a fraudulent scheme performed by a dishonest individual.docx

8/12/2019 A fraudulent scheme performed by a dishonest individual.docx

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accompanied by the noise and commotion created by tourists.

CONCLUSION

Tourism industry in Indiais growing and it has vast potential for generating employment and earning

large amount of foreign exchange besides giving a fillip to the countrys overall economic and social

development. But much more remains to be done. Eco-tourism needs to be promoted so that tourism in

India helps in preserving and sustaining the diversity of the India's natural and cultural environments.

Tourism in India should be developed in such a way that it accommodates and entertains visitors in a way

that is minimally intrusive or destructive to the environment and sustains & supports the native cultures in

the locations it is operating in. Moreover, since tourism is a multi-dimensional activity, and basically a

service industry, it would be necessary that all wings of the Central and State governments, private sector

and voluntary organisations become active partners in the endeavour to attain sustainable growth in

tourism if India is to become a world player

To sum up, Indian tourism has vast potential for generating employment and earninglarge sums of foreign exchange besides giving a flip to the countrys overall economic andsocial development. Much has been achieved by way of increasing air seat capacity,

increasing trains and railway connectivity to important tourist destinations, four-laning ofroads connecting important tourist centers and increasing availability of accommodation byadding heritage hotels to the hotel industry and encouraging paying guest accommodation.But much more remains to be done. Since tourism is a multi-dimensional activity, andbasically a service

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Foreign direct investment in indian retail sector Document Transcript

Foreign Direct Investment in Indian RetailSectorAn AnalysisPosted by Ramoo onDecember 8th, 2011 08:59 PM | ArticlesShare on facebook Share on twitter Share ondelicious Share on digg Share on stumbleuponShare on reddit Share on email MoreSharing ServicesPartagerPartagerPartagerPartagerPartagerBY:-Pulkit AgarwalEshaTyagiIntroductionJust back from first frenzied shopping experience in the UK, a fouryear old ever-inquisitivedaughter asked to her father, Why do we not have a Harrods inDelhi? Shopping there is somuch fun! Simple question for a four-year-old, but not sosimple for her father to explain.As per the current regulatory regime, retail trading(except under single-brand product retailingFDI up to 51 per cent, under the

Government route) is prohibited in India. Simply put, for acompany to be able to getforeign funding, products sold by it to the general public should onlybe of a single-brand; this condition being in addition to a few other conditions to be adhered to.Thatexplains why we do not have a Harrods in Delhi.India being a signatory to World TradeOrganisations General Agreement on Trade in Services,which include wholesale andretailing services, had to open up the retail trade sector to foreigninvestment. There wereinitial reservations towards opening up of retail sector arising from fearof job losses,procurement from international market, competition and loss ofentrepreneurialopportunities. However, the government in a series of moves has openedup the retail sectorslowly to Foreign Direct Investment (FDI). In 1997, FDI in cash

and carry (wholesale) with100 percent ownership was allowed under the Government

approval route. It was brought underthe automatic route in 2006. 51 percent investment ina single brand retail outlet was alsopermitted in 2006. FDI in Multi-Brand retailing isprohibited in India.Definition of RetailIn 2004, The High Court of Delhi[1] defined theterm retail as a sale for final consumption incontrast to a sale for further sale orprocessing (i.e. wholesale). A sale to the ultimate consumer.

Thus, retailing can be said to be the interface between the producer and the individualconsumerbuying for personal consumption. This excludes direct interface between themanufacturer andinstitutional buyers such as the government and other bulkcustomersRetailing is the last link thatconnects the individual consumer with themanufacturing and distribution chain. A retailer isinvolved in the act of selling goods tothe individual consumer at a margin of profit.Division of Retail IndustryOrganised and

