Research Paper On Fdi In Service Sector
After Independence from Britain in 1947, Indian economy remained fairly close.In mid-1980s, India faced a severe deficit of balance of payment.In the contemporary markets economies, retailing is a significant link between producers and consumers.In order to build a strong relationship between the two, retailers not only offer a wide range of products, but also provide complementary services to the consumers, both of which together provides satisfactory and convenience experience of shopping for consumers.Further, the development of scale was also limited due to restriction on interstate movement of goods and stock.Overall the growth of retail sector was constrained due to low income of the consumers followed by high taxation and poor government support.After the disaster of 1991, neoliberal reforms were introduced which was never previously allowed; by opening the economy to initiate privatisation, changes in tax-reforms, deregulation of economic trade practices, allow international trades and investments, control inflation level.
The retail sector is expanding at a rapid pace, with a gradual shift in formats towards organised retailing.
On the other hand, only 8% of the retail sector is organised (in USA 85%) which includes licensed retailers like hypermarkets, supermarkets, retail chains and mega-stores.
Before the initiation of liberalisation of FDI policies, organised sector growth was slow due to significant restriction on consumer goods and consumerism.
A comprehensive and critical review of the existing evidence on the subject was carried out, and descriptive statistical analysis of data from 1991 to 2013 was performed which leads to conclude that the policy of FDI liberalisation has proved to provide diversification and sustainable development to the Indian economy and specifically retail sector which is considered to be one of the significant pillars of economy.
Furthermore, for continuous growth of the economy, it seems vital to encourage more investment in other sectors by liberalising the restrictive policies.