Arguments for and against FDI in multi-brand retail are flying thick and fast. In the article below I have cited some of the forceful ones adduced by both sides, so that none of the readers may be led blindly by one side alone. Please publish it in our Almaya Sabdam Website. Hope you are keeping well. With regards,
Whom are we to Believe?
There are arguments galore for and against introduction of FDI trotted out by honourable men, all patriotic to the core starting with Mammohan Singh. Others contradict & make fun of without malice or ill-will. Where does truth lie?
Change alone is the unchanging law of nature. Gita has taught us. Lived experience, personal and universal, confirms it. What is desired is change for the better which necessarily don’t happen even after taking due diligence. Here we are grappling with the question of introducing Foreign Direct Investment (FDI) in India to make our country economically robust and prosperous. What are the arguments for and against in the national interest, setting aside all divisive partisan politics?
Walmart (American), Carrefour(French) and Tesco (British) are three of the World class business Tycoons in this field eager to come in. In his address to the nation Dr. Manmohan Singh said: “The fear that small retailers will be wiped out is completely baseless.... According to the regulations we have introduced, those who bring FDI have to invest 50% of their money in building new warehouses, cold-storages, and modern transport systems. This will help to ensure that a third of our fruits and vegetables, which at present are wasted because of storage and transit losses, actually reach the consumer. Wastage will go down; prices paid to farmers will go up; and prices paid by consumers will go down.... will also create millions of good quality new jobs.... But one state (Mamatha?) should not stop another state from seeking a better life for its farmers, for its youth and for its consumers.”
Others supporting him say middle men who lose initially in the turbulence, too will benefit if there is a Walmart or Correfour to compete with. For example writers like S A Ayer in Times of India 23/9/12, ask us to look at the auto industry. “Till 1991, it was dominated by indigenous Ambassador and Premier Cars. These have been replaced by a cavalcade of new brands, some Indian but mostly international. Yet it would be moronic to mourn for the heyday of the Ambassador and Premier as a golden era when foreigners were kept out and all profits were retained in India.” Think also of Tata’s Nano exported in great numbers and any number of new brands which are products of Indian and foreign collaboration.
Millions Stand to Gain
No demise of petty shopkeepers across the country is going to happen, says another writer Jug Surayia. In stead he argues: 1. 600 million farmers and some 1,200 million potential consumers stand to benefit. 2 Both will live in peaceful and prosperous coexistence due to friendly competition providing personalised services that impersonal supermarkets can`t. 3. Small traders extend a line of credit to regular customers, an informal buy now, pay later scheme. 4. They also do home deliveries and generally have a young person to help customers carry heavy packages to their vehicles. Such shops are not only economic but also a needed social institution, a place where, apart from the goods being sold, neighbourhood gossip and information are also exchanged.
For instance, when fast-food chains like Kentucky Fried Chicken and McDonald's came into the country, doomsayers began to write premature obituaries for traditional Indian fast foods like samosas and idli-dosa. However, in robust defiance of such fears, Indian fare has not only survived and thrived but in many cases has literally turned tables on its foreign competition, by making it adapt to local customs and tastes.
As a result McDonald`s is persuaded to make home deliveries and offer pure-veg items. The result is that there are more pizza-eaters in this country than in Italy. Just as English is no longer an `English` language; pizza is no longer an Italian dish. A happy marriage between Indian and foreign know-how often resulted in a more beneficial hybrid to both.
Financial Gain of Billions
Financially FDI is estimated to bring in $16 billion worth of FDI over the next 3 years to help the country bounce back from a debt ridden situation now. According to Rajiv Kumar writing in Hindu sept.15, is a long overdue step. Those who entered last few years were from Real Estate sector without its modern inventory management practices, supply chain management, new storage and vending technologies and advanced organisational skills so our retail sector is till in shambles. He asks to bury the myth of becoming slaves to anew version of East India Company. Gandiji opposed Videsi with Swadesi mostly in the political context. The new entrants have to abide by the rule of procuring goods for sale mostly from the country, not from cheaper markets outside.
Currently, the share of modern retail is a mere 5% in the total retail trade sector worth $500 billion. It should rise to $900 billion in the next 20 years. Now the self-organised ‘mom & pop’ stores or retail sector is worth only $450 billion. Twenty years later it would be more than $650 billion, improved, and not destroyed. It will benefit farmers, small producers and consumers. A by-product will be generation of a large number of ‘semi-skilled’ or skilled jobs for India’s young population. Besides an employ of an International company stands a better chance to get bank loans for educating his children.
According to Rejiv new foreign entrants will help our farmers get new high yield varieties of seeds and better technologies that will help bring down the cost and more yields. They will help farmers produce FMCG (fast moving consumer goods) brands, will give impetus for the growth of MSEs (medium and small enterprises) that will be mobilised by large retailers to produce their own ‘house brand’ across the entire range of FMCG and other consumer products. Hence the bogy that the country will be inundated with cheap imports is misplaced.