For example, Nike operates its business in India, for this they need some capital. This capital is inward FDI for India.
There are different factors which encourage inward FDI; they are subsidies, loans, grants, tax breaks and the elimination of rules and regulations. With the allowance of inward FDI there are many possible effects on the host country. Generally it is assumed that the technology used by the investing firms is superior to that of the host country. But there would be some other benefits to the host country like higher quality, lower prices in production of goods and service which in turn results in better consumer welfare.
Phd Thesis 13 | Foreign Direct Investment | Investing
Improvements in the supply chain management of the retailing sector in organised as well as unorganised retailing. Over the years, foreign direct investment has helped and showed its significant effect in the growth of a countries economy where the investment is being made but this is especially applicable for the economically developing countries.
For most of the countries in early s, Foreign Direct Investment is considered as one of the major source of external finance which will help in the growth of the economic perspective and also it helps in the improvement of the infrastructural condition of a country as well as there is ample scope in the development of the technology.
As a result of this foreign direct investment, the living standard of the general public of the host country will improve in a significant manner and also the health sector of the domestic country will experience its benefits. From this, we can say that foreign direct investment plays a crucial role in the overall economic and social development of a country. Indian retail sector is one of the largest sectors and is being considered as the most profitable sector, which contributes about 10 per cent to the GDP and about 9 per cent of the employment. It has emerged as a dynamic and rapid growing sector as the global retailers showing their interest to enter into the market.
With this significant effect the growth of the Indian economy has increased to a great extent, by this the format of retailing sector is now changing in terms of system and consumer purchasing behaviour. Kearney, India was ranked as the most attractive destination for FDI. This is because the share of organised retailing is very low; it is just 4 per cent of the entire retail sector. The absence of this organised sector gave enough scope for the international retailers a golden opportunity to enter into the organised retail stores.
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In the next five years, the growth of organized retailing sector will be more than the GDP growth. With this current growth rate this sector will be the 5th largest consumer market by The ASSOCHAM, has expressed its opinion in favour of further expansion of retail sector where foreign direct investment is allowed in a calibrated manner.
FDI in India: A Review
Thus, all these factors despite all the hurdles have encouraged the giant retailers from the worldwide to enter into the Indian retail market. Most of the retailers from worldwide are showing their extreme interest to invest in Indian retail market; some of them are planning to enter in joint ventures in association with Indian marketers. The international retailer like Wal-Mart has showed their interest to invest in Indian retail sector. In its initial attempt Wal-Mart has announced that, it is going to come up with its first store, which sells all the basic needs like fruits, vegetables, groceries and consumer appliances to retailers and small businesses.
Foreign Direct Investment provides access to new technologies, and also transfers of technologies from one country to another. At times, FDI could be provided in the form of technology. All this is possible with the provision of capital inputs. The money that comes from a foreign country as foreign direct investment to the host country can be utilised to buy or import technologies.
From this, we can say that foreign direct investment plays an important role in the context of economic development. For any giant retail formats like India technology can be treated as lifeline in managing the basic functions of the store. It links between various operations performed by a retailing organisation in an integrated structure and it also helps in the information flow across the organisation.
In recent times, Indian retailing sector is booming in a very extravagant manner. This sector has moved into second phase with the presence of existing players experimenting with different formats. The growth of organised retailing sector is playing a crucial role in the growth of Indian economy.
Since for the country FDI results in the collaboration of technology, work culture, business strategies. Foreign Direct Investment FDI plays a vital role in global business, which in turn gives rise to multinational corporations. It provides access to new technologies, new markets and marketing environment with products, manpower, and finance and management skills which provide a strong movement to economic development.
An investment to be regarded as an FDI, the investing firm i.
Indian Retail Sector: An Over View
It may also be treated as FDI if the parent firm itself holds the voting power in the home country even though it operates in foreign. By Sneha Shah. For the first time in two decades, India has been getting more foreign investment than its neighbour China. However, that will also depend on how the latest changes in the FDI policy on ecommerce play out. Inbound interest will remain strong as India continues to be a critical growth market with its billion plus demographic advantage for investors from the US as well as China.
Some of the crown jewels of Indian manufacturing, especially in steel, have been put on the block. As a result, foreign investors with deep pockets are deploying funds. In the past two years since the Insolvency and Bankruptcy Code IBC has been introduced, around 9, cases have come up for redressal, media reports show. This is where bankers see a huge opportunity — helping promoters seek investment from strategic and financial sponsors before a company is admitted for liquidation.
It is either the promoter that is looking at some sort of financing to stay out of IBC, you can look at the typical ARCs asset reconstruction companies or traditional distress funds to come in at this point. With banks and other traditional lenders staying away, this has presented a big opportunity for structured credit in terms of buying out distressed loans and real estate financing. Those roles are fast reversing. They turned out to be mediocre. We realised we needed to either have controlling positions or significant minority to be able to drive changes. Corporate families are looking to optimise portfolios and capital allocation for the India of the future which will be about scale and innovation.
I have also conducted an extensive literature review on the impact of Wal-Mart on small retailers to understand the potential impact it can have on India. Despite the concerns, I conclude that this change can be managed to India's advantage and that opening of the retail sector to FDI is an imperative, not an option. Description Thesis M. Date issued Department Sloan School of Management. Publisher Massachusetts Institute of Technology. Keywords Sloan School of Management. Collections Management - Master's degree Management - Master's degree. Show Statistical Information.