Is Foreign Direct Investment (FDI) in retail sector good for India?

FDI in sectors such as an automobile, education, manufacturing is greatly beneficial for India because it leads to investment not only in terms of money but also in terms of technology. Take for e. G. The partnership between Maruti and Suzuki, Hero and Honda, Mahindra and Renault. All this has led to the creation of powerful brands that produce vehicles of high standards and efficient manufacturing systems from Japan and other European countries. Maruti Suzuki is the largest car seller, while Hero and Mahindra have established themselves as strong Indian brands. Similarly, the investment and signing of MOUs have led to the establishment of institutes like IITs and IIMs which are world-class colleges producing world-class engineers and managers. Similarly, investment of technology or money in manufacturing industry strengthens them and enables them to compete with the foreign market.

However, allowing FDI in retail will be a huge mistake because retail industries or commerce shops are too simple to operate and doesn't need huge technological or economic investment. This is the reason why we can see so many Indian shops and malls operating in various places of India. Also the Indian IT industry is strong enough to help management of shops or malls easier by state of art software and computer systems. By allowing FDI in retail we increase unemployability of people because small shop owners will find it tough to compete with large retail giants and will lead to the closure and firing of employees. Also the companies investing here for retail are most likely to send the profit to their home countries. There is a benefit for farmers if the retail industries can give farmers a better price for the produce but even this is less likely and might lead to exploitation of farmers.

Therefore we can conclude that FDI in industries requiring technical know-how is a good option but FDI in sectors such as retail has huge drawbacks and should be implemented with due caution.

FDI is always welcomed in a Capital deficient Country like India but as far as FDI in retail sector is concerned, there is a lot discussion for and against the motion. Let's have a little look about that;

Arguments by those who favours it -.

1. Allowing FDI in retail sector will create millions of employment as some Giant MNCs like Walmart and Tesco will come and open their Malls and they will need man-force to operate it.

2. Customers will be able to find almost all their required items under one ceiling. They don't need to go from one place to another. It will save their time and efforts and at the same time will decrease fuel consumption as well as traffic congestion and help improve the environment (Pollution). I think this is more important for us at present.

3. Land in the centre of the city is very expensive so big MNCs may establish their building a little far from the centre (Must be connected with proper transportation). Thus, a lot of traffic will divert from centre to outside.

4. India will get a huge investment which will not only generate employment but revenue as GST and other taxes.

5. The competition will increase and thus customers will get better services. Customers will get products on competitive prices.

6. MNCs will buy retail items from India and thus can boost our domestic industry and generate employments indirectly. If they require, they can buy vegetables (to sell) from the farmer directly- this will help farmers get more prices for their products. Thus, help to double farmers income.

Arguments against it;

1. It will directly impact the employment in retail shops. The shops whose income will get down and not be able to pay even rent of shop building, they will cut man-power or it may be possible that they stop their shop.

2. There are more than 650 districts and around 4100 cities (administrative units) in our country. Suppose at least one such a big Mall is opened in each of cities give job to 50 people (the number can vary- it just an example), then 4100 Mall will give employment (Direct jobs) to 0. 2 million people almost. On the contrary, In our 13-14 million retail outlets (Wikipedia) suppose each gives the average job to 5 people (as there are some little big outlets and some small outlets) , then this sector may give a job to 65 to 75 million people (direct jobs). So the point is, FDI in retail sector may impact the livelihood of these 75 million people (not necessarily all).

3. A mall consumes a lot of electricity. It will increase the demand of electricity. To fulfil their requirement, we need to increase production which is still based on coal-based thermal power-plants (unhealthy for our environment). Thus will increase pollution (water, Air).

4. Big malls will impact competition environment in future. Some big malls can keep their prices less and get their rivals to throw out of the market and then can increase it (price). In absence of competitor, they can charge more prices on products (of course not more than MRP).

5. They can import all their needed retail products from abroad and thus, can destroy our domestic industry. It will result in more unemployment. (Govt. Can put a condition to buy at least some portion of their products from India).

Suggestions-.

1. We should allow FDI in the retail sector but there should be some limitations on it. Like as an experiment, we should allow some MNCs to open their mall in some districts in a state or in any Union Territory (no opposition from states in UTs) and then observe and examine how these MNCs impacting the retail market (retail shops) there. According to this experience, the Government should take further steps whether to allow it in the entire country or not.

2. No doubt, it will create employment but at the same time, it can generate unemployment on other places. So We have to deeply consider its pros and cons and then take any step.

Hi.

I think there is pros and cons for every decision that is taken. One way customer and the government would definitely be benefitted by its arrival but on the other hand, it would be an obstacle for the young generation who wants to become entrepreneurs of their own as building empires like these large giants will require years of hard work and huge manpower support.

Hello everyone. It is good for us and our country because in FDI lots of opportunity for a job. Many Indian are seated unemploye than slowly remove unemployee and growing economy in India.

Hello friends.

In my point of view, FDI is a good concept.

As it will directly increase the competition in the market and Indian companies will also increase the quality of their products. It will give more variety to the customers. Also, it will increase the employment in that sector and foreign companies will pay taxes which will enhance our Indian economy.

Hello everyone.

Yes. Absolutely foreign direct investment in retail sector is good for India. It provides us new job opportunities and we could do best in business. To be specific if multinational company like wallmat, spencer k mart, dmart are willing to invest, then surely it is beneficial for us. I think Indian should take advantage of fdi and show economic growth.

FDI is Foreign Direct Investment in which a company which has its base outside India will set up its branch in India and start doing buisness. It can be advantegeous from point of view of consumer and goverment. This is because because of FDI many companies will come to India with their own products thus the customers will get a wide variety of choices and in terms of prices, and from the point of view of government when a MNC will come to India then it will buy land and give taxes to our government which will increase our economic growth. The other merits of FDI is that when a company set up its branch then it will introduce new technology so in order to operate these machines it will hire people thus it is providing employment to the youth and at the same time exposure to our young generation. But as we know every coin has its two faces in a same way there are some cons of introducing FDI in retail sector as for example if it is providing employment to our youth then at the same time it is a major cause of unemployment as it will ruin our small scale industries which is directly or indirectly employing lakhs of people so if these industries are closed then a huge amount of people will get unemployed.

Thus in conclusion we can say that FDI should be introduced in some percentage in retail sector not 100%.

Some strict rules and regulations and at at the same time government should support the local industries until.

They get economically strong so that they can compete in the global market.

GDP will increase but it will create unemployment in the country. FDI will fetch all profits to there countries. Indirectly it will be dangerous for our Indian retailers. Our own people will doing job for them and they will rule on our economy.

FDI will increase our market size but it will take away the small retailers and the household industries and the employment of those who have no degree or those who are uneducated.

But the tax revenue will increase as the companies will pay the taxes more fairly than our medium and small enterprise bit surely this will make us dependent after some couple of years then these companies will threaten us to DESTROY our economy.

Or, These giant foreign monsters could also do lobbying with our ministers which is even more harmful than tax evasion done by MSME, FDI in certain limits is always well and good but 100 % FDI is like giving 100% quota to a foreign student in our own universities.

Hello friends, FDI means investment of foreign companies in our country and this results to increase the GDP of our country. If foriegn companies will come in our country it decrease unemployment of our country. Due to increase in companies there is a competition among Indian and foriegn companies and this results to be better things will come in market. It will give us a number of choices of things in market.