There are several factors attracting FDI in Indian retailing:
1. Profile of people: India is the world’s third largest economy in terms of purchasing power parity (PPP), with a gross domestic product (GDP) of US $4.042 trillion. The Young and working population of India is the biggest positive factor of India and its growth in coming years.
2. Indian consumer: India’s per capita income grew by 10.5 per cent to ` 44,345 in 2009-10 against ` 40,141 in the year-ago period, according to the government data. Per capital income means income of each Indian if national income is evenly divided among the country’s population of 117 crores (` 1.17 billion).The per capita income was slightly higher than ` 43,749 as calculated by the Central Statistical Organisation its advance estimates for FY10. With rapid increase in the purchasing power of its middle class population, India will experience a consumer boom supported by a sudden growth in demand for household products in the next few years
3. Cheap availability of labour: India is not short of labour, capital and enterprise. – Being the second most populous country abundant cheap labour is accessible to Indian industries.
4. Easy availability of capital: Capital raising policies are liberal in economy. Apart from that all the companies are showing profits and low debts in their balance sheet thus showing strong market position and attracting many lenders to the market.
5. Large domestic market: FDI inflows find their destination in economies where local demand for the product is huge due to heavy absorption capacity because of advanced industrialization, and a huge consumer market because of high per capita income and purchasing power.
6. Overall facilities: New transport, faster delivery service, latest communication and information technology allow firms to spread and operate international investment and business more efficiently and smoothly. Investors usually come with latest technologies’ for operation, so the host countries must have the ability to provide the complementary human capital, infrastructure, supplies and institutions to operate technologies efficiently and flexibly.
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