A Review of the Impact of Foreign Direct Investment on Indian Retailing

Retailing is the largest private industry in India and second largest employer in the Indian economy. At present, India’s retail sector is largely unorganized, with about 15 million tiny outlets. Organized retail is restricted to few cities and catering largely to a small portion of population. In spite of development in organized retailing and its immense contribution to economy, the growth of organized retailing in India has been much slower as compared to rest of the world and one of the major reason is that retailing is one of the few sector where foreign direct investment ( FDI) is not fully allowed. Liberalizing flow of FDI into the retail sector has been a subject of active debate for a long time. This paper examines the global trends of FDI in retailing and its contribution in economic development. The paper reviews that post liberalization, FDI has stimulated the growth in different sector in India. The paper finds that FDI in retailing can be a powerful catalyst for development of organized retail and the fears being perceived by unorganized retail have no logical or historical base. The intense competition will have positive impact for all the stakeholders.