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FDI in India's Retail Trade: Few Missing Issues in the Current Debate

20 Pages Posted: 11 Jan 2006  

Dipankar Dey

IBS Business School

Date Written: January 9,2006

Abstract

The current debate on allowing foreign direct investment (FDI) in India's retail trade primarily focuses on two issues - employment and consumer welfare. The supporters of the move have developed consumer centric arguments while the opponents are more concerned with its adverse impact on employment. In the process, some key areas of concern remain untouched
Here, we have identified the following few which deserve due attention of policy makers. These are: (I) Unique characteristics of Indian retail sector. (II) Identification of major beneficiaries of FDI - the push and pull factors (III) Possible impact on marginal producers and work force- the experiences of other countries. (IV) Impact on existing labor laws. (V) Safeguard options available with the government to protect the interest of small producers and suppliers.

This paper attempted addressing the above issues on the basis of secondary information gathered from diversified sources. We concluded that unlike in other sectors, FDI in retail will have a much wider impact on the economy. Organized global retail chains will break the traditional symbiotic relationship that exists between small producers and small retailers. In the new retailing format, due to unequal terms of trade in a monopsony like situation, small producers and suppliers are likely to suffer most.

Keywords: FDI, Retail, Supply Chain

JEL Classification: F00

Suggested Citation

Dey, Dipankar, FDI in India's Retail Trade: Few Missing Issues in the Current Debate (January 9,2006). Available at SSRN: https://ssrn.com/abstract=874707 or http://dx.doi.org/10.2139/ssrn.874707

Dipankar Dey (Contact Author)

IBS Business School ( email )

Plot No. J-3, Sector-V
Kolkata, West Bengal 700091
India
919433887819 (Phone)

HOME PAGE: http://www.ibsindia.org

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