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On 20th September, 2012 the government of India has approved 51% FDI in multi brand retail and 100% (revised) in single brand retail sector through government route with some riders. Government of India is firm to implement the FDI in multi brand retail Agitation and Bandhs have been called by some political parties. Oppositions have raised concerns about employment losses, promotion of unhealthy competition among organized domestic retailers resulting in exit of small domestic retailers from the market. Prime Minister of India has explained to the nation the necessity and obligation under WTO agreement to allow FDI in retail sector. There is mixed response about FDI in retail sector. Still some of the states are either not in favor of the FDI or indecisive on the issue as they feel that FDI in retail is harmful to local retailers in India. Everyone has the reasons for supporting or opposing the issue. The present paper focuses on the overview of the Indian retail sector along with the opportunities of expansion of FDI in retail in India and the major challenges that it faces.