Unorganised RetailingThe retail industry is mainly divided into:- 1) Organised and 2)Unorganised RetailingOrganised retailing refers to trading activities undertaken bylicensed retailers, that is, those whoare registered for sales tax, income tax, etc. Theseinclude the corporate-backed hypermarketsand retail chains, and also the privately ownedlarge retail businesses.Unorganised retailing, on the other hand, refers to the traditionalformats of low-cost retailing,for example, the local kirana shops, owner manned generalstores, paan/beedi shops,convenience stores, hand cart and pavement vendors, etc.TheIndian retail sector is highly fragmented with 97 per cent of its business being run by


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theunorganized retailers. The organized retail however is at a very nascent stage. Thesector is thelargest source of employment after agriculture, and has deep penetration intorural Indiagenerating more than 10 per cent of Indias GDP.[2]FDI Policy in IndiaFDI asdefined in Dictionary of Economics (Graham Bannock et.al) is investment in aforeigncountry through the acquisition of a local company or the establishment there of

an operation ona new (Greenfield) site. To put in simple words, FDI refers to capitalinflows from abroad that isinvested in or to enhance the production capacity of theeconomy.[3]Foreign Investment in India is governed by the FDI policy announced by theGovernment ofIndia and the provision of the Foreign Exchange Management Act(FEMA) 1999. The ReserveBank of India (RBI) in this regard had issued anotification,[4] which contains theForeign Exchange Management (Transfer or issue ofsecurity by a person resident outside India)Regulations, 2000. This notification has beenamended from time to time.The Ministry of Commerce and Industry, Government ofIndia is the nodal agency for motoringand reviewing the FDI policy on continued basisand changes in sectoral policy/ sectoral equitycap. The FDI policy is notified throughPress Notes by the Secretariat for Industrial Assistance(SIA), Department of Industrial

Policy and Promotion (DIPP).The foreign investors are free to invest in India, except fewsectors/activities, where priorapproval from the RBI or Foreign Investment PromotionBoard (FIPB) would be required.FDI Policy with Regard to Retailing in India

It will be prudent to look into Press Note 4 of 2006 issued by DIPP and consolidated FDIPolicyissued in October 2010[5] which provide the sector specific guidelines for FDIwith regard to theconduct of trading activities.a) FDI up to 100% for cash and carrywholesale trading and export trading allowed under theautomatic route.b) FDI up to 51 %with prior Government approval (i.e. FIPB) for retail trade of SingleBrand products,subject to Press Note 3 (2006 Series)[6].c) FDI is not permitted in Multi Brand Retailingin India.Entry Options For Foreign Players prior to FDI PolicyAlthough prior to Jan 24,2006, FDI was not authorised in retailing, most general players hadbeen operating in thecountry. Some of entrance routes used by them have been discussed insum as below:-1.Franchise AgreementsIt is an easiest track to come in the Indian market. In franchisingand commission agentsservices, FDI (unless otherwise prohibited) is allowed with theapproval of the Reserve Bank ofIndia (RBI) under the Foreign Exchange ManagementAct. This is a most usual mode forentrance of quick food bondage opposite a world.Apart from quick food bondage identical toPizza Hut, players such as Lacoste, Mango,Nike as good as Marks as good as Spencer, haveentered Indian marketplace by thisroute.2. Cash And Carry Wholesale Trading100% FDI is allowed in wholesale tradingwhich involves building of a large distributioninfrastructure to assist localmanufacturers.[7] The wholesaler deals only with smaller retailersand not Consumers.Metro AG of Germany was the first significant global player to enter Indiathrough thisroute.3. Strategic Licensing AgreementsSome foreign brands give exclusive licences anddistribution rights to Indian companies.Through these rights, Indian companies can eithersell it through their own stores, or enter intoshop-in-shop arrangements or distribute thebrands to franchisees. Mango, the Spanish apparelbrand has entered India through thisroute with an agreement with Piramyd, Mumbai, SPARentered into a similar agreementwith Radhakrishna Foodlands Pvt. Ltd4. Manufacturing and Wholly OwnedSubsidiaries.The foreign brands such as Nike, Reebok, Adidas, etc. that have wholly-owned subsidiaries inmanufacturing are treated as Indian companies and are, therefore,


