Effect of FDI in Retail Sector in India

FDI: FDI stands for foreign direct investment, which means allowing foreign companies to do business in the nation weather it should be retail industry or service industry or Parma industry etc. If FDI is between 51% to 100% then these companies will work as separate entity and if it is less than 51% then it is necessary to work with Indian company. FDI is the huge source of income in India which increases foreign currency reserves. FDI is shown in the Capital account of Balance of Payment, and it helps in maintaining the Balance of Payment. Foreign capital plays a constructive role in a country’s economic development. And India as developing nation get more benefits from this FDI as they are the large source of foreign capital and foreign currency. Sometimes it happen that domestically available capital is inadequate or insufficient for the proper development of the nation in all the sectors. So at that time this foreign capital act as filling the gap between the domestic available supplies of savings, government revenue, foreign exchange and planned investment is necessary to achieve development targets. And this is very true reason that why developing countries allowed FDI in their nation. India ranks second among the major fastest developing nations in the world after China. Indian economy has diversified portfolio which encompasses agriculture, handicraft, manufacturing, textile and a multitude of services. Along with this industries in India are most attractive point for the flow of FDI as the companies can make huge profit from the business. 

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