India Retail News

After two years of deliberation, the Indian cabinet announced at the end of November that it would allow foreign direct investment (FDI) into its domestic retail sector. This proposal would have allowed 51 percent foreign investment into multi-brand retailing from outlets such as Wal-Mart and Tesco and 100% FDI ownership by single-brand stores such as Apple and Nike. This was a landmark decision which had the potential to bring critical foreign capital into a sector that is largely dominated by small and unorganized mon-and-pop Kirana stores - stores which directly and indirectly employ around 40 million people. However, howls of protest within India led the government to suspend the market opening in retail. The policy would have not only brought huge foreign capital into the economy but also offered multiple benefits to producers and consumers. This paper discusses the impact of the roll back.