FDI in Retailing - Long Overdue - Free Resources - Articles

FDI in Retailing: Long Overdue

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The government should allow FDI in the retail sector taking a cue from China. The Indian retail market, which was largely unorganized till the 1980s, has undergone an immense transformation in the post-liberalization era. Due to the wide range of products available, the increasing purchasing power of consumers, superior supply chain management leading to economies of scale and a world-class customer service, the Indian retail market has been witnessing tremendous growth.

Alongside, there has been an increasing pressure from international agencies on the government, to allow Foreign Direct Investment (FDI) in the retail sector. Many industrial giants like Tatas (Westside), Eureka Forbes, RPG (Food World, Giant, Music World, Health & Glow), Pantaloons, Big Bazaar, Shoppers' Stop, and Lifestyle have entered the Indian retail market.

These big corporate houses have managed to attract a large number of customers over a period of time and have significantly improved this sector. Moreover, these companies invested huge resources, in terms of capital, personnel and technology, which allowed them to garner a significant market share in this industry. The increase in the double income households (as a result of multinational companies entering the country and creating potential employment opportunities), has given a tremendous boost to the spending power of consumers, thereby opening a plethora of opportunities for retailers.

Unlike earlier, consumers now are spending a major chunk of their income on buying goods and services. A growing number of families with both the spouses working gave impetus to instant and ready-made products (ITC's ready-to-eat foods) and services, which help save time. Retailers are now offering an entire range of convenience products, which a typical household requires.

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