FOREIGN DIRECT INVESTMENT POLICY WITH REGARD TO RETAILING IN INDIA

Foreign Direct Investment (FDI) is the most influential channel through which foreign capital comes into a country. In India FDI is being allowed in different sectors of the economy in different percentage/ratio through either the government approval or the automatic route. Before the economic reforms in 1991, the inflow of FDI in India was comparatively limited. But, with the introduction of the Industrial Policy of 1991 there is a paradigm shift in Indian economic planning, whereas it has opened the markets to foreign capital. India's retail sector has undergone a rapid transformation over the past decade. With the marked growth in India's per capita income and a rising middle class accompanied by a massive scale of urbanization, it is the retail sector that is pitted to be the real growth engine for the Indian economy. The Government of India has allowed 51% FDI in multi brand retail and 100% in single-brand retail. However, government in States and Union Territories are free to make their own policies. Obviously this has led to significant interest among policy analysts to develop the necessary regulatory frameworks to channelize the move. The theme of this article is to understand the concept of retail in India and to know the reasons behind allowing Foreign Direct Investment in retail sector. The article also explores the evolution of FDI in retail sector and provides brief information about the FDI in Single brand and Multi-Brand retail sector in India.