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allowed to do retail. Thesecompanies have been authorised to sell products to Indianconsumers by franchising, internal

distributors, existent Indian retailers, own outlets, etc. For instance, Nike entered throughanexclusive licensing agreement with Sierra Enterprises but now has a wholly ownedsubsidiary,Nike India Private Limited.FDI in Single Brand RetailThe Government has

not categorically defined the meaning of Single Brand anywhere neitherin any of itscirculars nor any notifications.In single-brand retail, FDI up to 51 per cent is allowed,subject to Foreign Investment PromotionBoard (FIPB) approval and subject to theconditions mentioned in Press Note 3[8] that (a) onlysingle brand products would be sold(i.e., retail of goods of multi-brand even if produced by thesame manufacturer would notbe allowed), (b) products should be sold under the same brandinternationally, (c) single-brand product retail would only cover products which are brandedduring manufacturingand (d) any addition to product categories to be sold under single-brandwould requirefresh approval from the government.While the phrase single brand has not beendefined, it implies that foreign companies would beallowed to sell goods soldinternationally under a single brand, viz., Reebok, Nokia, Adidas.Retailing of goods of

multiple brands, even if such products were produced by the samemanufacturer, wouldnot be allowed.Going a step further, we examine the concept of single brand and theassociated conditions:FDI in Single brand retail implies that a retail store with foreign

investment can only sell onebrand. For example, if Adidas were to obtain permission toretail its flagship brand in India,those retail outlets could only sell products under theAdidas brand and not the Reebok brand, forwhich separate permission is required. Ifgranted permission, Adidas could sell products underthe Reebok brand in separateoutlets.But, what is a brand?Brands could be classified as products and multipleproducts, or could be manufacturer brandsand own-label brands. Assume that a companyowns two leading international brands in thefootwear industrysay A and R. If thecorporate were to obtain permission to retail its brandin India with a local partner, itwould need to specify which of the brands it would sell. Areading of the governmentrelease indicates that A and R would need separate approvals,separate legal entities, andmay be even separate stores in which to operate in India. However, itshould be noted thatthe retailers would be able to sell multiple products under the same brand,e.g., a productrange under brand A Further, it appears that the same joint venture partnerscould

operate various brands, but under separate legal entities.[9]Now, taking an example of alarge departmental grocery chain, prima facie it appears that itwould not be able to enterIndia. These chains would, typically, source products and, thereafter,brand it under theirprivate labels. Since the regulations require the products to be branded at the

manufacturing stage, this model may not work. The regulations appear to discourageown-labelproducts and appear to be tilted heavily towards the foreign manufacturerbrands.[10]There is ambiguity in the interpretation of the term single brand. Theexisting policy does notclearly codify whether retailing of goods with sub-brandsbunched under a major parent brandcan be considered as single-brand retailing and,accordingly, eligible for 51 per cent FDI. Additionally, the question on whether co-branded goods (specifically branded as such at thetime of manufacturing) would qualifyas single brand retail trading remains unanswered.FDI in Multi Brand RetailThegovernment has also not defined the term Multi Brand. FDI in Multi Brand retailimpliesthat a retail store with a foreign investment can sell multiple brands under one


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roof.In July 2010, Department of Industrial Policy and Promotion (DIPP), Ministry ofCommerce circulated a discussion paper[11] on allowing FDI in multi-brand retail. Thepaper doesntsuggest any upper limit on FDI in multi-brand retail. If implemented, itwould open the doors forglobal retail giants to enter and establish their footprints on theretail landscape of India. Openingup FDI in multi-brand retail will mean that global

retailers including Wal-Mart, Carrefour andTesco can open stores offering a range ofhousehold items and grocery directly to consumers inthe same way as the ubiquitouskirana store.Foreign Investors Concern Regarding FDI Policy in IndiaFor those brands

