Foreign Direct Investment in Retail Sector in India

One of the most notable developments during the last two decades is the stunning growth of FDI in the global economic landscape. Such unprecedented growth of global FDI in 1990 around the world make FDI an vital component of development policy in both developed and developing nations and policies are designed in order to motivate internal flows. Foreign Direct Investment implies the transfer of foreign funds into a country to purchase a service or manufacturing business or to open a new factory or service company. FDI is a direct investment into production or business in a country by a company in another country whichever by buying a company in the target country or by expanding operations of an existing business in concerned country. The shortage or scarcity of all types of resources viz. technological know- how, skills and practices, financial, capital, entrepreneurship, access to markets- abroad- in their economic development, developing nations accepted FDI as a sole visible answer for all scarcities faces by them. Foreign Direct Investment in India is govern by sub-section (3) of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. 20 dated 3.5.2000 as amended from time to time. One of the recent circular on FDI policy was issued by Ministry of Commerce and Industry, 'Consolidated FDI Policy' which is effective from 10^th April 2012.

Despite some concerns about the large fiscal deficit our Country represents a promising macroeconomic story with potential to maintain sustain high economic growth rates. As per Ernst and Young in June 2008 India has been rated as the 4^th most attractive investment destination in the world after Central Europe, China, and Western Europe. Similarly, UNCTAD's World Investment Report 2005 states that India the 2nd most attractive investment destination among the Transnational Corporations (TNCs). All this could be attributed to the rapid growth of the economy and favorable investment process, liberal policy changes and procedural relaxation made by the government periodically.