BUS 445 California State University FDI in the Indian Retail Sector Questions

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FDI in the Indian Retail Sector

Summary

The closing case explores India’s complicated retailing sector. On the surface, India’s huge population would seem to be a marketer’s dream, yet foreign investment in the country is very limited thanks to a series of highly restrictive policies for foreign companies. The policies, aimed at protecting the country’s vast number of small stores, were recently loosened, yet many companies are still staying away. Under the new regulations, foreign retailers must source 30 percent of their inventory locally, a demand that is too costly for many companies. Furniture and home goods retailer IKEA is one exception to this trend. The company has plans to open 25 stores in the country.

Discussion Questions

1. How might investment by foreign retailers change retailing in India? What are the potential benefits of such FDI?
2. Who stands to lose from FDI into India’s retail sector? Who stands to gain?
3. Why has India been so slow to change its laws regarding foreign ownership of retailers? What, if anything, can foreign retailers do to influence the laws in a way that benefits entry?
4. Given the political and economic realities in India, what is the best entry strategy for a foreign retailer?

Notes: For more information on India’s retail sector, go to https://www.cnbc.com/2017/06/05/india-overtakes-china-as-the-most-promising-market-for-retail-expansion.html