which adopt the franchising route as a matter of policy, the current FDI Policywill notmake any difference. They would have preferred that the Government liberalize rulesformaximizing their royalty and franchise fees. They must still rely on innovativestructuring offranchise arrangements to maximize their returns. Consumer durable majorssuch as LG andSamsung, which have exclusive franchisee owned stores, are unlikely toshift from the preferredroute right away.For those companies which choose to adopt theroute of 51% partnership, they must tie up with alocal partner. The key is finding apartner which is reliable and who can also teach a trick or twoabout the domestic market

and the Indian consumer. Currently, the organized retail sector isdominated by the likesof large business groups which decided to diversify into retail to cash inon the boom inthe sectorcorporates such as Tata through its brand Westside, RPG GroupthroughFoodworld, Pantaloon of the Raheja Group and Shoppers Stop. Do foreign investorslookto tie up with an existing retailer or look to others not necessarily in the businessbutlooking to diversify, as many business groups are doing?An arrangement in the shortto medium term may work wonders but what happens if theGovernment decides tofurther liberalize the regulations as it is currently contemplating? Will theforeign investorterminate the agreement with Indian partner and trade in market without him?Either way,the foreign investor must negotiate its joint venture agreements carefully, with anoptionfor a buy-out of the Indian partners share if and when regulations so permit. Theymustalso be aware of the regulation which states that once a foreign company enters intoa technicalor financial collaboration with an Indian partner, it cannot enter into anotherjoint venture withanother Indian company or set up its own subsidiary in the same

field without the first

partners consent if the joint venture agreement does not provide for a conflict of

interestclause. In effect, it means that foreign brand owners must be extremely careful

whom theychoose as partners and the brand they introduce in India. The first brand couldalso be their last ifthey do not negotiate the strategic arrangement diligently.Concerns forthe Government for only Partially Allowing FDI in Retail SectorA number of concernswere expressed with regard to partial opening of the retail sector for FDI.The Honble

Department Related Parliamentary Standing Committee on Commerce, in its 90thReport,on Foreign and Domestic Investment in Retail Sector, laid in the Lok Sabha and

theRajya Sabha on 8 June, 2009, had made an in-depth study on the subject and identifieda numberof issues related to FDI in the retail sector. These included:It would lead tounfair competition and ultimately result in large-scale exit of domestic retailers,especiallythe small family managed outlets, leading to large scale displacement ofpersonsemployed in the retail sector. Further, as the manufacturing sector has not beengrowing fastenough, the persons displaced from the retail sector would not be absorbedthere.Another concern is that the Indian retail sector, particularly organized retail, is still


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under-developed and in a nascent stage and that, therefore, it is important that thedomestic retail sectoris allowed to grow and consolidate first, before opening this sectorto foreign investors.Antagonists of FDI in retail sector oppose the same on variousgrounds, like, that the entry oflarge global retailers such as Wal-Mart would kill localshops and millions of jobs, since theunorganized retail sector employs an enormous

percentage of Indian population after theagriculture sector; secondly that the globalretailers would conspire and exercise monopolisticpower to raise prices and monopolistic(big buying) power to reduce the prices received by thesuppliers; thirdly, it would lead toasymmetrical growth in cities, causing discontent and socialtension elsewhere. Hence,both the consumers and the suppliers would lose, while the profitmargins of such retailchains would go up.LIMITATIONS OF THE PRESENT SETUPInfrastructureThere hasbeen a lack of investment in the logistics of the retail chain, leading to aninefficientmarket mechanism. Though India is the second largest producer of fruits andvegetables (about180 million MT), it has a very limited integrated cold-chaininfrastructure, with only 5386 stand-alone cold storages, having a total capacity of 23.6million MT. , 80% of this is used only forpotatoes. The chain is highly fragmented and

hence, perishable horticultural commodities find itdifficult to link to distant markets,including overseas markets, round the year. Storageinfrastructure is necessary forcarrying over the agricultural produce from production periods tothe rest of the year andto prevent distress sales. Lack of adequate storage facilities cause heavylosses to farmersin terms of wastage in quality and quantity of produce in general. Though FDIispermitted in cold-chain to the extent of 100%, through the automatic route, in the absenceofFDI in retailing; FDI flow to the sector has not been significant.

