The effects of FDI are by and large transformative. The incorporation of a range of well-composed and relevant policies will boost up the profit ratio from Foreign Direct Investment higher. Some of the biggest advantages of FDI enjoyed by India have been listed as under:
Economic growth- This is one of the major sectors, which is enormously benefited from foreign direct investment. A remarkable inflow of FDI in various industrial units in India has boosted the economic life of country.
Trade- Foreign Direct Investments have opened a wide spectrum of opportunities in the trading of goods and services in India both in terms of import and export production. Products of superior quality are manufactured by various industries in India due to greater amount of FDI inflows in the country. Employment and skill levels- FDI has also ensured a number of employment opportunities by aiding the setting up of industrial units in various corners of India. Technology diffusion and knowledge transfer- FDI apparently helps in the outsourcing of knowledge from India especially in the Information Technology sector. It helps in developing the know-how process in India in terms of enhancing the technological advancement in India. Linkages and spillover to domestic firms- Various foreign firms are now occupying a position in the Indian market through Joint Ventures and collaboration concerns. The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market.
Critics says : That disinvestment in the retail sector would lead to closure of small shops and lead to mass unemployment but then should not existing Indian supermarkets like More, Big Bazaar, Home Shop, Metro and the likes be banned and don't their existence lead to joblessness and closing down of the local 'kirana' (or mom-and-pop stores)?
No it does not; as we have seen supermarkets and the neighbourhood 'kirana' co-exist peacefully. What the BJP is doing here is fueling a sense of paranoia in local traders to their advantage. Big names have already entered the retail space and are being given a run for their money by small stores as customers patronize both to meet different needs. There is no reason to believe that the entry of foreign Retailers
will lead to a vastly different outcome.