Economics for SSC EXAM

FDI in retail

Pro and cons of the introduction of FDI in retail-

Ill effects of FDI :

• It will lead to closure of small scale shops across the country and endanger livelihood of some million people.
• It may bring down prices initially, but this will be a predatory pricing scheme by multinational companies to get a stronghold in the retail market later they will increase the prices once the competition dries up, hence Small and medium enterprises will become victims of predatory pricing policies of multinational retailers
• Farmers may be given remunerative prices initially, but eventually they will be at the mercy of big retailers
• It will disintegrate established supply chains by encouraging monopolies of global retailers

FDI as a boon to India:

• It will cut intermediaries between farmers and the retailers, thereby helping them get more money for their produce
• It will help in bringing down prices at retail level and calm inflation
• Big retail chains will invest in supply chains which will reduce wastage, estimated at 40 percent in the case of fruits and vegetables
• Small and medium enterprises will have a bigger market, along with better technology and branding
• It will bring much-needed foreign investment into the country, along with technology and global best-practices
• It will actually create employment than displace people engaged in small stores
• It will induce better competition in the market, thus benefiting both producers and consumers.