activities, where prior approval from the RBI or Foreign INVESTMENT Promotion Board

(_FIPB) would be required.

It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDI Policy
issued in October 2010 which provide the sector specific guidelines for FDI with regard to the
conduct of trading activities.

a) FDI up to 100% for cash and carry wholesale trading and export trading allowed under
the automatic route.
b) FDI up to 51 % with prior Government approval (i.e., FIPB) for retail trade of Single
Brand products, subject to Press Note 3 (2006 Series).
c) FDI is not permitted in Multi Brand Retailing in India.

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RESEARCH STUDY

16
 Problem definition of FDI

The main purpose of study is to find out (ROLE OF FDI IN INDIAN RETAIL
SECTOR)
FDI in the retail and in the, industry means that foreign companies in certain categories
can sell products through their own retail shop in the country. At present, foreign direct
investment (FDI) in pure retailing is not permitted under Indian law. The government
of India has allowed FDI in the retail of specific brands of products. As India is one of
the developing countries, FDI must be promoted but must be kept under control as it
can affect the economy of the country.
FDI IN INDIA
FDI in my opinion is bad for the country’s economy. As we are in the category of
developing country and to develop properly, we need to control the country’s economy
very carefully. If the % in FDI in the retail sector (multi-brand) is increased then the
investment in India’s retail market will be from foreign investors and the profits are also
drained to the investors. And moreover, in INDIA, the retail sector mainly depends upon
the agricultural sector the producer and if FDI is increased then it is going to affect the
agricultural sector of the country very badly and which will affect the country’s
economy. And if the % of FDI has increased to 100% in the retail (both single and
multi-brand) sector then the government will lose control over this sector completely
and then it cannot help in controlling this sector with its rule and regulations as the
whole retail sector would be privatized. And this privatization can make a very serious
effect on the country’s economy.
And one of the most disadvantages of FDI in the retail sector is that as we know that
the retail sector is one of the major employee providers and permitting FDI in this sector
can displace the unorganized sector and lead to loss of livelihood the most favoring
example is if wall mart entry in the retail sector is allowed then it will kill the millions
of local shops and jobs. The global retailers would exercise monopolistic power to raise
prices and monopolistic power to reduce the prices received by the supplier. Hence both
the consumer and supplier would lose while the profit margin in such retail change
would go up. So, from the above points, I can say that FDI in the retail sector is not
good for India.
industry means that foreign companies in certain categories can sell products through
their own retail shop in the country. At present, foreign direct investment (FDI) in pure
retailing is not permitted under Indian law. The government of India has allowed FDI
in the retail of specific brands of products. As India is one of the developing countries,
FDI must be promoted but must be kept under control as it can affect the economy of
the country. 17