Intermediaries dominate the value chainIntermediaries often flout mandi norms and theirpricing lacks transparency. Wholesaleregulated markets, governed by State APMC Acts,have developed a monopolistic and non-transparent character. According to some reports,Indian farmers realize only 1/3rd of the totalprice paid by the final consumer, as against2/3rd by farmers in nations with a higher share oforganized retail.Improper PublicDistribution System (PDS)There is a big question mark on the efficacy of the public

procurement and PDS set-up and thebill on food subsidies is rising. In spite of such heavysubsidies, overall food based inflation hasbeen a matter of great concern. The absence ofa farm-to-fork retail supply system has led tothe ultimate customers paying a premiumfor shortages and a charge for wastages.No Global ReachThe Micro Small & MediumEnterprises (MSME) sector has also suffered due to lack ofbranding and lack ofavenues to reach out to the vast world markets. While India has continuedto provideemphasis on the development of MSME sector, the share of unorganised sector inoverallmanufacturing has declined from 34.5% in 1999-2000 to 30.3% in 2007-08[12]. Thishaslargely been due to the inability of this sector to access latest technology and improveitsmarketing interface.Rationale behind Allowing FDI in Retail SectorFDI can be apowerful catalyst to spur competition in the retail industry, due to the currentscenario oflow competition and poor productivity.The policy of single-brand retail was adopted toallow Indian consumers access to foreignbrands. Since Indians spend a lot of moneyshopping abroad, this policy enables them to spendthe same money on the same goods inIndia. FDI in single-brand retailing was permitted in 2006,up to 51 per cent of ownership.Between then and May 2010, a total of 94 proposals have beenreceived. Of these, 57proposals have been approved. An FDI inflow of US$196.46 millionunder the category


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of single brand retailing was received between April 2006 and September2010,comprising 0.16 per cent of the total FDI inflows during the period. Retail stocks rosebyas much as 5%. Shares of Pantaloon Retail (India) Ltd ended 4.84% up at Rs 441 onthe BombayStock Exchange. Shares of Shoppers Stop Ltd rose 2.02% and Trent Ltd,

3.19%. Theexchanges key index rose 173.04 points, or 0.99%, to 17,614.48. But this is

very less ascompared to what it would have been had FDI upto 100% been allowed inIndia for singlebrand.[13]The policy of allowing 100% FDI in single brand retail canbenefit both the foreign retailer andthe Indian partnerforeign players get local marketknowledge, while Indian companies canaccess global best management practices, designsand technological knowhow. By partiallyopening this sector, the government was able toreduce the pressure from its trading partners in

bilateral/ multilateral negotiations and could demonstrate Indias intentions in liberalisingthissector in a phased manner.[14]Permitting foreign investment in food-based retailing islikely to ensure adequate flow of capitalinto the country & its productive use, in a mannerlikely to promote the welfare of all sections ofsociety, particularly farmers andconsumers. It would also help bring about improvements infarmer income & agricultural

growth and assist in lowering consumer prices inflation.[15]Apart from this, by allowingFDI in retail trade, India will significantly flourish in terms ofquality standards andconsumer expectations, since the inflow of FDI in retail sector is bound topull up thequality standards and cost-competitiveness of Indian producers in all the segments. Itistherefore obvious that we should not only permit but encourage FDI in retail trade.Lastly,it is to be noted that the Indian Council of Research in International EconomicRelations(ICRIER), a premier economic think tank of the country, which was appointedto look into theimpact of BIG capital in the retail sector, has projected the worth of Indianretail sector toreach $496 billion by 2011-12 and ICRIER has also come to conclusionthat investment of bigmoney (large corporates and FDI) in the retail sector would in the

