FDI in India: Single-brand and Multi-brand Retail

Post independence, the Government of India followed a socialist approach for the economic development of the country. It exercised a high degree of control over industrial activity by imposing rules and regulations. The trade policy focused on import substitution. Financial sector policy did not pay enough attention to generating funds/capital within and outside the country.

These policies led to inefficiencies in the process of manufacturing, high costs of products, non-competitiveness, import controls, and lack of export orientation and acted as disincentives to foreign investors.At that time, Jawaharlal Nehru realized the importance of Foreign Direct Investment (FDI) as a means to attract capital and technological and industrial knowledge to solve the prevailing inefficiencies.