Model essay: FDI in retail is a boon for India
Fears that the entry of FDI in multi-brand retail may cause unemployment as foreign firms may not procure material from domestic producers and may import the same from international market are unfounded
FDI will improve investment in logistics of the retail chain, leading to an efficient market mechanism It is always imperative to understand the topic in its right perspective before you place your views on it. Let us first think what do we know about this hot, contemporary and fiercely-debatable topic and once we have clarity on the same, we may proceed to present our opinion based on facts in the given time. Any essay or write-up on the captioned topic should describe two broad issues – what is FDI in retail and how is it beneficial to India. The essay below will give you a clear idea about it. FDI in retail is a boon for India
Foreign direct investment (FDI) refers to foreign capital that is invested to enhance the production capacity of the economy. However, FDI in retail is different from the investment in corporate, manufacturing or infrastructure sectors. Retail can be single or multi brand and may be described as a sale to the ultimate consumer at a margin of profit.
While the FDI in single-brand retailing was allowed earlier, FDI in multi-brand retailing is being allowed now. This means a retail store with foreign direct investment can sell multiple brands under one roof. So, it is the link between the producer/manufacturer and the individual consumer. India had to open up the retail trade sector to foreign investment as she is a signatory to the World Trade Organization’s General Agreement on Trade & Services, which includes wholesale and retail services.
The Indian retail sector is highly fragmented with around 97 per cent of its business being run by unorganized retailers. Organized retail is still at a nascent stage. With the entry of FDI, the retail sector will become...