As naturally as night follows day, the Congress-led UPA government’s overnight decision to allow foreign direct investment (FDI) in single and multi-brand retail has led the Opposition to oppose it. And, as naturally as day follows night, a move that was meant to be a way out of the policy paralysis has resulted in a paralysis of Parliament.
In together opposing FDI in retail, both the BJP and the Left have willy-nilly managed to paint the Congress as the natural party of reforms, that party having also opened the doors of the economy in 1991. But in rushing through the decision without building a consensus, the UPA has once again displayed a natural instinct for harakiri, with several key States going to the assembly elections in the next few months.
The pros and cons of FDI in retail are too wellknown to bear repetition. That it will bring in investments, that it will create jobs, that it will offer greater choice, and that it will hurt small stores, that our markets will be flooded with cheap foreign imports, etc. The government for its part claims it has introduced safeguards, like allowing it only in cities of over 10 lakhs’ population and so on.
In all the batting for the neighbourhood trader, not too much attention is being to the person whom FDI in retail is really being intended for: you, the consumer.
Do you want multinational corporations to sell you salt and milk? Or do you not care? If the mom-and-pop store in your neighbourhood could stave off the threat posed by Big Bazaar, Reliance and More outlets, is he really so dumb as to let the MNCs to run over him now? And is the mom-and-pop store really the embodiment of all things good?
Is it healthy for our democracy if policies are implemented on the basis of the parties in power? Are the established big Indian players protecting their investments using politicians? Or has the government raised the FDI bar so high so as to roll it back to reasonable limits when faced with opposition?
External reading: Who wants to shop in a big store anyway?
churumuri 
There is no need for any FDI in Retail Sector, both single and multi brand.
We need 100% FDI in Manufacturing and Agriculture Sector with Single window facility and fast tract.
Actually we need to provide incentives for FDI in above mentioned sectors other wise only 100% route won’t attract any investor.
Those who advocate for FDI are only doing so with their hidden aim because of having links with these giant multinationals.
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Life, growth and development can never been said in terms of YES or NO.
All growth oriented plans and projects especially for India should keep a few things in mind:
– how will it serve true social justice and narrow the murderous inequities between people;
– how to make rural people prosperous with opportunities to grow and enriching their life;
– no such thing that all western models are good or bad; it all depends how we adapt these models to suit and serve our needs;
– no need to subscribe to the idea that Walmart will replace our mom and pop and street corner stores is totally misplaced;
have lived in NYC, Chicago, LA, Sandiego etc. many years and have found Wal Marts, JC Penny or the like could never replace my Patel Stores every where;
– high time we do not allow ourselves to be fooled by the stupid self-serving politicians;
– beware, these politico-babu combo are our leeches to draw blood from our veins..
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Yes, FDI was long overdue.
Thank god the UPA finally began their much awaited reform agenda.
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i am no expert.
whatever we have today in the name of progress , cmptrs, cdot, open economy, delinking petrol, name it and you have one icon manmohan.
you cant keep on commiting hara-kari all the time, midgets suffering from oral loose motions are allways vomiting everywhere and opposing everything.
elections are “near” for the next 3 years, so what, policies are not framed based on elections and anyway whoever wins or loses they are all losers.
bangalore developed post 91.
pranab and manmohan have the guts to bring it in and i am sure they are much much much wiser then all of us combined, now accuse them of catering to outside interests!!!!!
more than a third of our vegs and fruits are destroyed and never reach the market. we do not have the infrastructure and we do not have funding for it.
when the price of petrol was delinked i joined in the howling but of late i am quite on the petrol price when it is going down.
as far as mom and pop shops are concerned, they are safe, because most people can’t even make a monthly requirement of rations and most purchases are made as and when things get over.
i know, i know we have gone through hell for decades but we have all survived. So Where Is Our Wisdom.
When You Know Not; TRUST and you wont be betrayed.
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Whether foreign or desi, all I want is one-stop-shops that give value for my hard earned tax paid money.
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I definitely will not be buying milk, salt or anything else from Walmart, that is for sure. MK Ahmed and my local shops are good enough for me.
FDI is being allowed so that the debt-ridden Indian organised retailers can breathe a bit easier. Job creation as a result of the entry of foreign firms is spin doctoring plain and simple. And they are not interested in setting up back-end infrastructure (http://www.thehindubusinessline.com/2010/08/10/stories/2010081052020500.htm). So that is spin doctoring too.