long run not harm interests ofsmall, traditional, retailers.[16]In light of the above, it canbe safely concluded that allowing healthy FDI in the retail sectorwould not only lead to asubstantial surge in the countrys GDP and overall economicdevelopment, but wouldinter alia also help in integrating the Indian retail market with that ofthe global retailmarket in addition to providing not just employment but a better payingemployment,which the unorganized sector (kirana and other small time retailing shops)haveundoubtedly failed to provide to the masses employed in them.Industrialorganisations such as CII, FICCI, US-India Business Council (USIBC), theAmericanChamber of Commerce in India, The Retail Association of India (RAI) andShopping CentersAssociation of India (a 44 member association of Indian multi-brandretailers and shoppingmalls) favour a phased approach toward liberalising FDI in multi-brand retailing, and most ofthem agree with considering a cap of 49-51 per cent to startwith.The international retail players such as Walmart, Carrefour, Metro, IKEA, andTESCO share thesame view and insist on a clear path towards 100 per cent opening up innear future. Largemultinational retailers such as US-based Walmart, Germanys MetroAG and Woolworths Ltd,the largest Australian retailer that operates in wholesale cash-and-carry ventures in India, havebeen demanding liberalisation of FDI rules on multi-brand retail for some time.[17]Thus, as a matter of fact FDI in the buzzing Indian retailsector should not just be freely allowedbut per contra should be significantly encouraged.Allowing FDI in multi brand retail can bringabout Supply Chain Improvement,


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Investment in Technology, Manpower and Skilldevelopment,Tourism Development,Greater Sourcing From India, Upgradation inAgriculture,Efficient Small and MediumScale Industries, Growth in market size and Benefits togovemment through greater GDP,tax income and employment generation.[18]

Prerequisites before allowing FDI in Multi Brand Retail and Lifting Cap of Single

BrandRetailFDI in multi-brand retailing must be dealt cautiously as it has direct impacton a large chunk ofpopulation. Left alone foreign capital will seek ways through which itcan only multiply itself,and unthinking application of capital for profit, given our peculiarsocio-economic conditions,may spell doom and deepen the gap between the rich and thepoor. Thus the proliferation offoreign capital into multi-brand retailing needs to beanchored in such a way that it results in awin-win situation for India. This can be done byintegrating into the rules and regulations forFDI in multi-brand retailing certain inbuiltsafety valves. For example FDI in multibrandretailing can be allowed in a calibratedmanner with social safeguards so that the effect ofpossible labor dislocation can beanalyzed and policy fine tuned accordingly. To ensure that theforeign investors make agenuine contribution to the development of infrastructure and logistics,it can be stipulated

that a percentage of FDI should be spent towards building up of back endinfrastructure,logistics or agro processing units. Reconstituting the poverty stricken andstagnating ruralsphere into a forward moving and prosperous rural sphere can be one of thejustificationsfor introducing FDI in multi-brand retailing. To actualize this goal it can bestipulated thatat least 50% of the jobs in the retail outlet should be reserved for rural youth andthat acertain amount of farm produce be procured from the poor farmers. Similarly todevelopour small and medium enterprise (SME), it can also be stipulated that a minimumpercentage ofmanufactured products be sourced from the SME sector in India. PDS isstill in many ways thelife line of the people living below the poverty line. To ensure thatthe system is not weakenedthe government may reserve the right to procure a certainamount of food grains for replenishingthe buffer. To protect the interest of small retailersthe government may also put in place anexclusive regulatory framework. It will ensurethat the retailing giants do resort to predatorypricing or acquire monopolistic tendencies.Besides, the government and RBI need to evolvesuitable policies to enable the retailers inthe unorganized sector to expand and improve theirefficiencies. If Government isallowing FDI, it must do it in a calibrated fashion because it ispolitically sensitive andlink it (with) up some caveat from creating some back-endinfrastructure.Further, To takecare of the concerns of the Government before allowing 100% FDI in SingleBrand Retailand Multi- Brand Retail, the following recommendations are being proposed [19]:-Preparation of a legal and regulatory framework and enforcement mechanism to ensurethat large retailers are not able to dislocate small retailers by unfair means. Extension ofinstitutional credit, at lower rates, by public sector banks, to help improve efficiencies ofsmall retailers; undertaking of proactive programme for assisting small retailers toupgrade themselves. Enactment of a National Shopping Mall Regulation Act to regulatethe fiscal and social aspects of the entire retail sector. Formulation of a Model CentralLaw regarding FDI of Retail Sector.Conclusion

