Foreign Direct Investment in India - Pros & Cons

The following article talks about Foreign Direct Investment i.e. FDI in India which has its own advantages & disadvantages with it. But overall it is beneficial for a country like India with such a vast population.

Foreign Direct Investment in retail

Indian government has cleared the way for Foreign Direct Investment i.e. FDI in retail sector in India which is undoubtedly a very brave and farsighted step by this Manmohan Singh led UPA government at the centre. But as expected this decision has created a political storm in India. Not only the opposition parties like like NDA and Left are against it but even the most of the UPA allies like Mamta Banerjee's Trinmool Congress, Mulayam Singh's Samajwadi Party, Mayawati's Bahujan Samaj Party etc. are also against it and Congress is finding it really hard to convince all of his major allies. This FDI clearance has once again threatened the stability of this UPA government which is already shrouded in numerous scams of high magnitude which are being unearthed one after the other like 2G and Coalgate.

Merits of FDI

Supporters of Foreign Direct Investment are of the view that government will earn thousands of crores of revenue through this which can be used for the purpose of implementation of various social welfare schemes in India like Food Security bill, Right to education etc. Not only this farmers will also be able to get good purchase for their produce as these international retail stores will purchase their produce directly from the farmers thus eliminating the middleman. Moreover, consumers will also get good quality products at cheaper rates from these retail chains. Also, these retail chains will generate employment in India & will contribute a lot in eradication of unemployment from India.

Demerits of FDI

Although Foreign Direct Investment in retail has lot of advantages but it's critics are of the view that it will create more problems rather than solutions in India. Its opponents are of the view that if these international retail chains are allowed to operate in India they will create a monopoly in Indian market & will displace millions of small retailers operating throughout India. Thus instead of generating employment it will create more unemployment. Also foreign retailers are going to benefit from this FDI in retail as the bulk of the purchase of these foreign retail giants will be from foreign markets which is totally unacceptable. Further initially they may offer low prices for their products but once they create their monopoly over Indian market they are going to raise their prices much higher and Indian consumer will have no choice but to purchase their products.


So, after taking into consideration both pros and cons of FDI in retail in India one can safely say that it has more advantages rather than drawbacks. FDI in retail is in the interest of India and most of the fears about FDI are without any base. For example when stores like Reliance fresh, Easy day came many people feared that they will affect small traders but nothing like that happened as small shop owners are still doing their business really well & these stores have hardly affected them. Same will be the case with FDI in retail as these international retail chains will be allowed to operate only in the cities with the population of over 10 lakh so there is hardly any chance that the are going to affect the small retailers operating throughout India. Opponents of FDI should first introspect before fooling the people of the country.

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