Liberalizing FDI in Retail: Implications for India’s Trade Agreements

AuthorTanu M. Goyal,Arpita Mukherjee
Published date01 February 2013
Date01 February 2013
DOIhttp://doi.org/10.1177/001573251204800108
Subject MatterArticles
Liberalizing FDI in Retail:
Implications for India’s
Trade Agreements
Arpita Mukherjee
Tanu M. Goyal
Abstract
India is a proponent of liberalizing services in the WTO and in its FTAs. However,
the country has not taken commitments in sectors such as retail in its trade agree-
ments. This is because there are restrictions on FDI in this sector. India’s trading
partners have been requesting for liberal commitments in the retail sector. In the
year 2012, India autonomously liberalized FDI in retail, allowing 100 per cent FDI
in single-brand and 51 per cent in multi-brand retail subject to certain conditions.
Given this background, this paper examines the impact of autonomous liberaliza-
tion on India’s commitments in trade agreements. The paper found that if India
agrees to bind the autonomous regime in the trade agreements, it will increase
India’s bargaining power in the WTO and FTAs. The country can trade-off com-
mitments in retail sector for greater market access in areas of its trade interest.
Binding the autonomous regime in trade agreements will speed up the negotia-
tions process and lead to conclusion of pending agreements such as the India-EU
bilateral agreement. However, there are some concerns. Since the FDI liberaliza-
tion is accompanied by certain restrictions, which are only applicable to foreign
service providers, India cannot undertake national treatment commitments.
Keywords
India, retail, World Trade Organization (WTO), Foreign Direct Investment
(FDI), Free Trade Agreement (FTA)
Introduction
India is a major proponent of liberalizing services in the World Trade Organization’s
(WTO’s) Doha Round of negotiations and in its bilateral and regional trade agree-
ments. India seeks greater market access for its professionals and negotiates for
Article
Foreign Trade Review
48(1) 143–151
©2013 Indian Institute of
Foreign Trade
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/001573251204800108
http://ftr.sagepub.com
Arpita Mukherjee is a Professor, ICRIER. E-mail: arpita@icrier.res.in
Tanu M. Goyal is a Research Associate, ICRIER. E-mail: tgoyal@icrier.res.in

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