Indian Retail Sector

Introduction
Retailing in India is one of the pillars of its economy and accounts for 14 to 15 percent of its GDP. The Indian retail market is estimated to be US$ 450 billion and one of the top five retail markets in the world by economic value. In 2012, Indian government made a Foreign Direct Investment policy which allows foreign retailers to own up to 51 per cent in multi-brand retail.

Retail in India can be divided into

Organised Retail Unorganised Retail

Organised retail could be described as when trading is taking place under a license or through people that are registered for sales tax or income tax.

Unorganized retail is Indias more traditional style of lowcost retailing, for example, the local kirana shops, ownermanned general stores, convenience stores.

FDI in Multi Brand Retail is opened up to 51%, with the following conditions:
Minimum investment of US$ 100 million 50% of US$ 100 million to be invested in the back-end infrastructure 30% of sourcing to be done from small scale industries Stores can be opened only in cities with a minimum population of 1 million States will have freedom to decide entry of international retailer with 51% FDI

Merits of FDI policy

Inflow of funds & investment Generation of more employment and improvement in the quality of employment. Benefits to consumers. Improved product quality, availability and reduce wastage. It inspire competition and innovation in retail industry. Growth of infrastructure.

Demerits of FDI policy

Increase in real estate prices. loss to unorganized retail like local shops. Absence of proper regulatory guidelines would induce unfair trade practices. Financial strength to foreign companies as compared to domestic players

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