FDI in Indian Retail Sector: Good or Bad

Retailing is the interface between the producer and the individual consumer buying for personal consumption. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. The recent clamor about opening up the retail sector to Foreign Direct Investment (FDI) becomes a very sensitive issue, with arguments to support both sides of the debate. It is widely acknowledged that FDI can have some positive results on the economy, triggering a series of reactions that in the long run can lead to greater efficiency and improvement of living standards, apart from greater integration into the global economy. By infusion of FDI in retail trade the consumer will be benefited by both price reductions and improved selection, brought about by the technology and know-how of foreign players in the market. This in turn can lead to greater output and domestic consumption. But the most important factor against FDI driven “modern retailing” is that it is labor displacing to the extent that it can only expand by destroying the traditional retail sector. This paper tries to throw light on the positive and negative effects of FDI in Indian Retail industry.