FDI in Retailing - Long Overdue - Free Resources - Articles

FDI in Retailing: Long Overdue

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There are several reasons that have led to the retail sector being more organized. Increased urbanization, growth in the demand for newer and varied products by consumers, and branded goods penetrating the market on a large scale are some of the reasons. Segments in retailing like consumer durables, furniture, healthcare, garments, food and services, personal care products, apparel, music, and books are increasingly getting organized.

Globally, there has been a significant change in the retail sector over the past two decades. More than 70% of retailing in developed countries is organized. The organized retail sector in China is 10 times that of India's. India is next only to China in market size and is the fourth largest economy in the world after the US, China and Japan.

(The US accounts for 21.1% of the world's GDP, China 12.6%, Japan 7% and India 5.7%.) The World Trade Organization (WTO) and international agencies have been pushing the Indian government to allow FDI in the retail sector. The WTO has also been planning to withdraw tariff and trade privileges provided to India under the new General Agreement on Tariffs and Trade if FDI is not allowed.

However, in India, the government is still apprehensive about allowing FDI in the retail sector. It is high time that the government allows FDI in this sector. The average Indian deserves consumption of good quality products at prices he can afford. In a developing country like India, a major chunk of a consumer's expenditure is on retail products. This expenditure is only likely to increase in the near future.

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