Thankfully, the Indian consumer seems to know better, so far at least.
Yes, the more important question is of how such policies should be created. Did the UPA campaign on this issue or did it consult the people? I don’t think so.
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@the colonel – icons, heroes, supermen who will deliver us from difficulties. Somehow, I’m not able to bring myself to believe in these things.
Dr. MMS, Pranabda, assorted other voices have been predicting the demise of high-inflation within the next three months. For the last two years or so.
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This should not be reduced to a yes or no question. If FDI in retail is allowed, it should be done after all concerns are suitably addressed. The world over, similar decisions have created benefits in some countries while causing hardships in others. As the saying goes, the devil lies in the fine print. It would be a pity if the decision is rushed through without a discussion of the details.
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Anand Sharma was extoling the benefits of FDI in retail saying it will build infrastructure like Cold storage facilities and something else. Could that have not been done by the Government ob a Private Public joint venture?
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If that were the case, like someone pointed out Big bazaar, reliance and other outlets should have wiped out mom-and-pop stores a long time back. They have not. No reason why a wal-mart will be able to.
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Indu Ramesh:
We never learn our lessons, do we? You people still expect the government to do things for you, and do them efficiently? Have all these decades not taught you that the state cannot even get the basics right?
Damn this mentality of mai-baap sarkar that has seeped into Indians so completely. God knows when Indians will come out of it.
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Yes.. they have not wiped out the mom-and-pop stores…. but definitely have reduced the push cart vegetable vendor and the vegetable vendor on the footpath…!
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i cant think of an issue more important than this these days. not an economist, but i can’t shake the feeling that this is one of the biggest con jobs in the history of this republic. chasing after efficiencies of greater scale is only going to pull people apart and create more inequality. india needs LESS globalization of its supply chains. someone stands to make billions off of this of course.
i’m not typically sympathetic to the challenges of the trading class, but they are a part of the backbone of india’s middle class. this is really sticking it to them.
side note: my local fruit vendors and grocers ALWAYS give me a better customer experience, including return policy than any chain stores in the USA let alone the lousy reliance and more outlets.
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In the long big shops will wipe out mom and pop stores. A report released in USA in 2005 claims that a Wal-Mart expansion in Iowa was solely responsible for the extensive closings of mom-and-pop stores, including 555 grocery stores,298 hardware stores, 293 building suppliers, 161 variety shops, 158 women’s stores, and 116 pharmacies. Labour is plenty in India so why how can we justify arguments like this process of creative destruction is able to increase economic efficiency by the reallocation of resources?
Because Walmart is the world’s largest retailer, it sets industry standards for wages, benefits and corporate responsibilities that impact millions of retail workers, their families and communities. Unfortunately this impact all too often includes lowering of standards that hurt communities and families.
Even in USA (NY) there is opposition to Walmart. Walmart has made no attempt to hide its ambition to carpet bomb all five boroughs of Manhattan with its stores. A study says that nearly 14,000 jobs would be lost at other merchants!
As Walmart becomes a giant in India, evangelists will piggyback on them and enter India. Only christmas will be celebrated inside. In small retail stores in India there is always a Ganesha idol. Walmart will smash it. They will only hire christians for key posts. The whole month of december customers will have to listen to Christmas songs and if any one objects they will arrest them. If there is no law to arrest them they will lobby and create one.
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yes we will have competition,lower prices better quality of products.a big yes. bala
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Growth and development is getting the best value for your money and best value for the taxes people are required to pay for all kinds of goods, services, and even for trouble-free situation of needless intervention by the state.
In a borderless society and states, how long one can afford to see things as desi and non-desi origins? Without resorting to parochial attitudes and behaviours, intelligent countries can view the situation as emerging opportunities and learn from experience to make the best for our people both the rural and urban and semi-urban areas.
Best for us need not be worst for someone else. This is where we nee professionalism and integrity. . .
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Opposition to FDI in retail is futile exercise – something for people to chew about till it is old. FDI is inevitable.
People who are opposing FDI in retail have no problem with HLL, P&G, IBM. The why opposition to Walmart, Tesco et al?
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richardw :
Since “mom and pop stores” effectively wipe out pushcart vendors, why don’t we talk of closing down the “mom and pop stores” too? :))
ghataprabha:
Lot of people share similar sentiments as you do. Which is why all this scaremongering and idiocy by the BJP is laughable. No corner store will get killed. There is enough room for everyone.
