Foreign direct investment (FDI) in the muli-brand retail sector in India - A boon or bane

Retailing in India is one of the pillars of its economy and accounts for about 15 percent of its GDP. Organised retailing is absent in most rural and small towns of India. Supermarkets and similar organized retail stores account for just 4 percent of the market. Challenges to the retail trade in general include, Geographically dispersed population, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods. FDI is a major source of external finance which means that countries with limited amounts of capital can receive finance beyond national borders from wealthier countries. Until 2011, Indian government denied foreign direct investment (FDI) in multi-brand retail, forbidding foreign groups from any ownership in supermarkets, convenience stores or any retail outlets. But, single-brand retail was limited to 51 percent ownership with government approval. But now, the government continues the hold on retail reforms for multi-brand stores. There are some, who are in favour of the entry of FDI in multibrand retail in india and some against it. This paper analyses all the views and presents a clear picture.