The Indian retail industry is valued at $270 billion, with organised retail cornering 4.5 %. The organized pie is expected to see a growth at a CAGR of 37 % (India Retail Report 2007)
The government has ultimately taken the bold decision and notified the much-awaited policy allowing 100 % FDI in single brand retail from the existing 51%. The government is yet to take final decision and notify 51% FDI in multi-brand retail.
The Confederation of Indian Industry (CII), while supporting the Government of India’s decision on opening of FDI in retail and the latest notification, urged on the government for earlier and speedier implementation of the decision in the light of the overall benefits for trade, business manufacturing, both large corporate and SMEs and a vast segment of the consumers in the country.
In view of the above background, the Confederation of Indian Industry (CII) has recently undertaken a comprehensive survey on Foreign Direct Investment (FDI) in retail on SME sector, in particular to assess the impact of the government’s decision to allow 51% foreign direct investment (FDI) in multi-brand retail and 100% in single brand retail on the Indian SME sector on different aspects of growth based on some select parameters. overnment and controversies raised in the country.
BENEFITS OF FDI AND COMPETITION IN ORGANIZED RETAIL IN INDIA
The changing structure and scale of retail can critically impact several industries in the short term- the retail industry itself, manufacturing, and real-estate, to name a few. And in the long term,spill-over effects can be felt in other industries. The growth of retailing has the potential to impact the performance of interlinked sectors such as manufacturing of consumer goods and agriculture-based industries. The potential benefits of allowing entry by large foreign discount retail chains on lowering inflation, improving distribution and warehousing technologies. We do so by comparing findings from US studies that examine the effects of Wal-Mart and other large chains entering the US retail sector and the upheaval in the retail landscape brought about in the US beginning in the early 1990s. The section concludes by describing a couple of policy Indian retail industry is one of the sunrise sectors with huge growth potential.