Friday, May 18, 2018

FDI in Retail

Few years back the country was struggling with the question, " Should India allow FDI in organized retail ? " Since the question seems to affect the livelihood of small grocery store owners, no political party was ready to take the risk to answer it in affirmative. Foreign retailers may also have realized that it will be difficult to get an outright support for such a move in a country like India.

 E commerce since then hit the Indian shores and likes of Flipkarts, Amazon and Snapdeals started giving deep discounts on the power of foreign money which got pumped into these companies. The real motive of the E commerce revolution was to change the behavior of people how they shop by incentivizing the spend through online stores rather than buying from physical stores. The initial promoters may be Indian, but soon most of these companies were owned by foreign PE funds with less than 10% owned by the Indian entrepreneurs. And finally picture got evident with Walmart taking control of Flipkart which is nothing but indirectly an FDI in retail.  Walmart have just replaced the foreign funds , so in the nutshell Flipkart was anyway a Foreign company operating in Indian retail segment so in the nutshell FDI in retail entered India a long time back.

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