Research Paper On Fdi In Service Sector

This study has analysed the impact of liberalisation of Indian economy and FDI policy on the retail sector since its implementation in the 1990s.It also further analyses sub-categories by investigating its impact on the unorganised retail sector and the flow of FDI in single-brand retail and multi-brand retail sectors.

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Therefore, it led to the initiation of competitiveness among domestic enterprises through access to global formats, retail innovation, availability of goods to the consumers and increasing technology and management practices.

The liberalisation of the retail sector to universal competition is likely to motivate retail rush and to transform retailing landscape and country’s ailing infrastructure in India.

Currently, India’s retail sector is at a nascent stage where 92% of the retail sector is unorganised retail such as vendors, street markets, hole-in-wall shops, mom-n-pop stores and roadside hawkers.

Unorganised retailing is categorised based on lack of knowledge about inventory control, supply chain management, government policies, taxation rules and standardisation of product.

On the other hand, only 8% of the retail sector is organised (in USA 85%) which includes licensed retailers like hypermarkets, supermarkets, retail chains and mega-stores.

Before the initiation of liberalisation of FDI policies, organised sector growth was slow due to significant restriction on consumer goods and consumerism.

Since the liberalisation of FDI policies started in the early 1990s, the Indian economy has welcomed many multi-national corporations (MNCs) to invest and was ascertained to receive the humongous amount of foreign investment in the future.

The retail sector of India went through a gigantic transformation in the last two decades.

Further, the development of scale was also limited due to restriction on interstate movement of goods and stock.

Overall the growth of retail sector was constrained due to low income of the consumers followed by high taxation and poor government support.