You tell me, if you need to buy a new pack of cigarettes, will you walk down to the corner store opposite your house, or will you take your car, drive down to wal-mart, pick up the cigarette pack, stand in queue to get it billed, and drive back? I will do the former!!!
Most of us will visit the corner store for our day to day needs, and visits to wal-mart will be like a picnic or occasional outing. Just the same way we do for Big bazaar today.
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1. When Reliance retail came a few years back, they had promised that they would build world class infrastrucutre for cold storage facilities, usher in a new era of shopping experience for fruits and vegetables and provide them at a cost advantage compared to the petty shop keepers. The reality today is far different. The chain stores substandard and often dry & stale vegetables at many of its outlets.
2. Creating an efficient supply chain process is not rocket science. If the government were to give similar tax concessions it gave to the software industry 20 years back, I am sure there are enough businesses in India which will create a far better process as against what the Wal marts of the world will bring in. So why is not the government giving that tax break?
3. That the consumers will get a better price if large retail formats are allowed is a huge myth. I have visited every single large format store operating in Bangalore. Be it More Super Market in Outer Ring Road or Star Hyper Market near Brookefields, I find no cost difference in any of the products that are sold. Infact, I have found that in perishables like eggs and vegetables, the local store offer a better price point as against these large stores. Case in point, a dozen eggs in Star Hyper market was Rs.48/- when I visited a few days back as against Rs.39/- in the local shop.
4. Big retail giants across the globe are known for their pursuit of buying stuff from the lowest cost manufacturer from across the globe. What would happen to Indian manufacturing setup if ten years down the line, these stores start sourcing all their materials from other countries? Has anyone tried to assess the social cost of this move?
5. Even the oft repeated “Retail chains will bring in greater choice to customers” is a myth. Over a period of time, the existing retail stores have started stocking their own inhouse brand of commodities and are giving shelf space only to these. This is at teh cost of other producers of similar products. Case in point? The Foodworlds the More market chain & the Nilgiris have more in house brands in items like Maida, Rice flour, Wheat flour and in almost all spices and condiments. So where is this choice we are talking about??
6. And the biggest myth of them all? Congress is the only party which is pro reforms and rest all are anti reforms. Opening of FDI in retail is not reform. It is a sure sign of bankruptcy of thought processess in the government who cannot think of better ways of creating a robust retail mechanism in house.
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Let us also look at a few other important points.
1. Are these retail chains going to manufacture anything new? The answer is no. So what purpose do they serve? When they find there is scarcity in the commodities they want to sell, they will simply start importing these items. How is the country getting benifitted out of this?
2. The urban middle class, which is clamouring for the opening of new format of these retail stores gives two hoots to what happens to the rest of the country as long as they get to shop in air conditioned comfort, of the goods they are used to seeing during their trips abroad. And the UPA government has used the perfect ploy to divert the attention of this restive middle class from the Lokpal bill. If someone beliieves that the decision is taken in the interest of the larger good of the society, they are living in a fool’s world.
3. Coming to the question of REAL economic reform, there are number of sectors which, literally is crying and begging for government intervention and relaxation of norms.
Power is one such sector. From where do these people build cold storage units when there is no power? They will have to depend on diesel run generators? Which indirectly means more importing of fuel? And more burden on the common man? Why cannot the government create an environment for FDI in power generation? SMEs in industrial areas across the country are suffering hugely because of non availability of power. Once the government ensures that there is uninterrupted power to the industries, the efficiency will automatically go up.
Another example. Why no FDI in roads? Why give contracts only to Indian companies? As it is we are paying a hell a lot of money for using these tolled roads, right?? So we might as well pay a MNC if they bring in better quality road. Is this not opened up becuase MNCs refuse to bribe as much as Indian companies do?
4. If the government really wanted to engage everyone in the debate on FDI in retail, they should have first initiated a discussion in the parliament and then taken the decision. What is happening now is the reverse. They have already taken the decision in the kitchen cabinet of Sonia G and wants our parliament to simply ratify this decision. Hell, no.
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even today retail gaints like bigbazar,reliance have failed to offer good shopping experience to customers. thats the reason why u see mom and pop stores in the same street where these retail malls are present, doing great business. this fear of fdi demolishing small retailers is uncalled for. more fatal is allowing foreign control over water supply to indian cities,which bjp(bangalore,mysore) was silently contemplating. so the pro-india posturing of bjp is a sham.
