FDI in India's retail trade

Abstract

The paper examines the political stand of holding back 100% FDI in multi-brand retail in India on the ground of safeguarding un-organised sector, the Kiranas. The study argues that this fear is largely unfounded by highlighting the dual nature of retail sector where foreign retailers operating through super markets cater mainly to the upper income groups with a demand for differentiated products leaving the market for undifferentiated and relatively low price goods to the Kiranas who cater the lower income groups mostly in the rural areas. The study hence proposes that the foreign owned firms in the retail sector are most unlikely to pose a threat to the Kiranas rather they may facilitate the sales of the Kiranas.