Abstract

                      Liberalization of trade policies during the last one and half decade has led India to become an investment friendly country. Indian economy is basically an agro based as its 70% population engaged in the agriculture sector. When liberalization started in 1991, Foreign Direct Investment (FDI) was limited to only a few sectors like manufacturing, infrastructure etc. Change in FDI policy of India in 2012, which allowed  investment in multi-brand retail stores, aviation sector and pension plan sectors, brought revolutionary changes in these sectors.

FDI plays an important role in India’s growth dynamics. India being second most-populous country has immense scope for retail expansion as along with time urbanization and consumerism has also been increasing. Initially India was conservative regarding FDI; it imposed restriction on foreign companies to limit their share in equity capital of their Indian subsidiaries but over the time Government of India gradually liberalized foreign investment in various sectors. Recently in 2011 India permitted 100% FDI in single brand retail and in 2012, 51% FDI permitted in multi brand.

Keywords: Retail Sector, FDI, Opportunities and Challenges