Is the FDI in multi-brand retail a reform?
Will the Retail giants rush to India to take advantage of Manmohan’s policy to boost India’s GDP? Why is Manmohan and his government so excited? Is it the cure of all the lapses in governance? Will they be able to get the real advantage out of it, as China has done?
Will these foreign giants be so benevolent to reduce the multiplier, between the price paid to the farmers and horticulturists, and the price paid by the consumer that according to Anand Sharma is 5-10? If it would, why had not it happened with the entry of big business houses in retail?
Why couldn’t then Ambani, Tata, Birlas, or even Safal could do the same what foreign retail biggies are expected to do ? Why could these big houses not set up the infrastructure such as cold storages and improve on the supply chain and logistics ? How is it possible with power shortages and increasing diesel price that runs generators for captive use?
The MNCs in retail will hardly encourage local manufacturers or provide sufficient incentive for the entry of the new entrepreneurs in manufacturing. With the knowledge of the countries having lowest price, instead of small local traders and importers, with the new policy in place, the global Retail giants will import almost everything and pass it on to the Indian buyers that are crazy for imported brands.
As I see the entry of these big retailers will have negative effects on the Indian companies engaged in manufacturing apparels, hosiery and knit wears. Manufacturers of household essentials and fancy items will not be able to compete with the Chinese.
My other fear is about its ill-effect on the fruit producers. In name of quality, the Indian consumers will have to forget our fruits and go for those produced in China and other countries.
The policy outright will favor those global giants in making up their losses due to the bad economical conditions in the industrialized countries of West and US.
Let us not dream that they will create jobs and if at all they create employment, it will be only for those who are not even good enough for call centers.
In 2005, when I was in US for almost six months, I had studied about the Wal-Mart In details and how this largest company of the world is hated by many for different reasons.
It would have been in national interest that domestic retail players would have seriously entered in this sector and would have brought a revolution for the farmers and consumers of the country. Alas! they failed us.
Interestingly, the English media and some economists are calling this as reform. The Economic Times is one. One can see its Sunday issue. Foreign media naturally are agog and have all praise with many adjectives for Manmohan.
I shall agree with just one thing that the announcement though might not be in the interest of the people of India but it will certainly make Manmohan a hero in the countries of those big retail companies that have been planning to come in India.
For me, the biggest reform for Mamohan to focus should have been related to the land acquisition and compensation, industrial labour, reduction in days for starting a new business and so many other essential policies that can make the execution of projects fast.
Let the people decide if it is reform.
this is a very good assessment of the pros cons of FDI IN RETAIL IN INDIA. WHEN LARGE INDIAN PLAYERS IN RETAIL COULD NOT PROVIDE SIGNIFICANT BENEFITS OR LOWER PRICES , HOW MNCs ARE EXPECTED TO DO IT. ?