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FDI and Retail Environment in India An Empirical Study

Rahul Ranjan Yadav

Research Scholar, Department of Commerce, University of Lucknow, U. P., INDIA.


FDI refers to capital inflows from abroad that is invested in or to enhance the production capacity of the economy. It can be a subsidiary, joint venture or merger or acquisition and includes Greenfield and Brownfield projects (Bansal & Kaushik, 2012). OECD has defined FDI as investment by a foreign investor in at least 10% or more of the voting stock or ordinary shares of the investee company. The High Court of Delhi defined the term retail as a sale for final consumption in contrast to a sale for further sale or processing (i.e. wholesale). Retailing is the last link of the long distribution channel of marketing that connects customers directly with the seller. Retail industry is one of the largest sectors of Indian economy. Unorganized retail sector in India occupies 97% of the retail business and the rest 3% is contributed by the organized sector. The unorganized retail sector contributes about 13% to the GDP and absorbs 6% of our labour force. India is one of the fastest growing retail markets in the world, with 1.2 billion people (Census, 2011). Hence, the issue of displacement of labour consequent to FDI Retail Sector is of primal importance in India. Also, there is a divided opinion on the impact of FDI in the retail sector in India. Some experts believe that FDI in the retail sector in India will lead to economic growth and creation of new jobs along with rural infrastructure development. Others believe that mass scale job loss will happen particularly in manufacturing sector with the entry of the big MNCs like Wal-Mart, Carrafuer, Metro PLC and IKEA etc.

Keywords :FDI, retailling, Technology Adoption Models, consumer behaviour.