FDI in Retail

FDI in retail was a new wave of consumerism. Which would have surely helped indian economy to grow more in terms of globalization.

Allowing 51% foreign investment in retail would lead to greater choice for buyers and off course at discount prices. Which would surely have helped food inflation which is hovering at 9% to come down. It would have also made some changes in farming sector and making it more efficient and effective.

Apart from Walmart, Swedens furniture maker IKEA, Japans Lawson, French retailer Correfour and Britain's TESCO were raring for India's entry.

Retail would have bought large variety of products and improved customer service. However the local kirana shop is not the only competitor but online retaile websites are also the competitors.

History reveals that Gaint retailers like Walmart has improved its value chain and have played a vital role in benefiting the end user.

So why is the government opposing it just because there are many intermediates in the value chain in the current retail segment. Government is collecting huge taxes and intermediates have been making margins on transactions incurred in passing the goods to end user. So the intermediates have been opposing and also govt is facing threat of its tax revenue.

However allowing FDI would have also helped Rupee to appreciate reducing govt expenditure on its fiscal deficit and also benefiting the end user which would have curbed food inflation down. Another noticeable change would be improved financial services (consumer loans) with retail loans. Creating job opportunities in financial sector, agriculture sector and retail sectors improving employment rate.

Considering these benefits I would favor FDI in retail. But why is Mr Ambani not in favour (guess).

KHP