Explain the advantages and disadvantages of allowing Foreign Direct Investment in Multi-brand in India.
Answers
Advantages and Disadvantages of FDI in Retail Sector
Advantages:
1. FDI shifts the burden of risk if an investment from domestic to foreign investors.
2. Repayments are linked to profitability of the underlying investment
3. FDI is the only capital inflow that has been strongly associated with higher GDP growth since 1970
4. FDI contributes to economic growth as it raises the ratio of FDI flow to domestic investment.
5. FDI has led to potential gains through technology transfer.
FDI has generated large employment opportunities in a number of countries.
FDI has led to the growth of the international trade.
Disadvantages:
Entry of global giants will force the Indian Traditional Kiryana Stores to shut down their business.
Profit will be distributed, investment ratios are not fixed.
An economically backward class person will suffer from price rise.
Market places will be located too far which will increase the travelling expenses.
There will be cross-culture conflicts
Exploitation of natural resources by foreign players
Inflation may be increased.
India will become slave due to entry of foreign players
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