FDI in Retailing: Lead to Economic Growth and Better Value to End Consumers

  •  V. Selvam    
  •  Desti Kannaiah    


Retailing is the largest private industry in India and second largest employee after agriculture. It has emerged as one of the most appealing investment areas for domestic as well as foreign investors. And this high growth curve owes some credit to a booming economy and liberalized Foreign Direct Investments (FDI). The sector contributes to around 10% of GDP. With over 12 million retail outlets, India has the highest retail outlets density in the world. This sector witnessed significant development in the past 10 years from small unorganized family owned retail formats to organized retailing liberalization of the economy, rise in the per capital income and growing consumerism has encouraged large business and venture capitalist in investing in retail infrastructure. The key factors that drive growth in retail industry are young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets. Also, rising incomes and improvements in infrastructure are enlarging consumer markets and accelerating the convergence of consumer tastes. India is one of the biggest economics in the world in terms of purchasing power. The market size of Indian retail industry is about US $312 billion FDI has boomed in post-reform India. Moreover, the composition and type of FDI has changed considerably since India has opened up to world markets. This has fuelled high expectations that FDI may serve as a channel to the higher economic growth of India. Foreign investors are extremely eager on charisma in Indian retail sector. Incontrovertibly, FDI in retail is budding as a sort of litmus trial to the government’s pledge to liberalization. In this background, this paper try to give a better view of what is the retailing, role of FDI in retail industry, retail trade at global level, Current Scenario and Changing Indian Consumer. This paper also tries to analyse the FDI in retailing: lead to economic growth and better value to end consumers.

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