FDI IN RETAIL: DISSECTING THE REALITY
Kisholoy Roy
Asst. Professor-Marketing, Globsyn Business School, Kolkata
email: krish301@ gmail.com #9903185527
INTRODUCTION
On December 5th 2012 and subsequently
on December 7th 2012, the Lok Sabha and Rajya
Sabha approved FDI in multi-brand retail
respectively through voting. It was after a gap
of many years that an executive decision of the
government was put to vote in Parliament. BJP,
the major political party against the proposed
FDI policy of the government witnessed its stand
defeated in the Parliament. While leader of the
Opposition Sushma Swaraj lamented the
approval stating that the government "won
technically but lost on moral grounds". The
commerce minister Anand Sharma mentioned
that out of 21 states which responded to the
Centre's communication on the FDI issue, 11
supported them in writing. Sharma further
observed, "No one can take away the right of
an elected government to take decision" apart
from mentioning, "Consensus means general
agreement and not unanimity." The voting on
the FDI issue and the subsequent approval has
put an end to the long drawn debate on the FDI
in multi-brand retailing issue. The government's
move to raise the cap of FDI in multi-brand
retailing to 51% has been a topic of heated
debate in various circles. The matter has
witnessed enough of politicizing in recent
months that has only added to the dilemma
surrounding the matter among the masses. It
needs to be understood over here that although
FDI in retail is mostly opined to benefit the Indian
populace, the government should not wholly and
solely depend on FDI for the overall development
of the retail industry as such. As on date, the
government has already implemented 100% FDI
in single brand retailing which has triggered the
proposed entry of IKEA in India. In the context
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of FDI in multi-brand retailing, the government
at the Centre has to take certain important
decisions and initiate certain crucial activities
that will allow holistic returns to retailers,
producers and customers from the enhanced FDI
in retailing.
FDI Proposal & Present Scenario
Let us first look at some of the salient aspects
of the FDI proposal put forth by the government
of India:
At least half of the FDI should be made in
back-end infrastructure such as
warehousing.
The minimum FDI in any multi-brand retail
project should be $100 million (INR 450
crore).
State governments can prohibit FDI in retail
if they wish to.
Stores can be set up only in cities with a
population of at least one million.
At least one - third of the sales should be
made to small retailers.
At least 30% of the sales should be made
to small retailers, either directly or throug