as a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale). A sale to the ultimate consumer. Thus, retailing can be said to be the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. Retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. A retailer is involved in the act of selling goods to the individual consumer at a margin of profit. Division of Retail Industry – Organized and Unorganized Retailing The retail industry is mainly divided into: - 1) Organized and 2) Unorganized Retailing Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. The Indian retail sector is highly fragmented with 97 per cent of its business being run by the unorganized retailers. The organized retail however is at a very nascent stage. The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10 per cent of India’s GDP.

The retail industry in India is one of the growing sectors in the economy. AT Kearney, the well-known international management consultancy, recently identified India as the ‘second most attractive retail destination’ globally from among thirty emergent markets. It has made India the cause of a good deal of many foreign eyes. With a contribution of 14% to the national GDP and employing 7% of the total workforce in the country, the retail industry is definitely one of the pillars of the Indian economy. In Indian Context: - The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganized retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. The following given table shows the share and growth % of the largest components of Indian...
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