Will liberalising FDI in multi-brand retail be good for Indian manufacturing sector and result in growth of manufacturing of low tech, mass produced products and in increased employment that India badly needs?
At one time after the very first long stay in US in 2005 when I studied extensively about Walmart, I was really impressed by that company and the way it has become one of the largest company of US . I was in favour of the entry of Walmart and the like in India.
When the debate of opening India for these MNCs in multi-brand retails started few years ago, I failed to appreciate why there was so much opposition to these entries. It would hardly affect the small retailers all around our households in cities, towns and villages. MNCs in retails would hardly have any significant penetration in India so easily and so fast. It may certainly cut down the intermediaries who take away the maximum share of the difference of price paid to the producers and the price paid by the consumers.
But after visiting US for about fives times and staying for longer duration, today I am against allowing the big retailers such as Wall Mart. In every visit I have found the penetration of the Chinese products in American households increasing. Today perhaps most of the things, be it toys, furnitures, furnishings, gardening or garage equipment, kitchenwares and particularly the clothes that an American household and its members use are Chinese or from similar sources. America can afford it, as it has not that big a population that depend on the employment in manufacturing of these mass produced low tech items.
India must ensure that its population engaged in manufacturing does not decline with the entry of these global retailers rather these global players in retails boost up the development and manufacturing of the household items for the domestic consumption as well as for export. It can’t happen without certain conditions imposed on these retailers so that they develop and sell or export the products indigenously manufactured, as it happened in auto component sector when Suzuki entered India in early 80s. That was the reason for the government’s conditionality of sourcing 30 percent of the items from the SMEs for allowing these global retailers in multi brand products. Unfortunately, because of the pressure of the MNCs retailers, the government seems to be yielding to their demands.
All these big retailers have already developed the sources of all types of wares at the cheapest price. Majority of the manufactured products that it sell comes from China and similar countries. These companies when in India will import those products from the same sources unless it become too costly for them to import and sell in India. It saves them from many difficulties. However, the concession will be against the interest of the manufacturing sector in India.
It will be great, if India provides and markets the possibility of involving these MNCs to encourage manufacturing in India.
Will the government do that? Will these MNCs such as Walmart be like Suzuki to help the Indian manufacturing sector to grow? As reported, “Walmart and “Made in China” are practically synonymous; Walmart imports some 70 percent of its merchandise from China.”
Can Walmart in India mean some proportionate figure from here? Or will Walmart promote only “Made in China” in India?