Foreign Direct Investment in India: A Study on Retail Sector

Abstract

Foreign direct investment (FDI) in the retail sector in India is restricted. In 2006, the government eased retail policy for the first time, allowing up to 51 per cent FDI through the single brand retail route. Since then, there has been a steady increase in FDI in the retail sector. The government has opened up multi brand retailing for foreign players. The growing Indian market has attracted a number of foreign retailers and domestic corporate to invest in this sector. 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). The present paper focuses on the overview of the Indian retail sector along with the opportunities of expansion of FDI in India and the major challenges that it faces. It concludes that inward FDI can enhance competition and accelerate the process of innovation in the local Retail Sector.