Advantages of FDI in Retail in India
By MT UVA BMS on February 15, 2013 in Retail Management
Advantages of FDI in Retail in India :
(1) Growth in Economy : Due to foreign companies entering into retail sector, new infrastructure will be built thereby bolstering the jagging real estate sector. In turn, banking sector will also grow as the funds needed to build infrastructure will be provided by banks. (2) Job Opportunities : It has been estimated according to government, that approximately ten million jobs will be created mostly in retail and real estate sectors. (3) Benefits to Farmers : In the retailing business, the intermediaries have dominated the interface between the manufacturers or producers and the consumers. Hence the farmers and manufacturers lose their actual share of profit margin, as the lion’s share is eaten up by the middlemen. This issue can be resolved by FD1, as farmers might get contract farming, where they will be able to supply an organised retailer based upon demand and will get paid handsomely for that and they need not run in search of buyers. (4) Benefits to consumers : Consumers will get variety of good quality products at low prices compared to market rates and will be able to choose from various international brands at one place. (5) Lack of Infrastructure : This has been one of the common issues in the retailing chain in India for years, which has led to the process of an incompetent market mechanism. To cite an example, inspite of India being one of the largest producers of fruits and vegetables, lack of proper cold storage facility significantly affects the selling of these perishable items and also in huge losses. Allowing FDI might help India have better logistics and storage technologies resulting in avoiding wastage. Due to FDI foreign companies will invest around $ 100 million in India. Thereby, infrastructure facilities, refrigeration technology, transportation sector will get a boost. (6) ...
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