Now let us look at the other argument against FDI in retail:
We are selling India to MNCs: Believers in this argument scream hoarse that we are repeating the episode in the Indian history when East India Company came to India India India has also changed and today India Sovereign Indian State
Hindi main kahun to: “Hindustan koi rasgulla hai, kee koi bhee ayega or hudup jayega?”
But let us move away from Bollywood dialogues and look at a global world. How can we cheer when a Tata goes out and buys Corus or a Mittal gobbles up Acelor in Europe or a Sun Pharma digests Teva in Israel India
Here are some of the benefits that Indian consumers and farmers will get from direct FDI in multi brand retail:
- Lower price for consumers
- Better margins and price for farmers as the big retailers buy directly from farmers and cut the middle men.
- Exponential growth in infrastructure with specific focus on cold store chains and ware houses.
- Growth in job opportunities for both semiskilled and skilled workforce in the retail stores.
- Increase in collection of both direct and indirect taxes which will further fuel the growth and investment in infrastructure.
Considering all this my vote is for immediately allowing FDI in retail as the benefits far outweigh any potential negatives being trumpeted by vote hungry self styled messiahs of masses.
To read the earlier posts in this series please visit here:
http://moneyandus.blogspot.com/2011/11/retail-and-fdi.html
http://moneyandus.blogspot.com/2011/12/fdi-in-retail-part-ii.html
To read the earlier posts in this series please visit here:
http://moneyandus.blogspot.com/2011/11/retail-and-fdi.html
http://moneyandus.blogspot.com/2011/12/fdi-in-retail-part-ii.html
Theoretically the argument is solid. Even ideal. But in practice, how will it be? Business is always about making profits. Nothing other than profit matters. So, will a foreign company with huge capital swallow too many small companies in India? Like a whale coming and eating up the little fishes.
ReplyDelete"No company in the world is big enough to dictate terms to our country, not even the biggest of companies in world can match the power of the Sovereign Indian State and its billion plus proud Indians."
ReplyDeleteThe Radia tapes and 2G scam falsifies the assertion.
@Matheikal: Yes the buisneess is about making profit, but do you think the small retailer is not making profit? Infact the big retailers like Big Bazaar work on a margin of 3% due to overhead and heavy discount they give, while your neighborhood kiryana store makes a margin of 14-20%, take your pick.
ReplyDelete@Debajyoti: The very reason that so many politicians went to jail after the scam came in open is proof enough that Indian people will no longer take this nonsense of cheating and fraud by big corporate houses. The fact is the big guys are yet to digest the fact that Indian masses have changed so they keep on trying to cheat them and in process they are getting caught with a more regular frequency than in past. Yes we have a long way to go, but this is a journey that does not have a U turn.
Yes i agree to your points here...you know being an agricultural country who has the capacity to produce enough food for the entire country still India has to import...the reason among all perishable food items being Except Potato all the food crops are getting spoilt because of inadequate warehouse,storing facilities and transport facilities...
ReplyDeleteyes i agree there would be job opportunities for skilled and semi skilled workers... but what about the half billion of Indian population who are directly or indirectly dependent on the Kiranas for their daily meal of bread?
Hi Anjan... Trust me millions of potatoes also perish in this country just visit parts of UP where cold storage facilities are not available.
ReplyDeleteThe guys who are currently employed in Kirana stores will get opportunities when more competition for employees come. Any body who works as store hand in a kiryana store will find a job and not all Kiryan stores will close. One major difference in Indian market is that a lot of people do not have cars so they will never drive very far to buy in bulk the USP of Wal Marts etc. So the product mix the local stores sell will change IMO but a lot of Kiryana stores are already gearing up to face the challenge. I believe a lot of them will find their niche and survive.
My point was to mention only potatoes have the cold storage facilities in India which is about 90% can be kept in safe and other food crops in spite of having a surplus are perished and then we have to import food crops from abroad...!!!
ReplyDeleteAre you saying the local pan wala shop and other millions of locAL KIRANAS will be able save himself from the onslaught?
Pan Wala nothing will happen as no MNC woth its salt will open a Pan Shop and they provide the last mile coverage for retail items that sell in small packets. The millions of Kiranas will have to battle it out. The good ones will survive and the bad ones will go, and I have a feeling that no body will miss them. Ask any house wife what she want the local kirana wala or cheap goods she will vote for cheap goods. So the consumers will decide. But like i said the Kiranas will have to fight for every street corner some will win some will loose :(
DeleteSorry it it looks offensive...it seems i have given much stress to a pan wala...
ReplyDelete:) None taken a healthy debate is the purpose of these posts...
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