A Start Has Been MadeWalmart has a joint venture with Bharti Enterprises for cash-and-carry (wholesale) business,which runs the Best Price stores. It plans to have 15 storesby March and enter new states likeAndhra Pradesh , Rajasthan, Madhya Pradesh andKarnataka.[20]Duke, Wallmarts CEO opined that FDI in retail would contain inflation


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by reducing wastage offarm output as 30% to 40% of the produce does not reach the end-consumer. In India, there isan opportunity to work all the way up to farmers in the

back-end chain. Part of inflation is due tothe fact that produces do not reach the end-consumer, Duke said, adding, that a similar trendwas noticed when organized retailbecame popular in the US.[21]Many of the foreign brands would come to India if FDI in

multi brand retail is permitted whichcan be a blessing in disguise for theeconomy.[22]Back-end logistics must for FDI in multi-brand retailThe government hasadded an element of social benefit to its latest plan for calibrated opening ofthe multi-brand retail sector to foreign direct investment (FDI). Only those foreign retailerswhofirst invest in the back-end supply chain and infrastructure would be allowed to setup multibrand retail outlets in the country. The idea is that the firms must have alreadycreated jobs forrural India before they venture into multi-brand retailing.It can be saidthat the advantages of allowing unrestrained FDI in the retail sector evidentlyoutweighthe disadvantages attached to it and the same can be deduced from the examplesofsuccessful experiments in countries like Thailand and China; where too the issue ofallowing FDIin the retail sector was first met with incessant protests, but later turned out

to be one of the mostpromising political and economical decisions of their governmentsand led not only to thecommendable rise in the level of employment but also led to theenormous development of theircountrys GDP.Moreover, in the fierce battle between theadvocators and antagonist of unrestrained FDI flowsin the Indian retail sector, theinterests of the consumers have been blatantly and utterlydisregarded. Therefore, one ofthe arguments which inevitably needs to be considered andaddressed while deliberatingupon the captioned issue is the interests of consumers at large inrelation to the interests ofretailers.It is also pertinent to note here that it can be safely contended that with thepossible advent ofunrestrained FDI flows in retail market, the interests of the retailersconstituting the unorganizedretail sector will not be gravely undermined, since nobodycan force a consumer to visit a megashopping complex or a small retailer/sabji mandi.Consumers will shop in accordance with theirutmost convenience, where ever they getthe lowest price, max variety, and a good consumerexperience.The Industrial policy 1991had crafted a trajectory of change whereby every sectors of Indianeconomy at one pointof time or the other would be embraced by liberalization, privatizationandglobalization.FDI in multi-brand retailing and lifting the current cap of 51% on singlebrand

retail is in that sense a steady progression of that trajectory. But the government has byfarcushioned the adverse impact of the change that has ensued in the wake of theimplementation ofIndustrial Policy 1991 through safety nets and social safeguards. Butthe change that themovement of retailing sector into the FDI regime would bring aboutwill require more involvedand informed support from the government. One hopes that thegovernment would stand up to itsresponsibility, because what is at stake is the stability ofthe vital pillars of the economy-retailing, agriculture, and manufacturing. In short, thesocio economic equilibrium of the entirecountry.BibliographyWebsites :-www.Legalserviceindia.com www.Manupatra.com www.Scribd.com www.cci.inwww.rbi.org.in www.dipp.nic.in

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