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SWOT ANALYSIS ON FDI IN

RETAIL SECTOR

BY
Narendrasingh Patankar

Present Retail Sector in India


Like every other economy, the retail sector is also
one of the most crucial and extremely potential
sector of the Indian Economy. As of now, the
retail sector in India accounts for approximately
33-35% of the GDP with 46% growth rate in past
three years. The Indian retail market is one of
the top 5 retail markets in the world and employs
7% of the total Indian work-force

Current FDI Policy in respect of


Retail Sector in India
1. FDI up to 100% for cash and carry wholesale
trading and export trading allowed under the
automatic route.
2. FDI up to 51% with prior Government approval
for retail trade of Single Brand products.
(now 100% allowed vide notification dated
11/Jan/2012).
3. FDI is not permitted in Multi Brand Retailing in
India

PROSPECTED changes in FDI


Policy for Retail Sector in India
1. India will allow foreign direct investment
of up to 51 per cent in "multi-brand" sector;
2. Single brand retailers, such as Apple and
Ikea, can own 100 percent of their Indian
stores, up from the previous cap of 51
percent. This has been allowed lately on
11/Jan/2012.

The bill
1. The retailers (both single-brand and multi-brand) will
have to source at least 30% of their goods from small
and medium sized Indian suppliers.
2. All retail stores can open up their operations in having
population over 1 million. Out of approximately 7935
cities and towns in India, 55 cities satisfy such criteria.
3.Multi-brand retailers must bring a minimum investment of
US$ 100 millions.
4. The opening of retail competition (policy) will be within
the parameters of state laws and regulations.

SWOT ANALYSIS

Strengths

1.
2.
3.
4.

Major contributor to the GDP


High growth rate
High potential
High employment generator


1.
2.
3.
4.

Weaknesses (limitations):
Lack of Competition
Highly unorganised
Low productivity:
Shortage of talented professionals:

Opportunities (benefits):
1. There will be more organization in the sector.
2. Healthy competition will be boosted and their
will be an check on the prices (inflation)
3. Create transparency in the system
4. Quality Control and control over leakage and
wastage
5. Heavy flow of foreign capital will help in
building up the infrastructure for the growing
population

Threats (drawbacks):
1. Political situation
2. Global Economy Status

CONCLUSION
Instead poking the political game in the
economic reform issues like these, all the
political parties (ruling party and all other
opposition parties also) of India, should
work in symbiosis, not only for their selfish
benefits, but for the welfare of the public at
large. Needless to say India is a
democratic country... !!!!