FDI In Retail - Not A Good Idea Sirji !

FDI In Retail – Not A Good Idea Sirji !

Allowing FDI in retail sector in India has stirred up a political hornets’ nest. Every political bigwig has tried to give some opinion on the issue, not because they care but because it brings them back in breaking news. FDI in retail looks good superficially. The employment opportunities will ofcourse increase but those who are already self-employed might have to struggle. Retail sector is what an average Indian easily enters in search of a living. Indian retailing boasts of the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores etc. With the advent of stalwarts like Walmart and Tesco these small business are sure to struggle.  Since these foreign players are not being forced to procure their goods from India, interests of Indian farmers are sure to get affected in long run.

Ok agreed in some countries small businesses have existed despite  FDI in retail sector. Actually some of them might have flourished. We do agree competition is good and we are  all for it,but government policies should encourage local business, shouldn’t it ? Someone convince them, everything American is not so good !

As far as farmers are concerned, big time farmers with large production capacities may be benefitted with entrance of new buyers(retail chains) in market but small farmers-cum-vendors will be the biggest losers. Not only this, if these chain owners get their products cheaper outside India, why would they care buying them from Indian farmers ?

It is what is called Macaulayism (it is the conscious policy of liquidating indigenous culture through the planned substitution of the alien culture). Only in our case words consciousness and planning  are missing.Political honchos just want substitution of indigenous things by an alien culture without any consciousness or planning. FDI in Retail, will result in having Walmarts in Indian cities, which actually seems fascinating. But, it is going to do less good than Bad.

According to IndiaInfoline.com, agro products and food processing sector in India is responsible for $69.4 billion out of the total $180 billion retail sector (these are 2001 figures). What makes it even more significant is the fact that in this segment, returns are much higher for any retailer. Prices for perishable goods like vegetables, fruits, etc. are not fixed (as opposed to, say, branded clothes ) and this is where the retailers can scale-up and in turn benefits are likely to pour down to customers. But, it does not guarantee higher returns for the manufacturers(doesn’t manufacturer of agro products sound better than farmers !!).

It is true that it is in the consumer’s best interest to buy the goods and services at the lowest possible price. But it should be a privilege for the individual consumer and it must not override the responsibility of any society to provide economic security for its entire population. Ofcourse, collective well-being must be preferred over individual benefits.
FDI In Retail – Not A Good Idea Sirji !

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