Some Issues on FDI in Retail Sector in India

In the era of globalization, Foreign Direct Investment (FDI) plays a vital role in the economy of any country. Large consumer market, cheap and sufficient human force, increasing improvement of infrastructure facilities are some of the important factors that attracts the foreign business giants to invest in India. India is also one of the few markets in the world which offers high prospects for growth and earning potential practically in all areas of business (World Bank, 2004; OECD, 1999). Retail Sector in India is one of the fast growing sectors with huge growth potential. FDI in retail sector is a debatable issue in India in recent years. Foreign Direct Investment (FDI) in retail sector in 1997 where 100% FDI in cash and carry with prior government approval was given by the Government of India. 51% investment in a single brand retail outlet was permitted in 2006. FDI in Multi-Brand retailing is prohibited in India though Government proposed to allow 51% FDI in this type of retail in 2011-12. This paper tries to find out the prospects of Foreign Direct Investment along with the pros and cons of FDI in retail sector in India.