Opportunities and challenges of FDI in retail sector in India

Foreign Direct Investment (FDI) is an important driver of growth. It is an important source of non debt financial resources for country for economic development. Besides it is a means of achieving technical know- how and generation of employment. Organized retailing is currently in a nascent stage in India. Although organized retailing contributes only 4% of total retail at present will grow by 25–30% every year and become Rs.1000 billion by 2010, the organized retailing sector evaluation passes through the four important phases. In India a number of barriers are found in the way of the development of organized retail market. FDI restrictions on the entry of international retailers in the country different sales tax rates exists in different states of the country implementation of VAT, complex cities in the tax structure, problem of funding from the banks, lack of proper infrastructure are constraints on the way of organized retailing. The three biggest challenges of the organized retail industry will be managed manpower, real estate and supply chain. This paper identifies the opportunities and challenges in Indian retail sector regarding FDI.