FDI in India is under surveillance by all Indian entrepreneurs as it could have a high impact both with small-business owners and consumers. Though FDI is said to be a part of economic reform in India based on global economy, the reactions from the common public is different from the government’s perspective. FDI – Foreign Direct Investment brings in investment directly from foreign establishments into Indian (retail) markets. One cannot sideline this process completely saying its negative impacts on consumers and retailers as it has got its own positive impacts too. Being a consumer, it becomes necessary to learn the pros and cons of FDI in retail sector in India.
Pros and Cons of FDI in Retail Sector in India
What are the positive and negative aspects of FDI in Indian retail sectors? The pros and cons of foreign direct investment in the Indian retail markets are given below which will clearly indicate the need, restriction and awareness of the FDI.
- FDI can increase the foreign investment in India directly.
- This does not mean any investment in Indian share markets.
- Foreign Direct Investment in retails can bring in new administrative systems and new infrastructure.
- Consumers can get goods at cheaper cost.
- Small-scale retail business people and entrepreneurs will get largely get affected.
- Since, big foreign companies make a huge investment in retail sector and transporting the goods won’t be an issue for them, there are chances of unavailable goods available in their market.
- Less chances for the consumers to get fresh foods from these western-style retail malls.
- No way could a consumer see change in their purchasing power even if FDI is banned as domestic retailers not limit their business style either.
- Due to FDI, more setbacks are for the small entrepreneurs or retailers than the consumers.
- The consumer could get affected in long run based on their habituation and dependency on products from FD invested retailers.
- Raise in price might affect the consumers in long run if the FD invested retailers become monopolies.
- Fresh products, especially, agri-based products would be a dream for Indian consumers, as farm-fresh items those are available now will be marketed by the FD invested retailers in their chain of retail malls from one place to another place which would consume its own time to be on shelves.
- Chances of farmers to benefit (not much though) through FDI as they could get high price from the foreign retailers.
- FD invested retailers can make more profit through their chain of malls they would start across the country by giving unavailable products available to the consumers’ easy reach.
The above are very basic pros and cons of FDI in retail sector in India. Like any other innovative business models this too has got its own negatives and positives. However, the common man’s question is whether the Indian retail players would have considered giving customer satisfaction if they are given with the sole chance of playing in the retail market? Indian retail entrepreneurs has got enough investment to create the same retail structure what an FDI retailer would do but where is the care for the consumer? As of now the advantages and disadvantages of FDI in retail sector in India cannot be framed out exactly until the Indian consumer market sees the business plans of FDI-retailers in reality.