A study on likely impact of FDI re-negotiating the foreign direct investment in retail: an overview

As the aftermath of global financial crisis, firms all across the world have taken a number of steps like corporate restructuring, cost reduction through corporate downsizing, re-negotiating contract terms with vendors, preparing and implementing marketing strategies with a focus on rural markets. There are certain variables that are uncontrollable at the firm's end. These variables include the policy rates, various incentives from the policy maker to specific sectors and the level of foreign direct investment (FDI) in a particular sector. Retail sector with its large employee base and vast reach has got a prominent place in Indian economy. But as the size of this sector has increased, its need for finances has also increased. Now, the retailers are compelled to adopt new ways to arrange for their financing needs. Till now they have resorted to domestic sources of finance as well as international equity and debt. But they are finding it difficult to fulfill their requirements without liberalized FDI policy. The role of FDI in any particular sector has been a matter of debate since long. A number of arguments have been presented in the in the favor and against the FDI policy in different sectors. We find that the debate is still relevant in certain sectors like retail.

In this paper we have tried to inculcate various aspects depending on different facts that are put forward while evaluating the liberalization of FDI policy in retail sector in India.