Beware, it bites! – FDI in Retail and India

The past year or so witnessed substantial clash of views, ideologies and opinion over the point of a complete green signal to FDI in the world’s largest growing retail market. Retail is one of the fastest growing and most dynamic sectors in the Indian economy, with a 5% compounded annual growth rate. The point that India needs to understand today is that Foreign Direct Investment if allowed to propagate in its full measures – will curb the entire economic backbone of a developing country.

Advocates may argue that FDI in retail will bring with itself enormous job opportunities in its stores, availability of cheap commodities in the market, World class technologies, new methods and also variety – which will no doubt enhance the options for the consumers. But the sole point of concern remains the cost which the economic setup of the country will have to pay for this ‘spectacle’ to happen and its after-effects.

A developing economy relies substantially on its manufacturing capabilities. The Indian manufacturing setup is very vast ranging from the factories and industries to the small scale manufacturers and craftsmen. FDI in retail market will rupture the very manufacturing backbone of the country, transforming it into a mere dump yard of foreign produced goods. This would serve as a threat to the entire production mechanism which has been traditionally prevailing in India. Secondly, another important aspect that needs to be addressed is to which jobs and what future are we looking upon when we invite FDI in retail market. After hampering the manufacturing setup of the country the only jobs that FDI will cater will be those of managerial in nature. The setback that the manufacturing setup will suffer from the entry of FDI will also result in the loosing of jobs of many more than can be replaced by the jobs that FDI in retail will create. So from a place where we could be a country of producers and entrepreneurs we will renovate into a country of salesmen and managers; which certainly is not something to look forward to. So if analysed thoroughly FDI doesn’t seem to look like the ‘messiah’ that the present government is projecting it to be. 

Retail is India’s largest industry amounting for over 10% of the India’s GDP and around 8% of the employment. The onus that lies on the state is to take steps that would help retail to grow and prosper. The present government on the other hand in order to please their foreign friends is proposing the entry of something that would hijack this entire setup just on the basis of power and capital. Isn’t this heading us back to colonialism? A developing economy should always harvest on options that will aid it to grow as one whole economic unit. FDI though lures a minority of the beneficiaries but undoubtedly has more repercussions than benefits for the mass. No Doubt we have the daunting task to paint a picture of an “Emerging Economic Superpower” but Foreign Direct Investment in retail market setup is not the colour that we will want to fill it up with. Because the economic setup of India does not suit it best. And if superimposed on this setup – FDI in retain market will turn back only to bite. 

About the Author


Yashwant Singh

He is a staunch believer of leftist ideology and pursuing integrated law program from Chanakya National Law University, Patna.

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