Vol. 1 No. 1 (March 2013) : [5] Collection home page


A little over two decades ago India began her tryst with a liberalized economic system. Unfortunately the optimism that had preceded the reforms has now given way to chronic disenchantment. A decline in agricultural productivity, rising unemployment, inflation and increase in rural to urban migration have resulted in the public morale being perched precariously on the brink of despair. It is in these difficult times of omnipresent pessimism that the Government of India chose to allow foreign direct investment in the retail sector. The reactions from all quarters were on expected lines and reasonably mixed. While some predicted a surge for the economy in the form of investments in infrastructure projects resulting in enhanced employment levels, others were pessimistic. A large section of people were worried about allowing resource laden foreign companies to operate and source products from all over the world thus rendering the competition ineffective. A third section was worried that the unorganized retail sector which comprised 96% of the retail trade in India would be eliminated by the entry of the foreign retail giants. In the midst of the sundry bouquets and brick bats that the new policy announcement invited and its long term ramifications on the Indian economy it is imperative that the first issue of our journal ‘ANWESHAN’ is dedicated to academic research on the subject of FDI. Professor Sugata Marjit in his paper entitled “Foreign Direct Investment in Multi-brand Retail Trade” deals with economic arguments for and against FDI in multi brand retail. He divides the ensuing debate into three phases. At phase 1 he deals with arguments for multi brand retail like better pricing for farmers and better price for buyers due to increased competition in the retail market. At phase 2 he deals with an analysis of the validity of the arguments and focuses on issues like decreased competition due to higher competitive advantage of multinational retailers which might force small retailers out of the business. At phase 3 Prof Marjit forms his judgment about the issue. He strongly concludes that it is a complex issue in a heterogeneous country like ours so a white paper should be issued by the government which must include empirical research in the area. Professor Abhirup Sarkar in his paper entitled “Understanding FDI in Retail: What Can Economic Principles Teach Us?” studies the pros and cons of FDI in retail from an economic point of view. He suggests that safeguards should be put in place before foreign multinationals are allowed to enter the retail sector. He concludes by emphasizing that though there will be huge losses in jobs in the traditional retail sector FDI in retail should be allowed. According to him new jobs will be created by these retail giants. While in the short run there may be a negative impact on aggregate employment it will improve in the long run when new avenues will open up for the employment of the underprivileged. Ms Nandita Pradhan and Professor Indrajit Ray in their paper entitled “Long-run effects of FDI in India’s multi-brand retail trade: Lessons from cross-country economic history” study the effect of FDI on domestic capital formation and growth of entrepreneurship in the country. The study also involves the economic history of Great Britain and Japan and studies in detail the concept of entrepreneurship. The researchers conclude that while domestic tertiary and agricultural sectors should provide capital and entrepreneurship to an economy in its industrialization process: foreign capital will lead to the marginalization of the domestic trading class. Thus FDI will hamper formation of domestic capital formation. Dr. Hirak Ray, Mr. Abhijit Lahiri and Mr. Joy Sarkar in their paper entitled “Do the Indian Stock Market Traits Influence the Foreign Institutional Investors?” have studied the relationship between the foreign institutional investors and the capital market in India. The study, which employs econometric tools of analysis concludes that long term stock market behavior is positively related to foreign institutional investors and that the stock market influences such FII activity. Professor Soumitra De in his paper entitled “The QWERTY Path for FDI in India?” looks at path dependence in policies and effects of economic liberalization. The paper involves an in depth study of FDI in the retail sector in China, different relevant trade agreements and events leading to the decision to allow FDI in the retail sector. He advocates that rules for FDI be kept transparent, time bound and short and that the host country should be in a position to take advantage of the FDI. In conclusion, Prof. De emphasizes that there may be chances of regional disparity when some states allow FDI in the retail sector while others don’t. Professor Debabrata Mitra and Dr. Amlan Ghosh in their study entitled “FDI in Multi Brand Retail: Cost Benefit Analysis” have analyzed the prevailing scenario in India with regards to the retail sector in order to arrive at a conclusion regarding the pros or cons of allowing FDI in multi brand retailing in India. The study entails a detailed cost-benefit analysis of foreign direct investment in the retail sector in India. In conclusion the researchers while enumerating the pros and cons of multi brand retail advocate a cautious approach with a proper regulatory framework including changes in laws so that the benefits of FDI in the retail sector actually accrue to the country and the people. Dr. Debasis Bhattacharya and Mr. Shuvendu Dey in their paper entitled “FDI in Multi Brand Retail: Indian Perspective in the Global Context” have sought to analytically, descriptively and comparatively analyze the decision of the Government of India on FDI. They have concluded that 220 million street hawkers, 50 million traders and 200 million people directly connected with retail trade in India will be affected by the decision of the Government of India. Further they have expressed concern about the fate of the farmers in a country like India where farm holdings are small as compared to Canada or the USA. Overall the paper concludes that the entry of foreign direct investment in the retail sector will result in loss of livelihood for a large percentage of people in India and will not help to augment the economy as suggested. The arguments for and against foreign direct investment in multi brand retailing are numerous. The perspectives in this publication represent diverse approaches to analyze the issue. This range includes economic history, political science and even econometrics. Some of the best minds in the field have sought to illuminate us on this very important topic. It is hoped that the articles here will help all of us to get a fresh perspective on the issue.

Editor-in Chief

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Collection's Items (Sorted by Submit Date in Descending order): 1 to 5 of 5
Issue DateTitleAuthor(s)
2013-03FDI in Multi Brand Retail: Cost Benefit AnalysisMitra, Debabrata; Ghosh, Amlan
2013-03The QWERTY Path for FDI in India?De, Soumitra
2013-03Long-run effects of FDI in India’s multi-brand retail trade: Lessons from cross-country economic historyPradhan, Nandita; Ray, Indrajit
2013-03Understanding FDI in Retail: What Can Economic Principles Teach Us?Sarkar, Abhirup
2013-03Foreign Direct Investment in Multi-brand Retail TradeMarjit, Sugata
Collection's Items (Sorted by Submit Date in Descending order): 1 to 5 of 5