SBI PO Sample Essay - FDI in Retail Sector

Published on Monday, April 21, 2014
To understand what FDI is we should first know the full form for FDI. FDI means Foreign Direct Investment. FDI is a process in which a company invests in another country where it does not possesses any business. FDI is usually done by the companies to expand its business and profits.

FDI in retail sector is booming now days as we all can see that more and more companies are coming to India to open its retail stores or doing joint ventures with host country companies. FDI has become a major area of investment by foreign companies to invest and earn profit. Companies try to come alone or with some other company as in India 100% is allowed only in single brand retail whereas in Multi Brand retail only 51% is being allowed for a company to invest in the retail sector.FDI has both positive and negative effects on the economy. In FDI the company tries to open its store in various areas in the countries alone or with joint venture with the other companies of home or host country. FDI is very important for a country as it helps in employment generation and economic growth. In India FDI was not allowed till 1991 but after new industrial policy the gates are being opened for the foreign companies to enter in to India. The main reason behind boom in FDI is Mergers & Acquisitions and Globalization in the world. In India it is seen that FDI is increasing day by day and it helps in increasing the economy of the country. FDI is of various types in which companies come in the country by opening it’s wholly owned stores or by doing joint ventures with the home country Like Carrefour, Wal-Mart etc had opened his wholesale cash and carry stores in India in which Wal-Mart store named as BEST PRICE and will open 50-60 stores in next 5 years down the line. Their major focus is on tier -2 and tier-3 cities as they see much business in these cities. There are various other companies which are coming in India for expanding their business of retail sector. According to a survey Indian Retail industry will grow at the rate of 10% in the coming years.

The other side of FDI in retail sector is increasing competition between local sellers due to this competition the local seller have to increase it quality with the competitive price strategy which they use for selling the product. FDI in retail sector is making the local seller to compete with them otherwise move out from the competitive league. FDI also make the price of the product so competitive that eventually it helps the consumer to get that product in fewer prices.

We can say that FDI has both positive as well as negative sides and it totally depend on thinking of a person. I think that FDI in retail sector is a good opportunity for Indian retailers to joint with them and try to overcome them so that consumer will get the best out of it whereas it provides opportunity to various unemployed person in the country.

CHIRAG TREHAN

MEERUT (U.P.)

My comments

  • Bad grammar
  • Lack of flow of ideas and facts
  • Marks - 3.5/10

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