Retail And FDI

So what does 51% FDI in multi brand retail means for you and me? Well in layman terms it simply means that foreign companies can now own upto 51% equity in companies that sell various brands in their stores e.g. Big Bazaar, More, Hypercity etc. This means more investment coming to the country and more choices to the customers.

So why are some people against the same? Well this is just political gimmick, there plea is that this will put millions of small kiryana stores out of business. So is this really going to happen?

May be may be not. US the country of wall mart still have hundreds of thousands of small retailers and most of them are surviving very close to Wall Mart. Only difference is while a Wall Mart will keep thousands of items the neighborhood retail store keeps items that sell quickly in the vicinity of the store.

While it is true that we have millions of small retailers in the country and some of them will loose out fighting the Wall Marts and Tesco’s of the world, but equally true is the fact that end consumers are going to win.

Why do I say that? Because the small stores can loose only if their customers move to big guys and customers will move because the big guys will sell cheap ( or as the allegations go). But my question is if the end consumer is getting goods at a lower price should we all not be happy for him? After all even if millions of small retailers loose, many more millions of consumers are going to win. But wait a second why just the consumers millions and millions of our farmers are also going to win as most of the big guys directly buy from farmers and make payments directly to farmers cutting the middlemen.

So my simple suggestion to all the people and politicians opposing the FDI in retail sector is please choose your battles carefully you may be eyeing the vote bank of retailers but you may loose the vote of farmers and consumers who  outnumber the kiryana shops by a big margin.

Thanks for reading.