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Anitha N:
If you say that big retail stores don’t have any advantage to offer in terms of quality or price, then what really is the fuss all about? The customer is not stupid, is he?
All these fears of manufacturing are misplaced. Almost everything you use today is made in China. Almost everything. Insistence on “Swadeshi” will lead us to living in caves.
I agree that India needs to shore up its manufacturing. An import duty on Chinese goods will do the trick. Your giant wal-mart and co. will then create demand for local industry.
FDI is needed in many other sectors, I agree. No dispute with that.
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People talking about job loss, who do you thing these retails employ? robots?
FYI, Walmart employ 21 lakhs ‘people’ worldwide. So any 10th pass or fail ‘Indian’ can get a job, not just the son of the shop owner.
More than retail, Govt must allow FDI in laying roads, maintaining footpaths because Indians have failed miserably.
@Bindu (against Sindhu), you must consider converting to Christianity to reap the benefits of FDI in retail in India.
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This has nothing to do FDI / MNC / mom-pop stores and everything to do with money. Here we are talking as though we have a say in the matter.
Manmohan is a coward who has only ever done anything when pushed into a corner with no escape. In 1991 it was PVNR who pushed for more liberalisation, while MMS was all for status quo with the license raj, because it gave them more power and control than a liberalised economy.
We were bankrupt, had no forex, and we sent 47 tons of gold to the IMF for a bailout. The 1991 policies were a direct result of IMF diktats. The liberalisation, IT boom, opening of the economy happened *in spite* of Manmohan, not because of him. Those of you old enough to have been taxpayers in that time would clearly remember how our leaders vehemently opposed the IMF terms and conditions, but had no choice.
Now our feeble leader is faced with a nearly similar crisis. The Rupee is at an all time low and we’re heading towards bankruptcy. He has no choice but to take these actions.
As for the prices going up or down, it has nothing to do with FDI or MNC’s and everything to do with our long term economic policies and infrastructure. We have no real economic policy unless some powerful external entity imposes one on us like in 1991.
As for street vendors, I have no sympathy. Yes the veggies and fruits may be fresh, but most of them here charge ridiculous prices even compared to the retail stores.
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Everybody thinks only they have the right to earn more money, no one else :D
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@Vinay,
I will tell you what the fuss is really all about.
1. The retail giants have deep pockets. They give discounts on all unwanted things. And in the process lure the masses into their stores. Once they go in, for the sake of convenience, they prefer to do the shopping there. And once they start shopping there which leads to the death of the neighbourhood stores, you know what will happen. I am not saying this will happen overnigh, oh no Sir. These are long term players and in a span of few years, it is kissing good bye to the kirana shops. Just like multiplexes have killed the single screen cinemas. Do you know the multiplexes were given exemption from paying entertainment tax for the first five years from the date of opening? And yet they continued to charge high ticket rates? Is this level playing field? Same thing will happen with these retail giants too. May be it has not happened because the Indian chains do not have as deep pockets as their western counterparts have.
2. No country in the world can have economic prosperity unless its manufacturing base is good. Service economy can only act as support system to the manufacturing economy. Unless we are someone like Switzerland who thrive on their banking industry. From pin to plane, we should have the capacity to produce everything in the country. And we have it at present here. May not be to the best cost advantage, but what the hell, the profits go to Indians and money stays in India.
3. @Nastika, it is not the question of job loss. It is the question of creation of jobs in the right sector. It is the question of quality of jobs. As it is we have a dearth of employable manpower in manufacturing industries. Once these low level sales job gets opened up, do you think a tenth fail will show any inclination to do hardwork in a manufacturing setup? The industry as a whole will die.
We need FDI. I am all for it. We need it in power sector. We need in agricultural sector. We need it in construction of roads, ports, dams and bridges. We need it in small and medium industries. We need it in technical industries. These sectors create wealth. And this will genuine wealth creation. Not merely replacement from one seller to another.
But to bring in FDI in these sectors means the government will have to actually start thinking innovatively. It will have to get back to the basics of Governing. And this is one government which has failed miserably in doing what it is supposed to do. Govern.
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@Anitha N
“We need it in power sector. We need in agricultural sector. We need it in construction of roads, ports, dams and bridges. We need it in small and medium industries.”
please remove small and medium industries – we dont need direct investment and rules in them. they need only capital , no rules or regulations.
You are quite right in most points. Are you single? Ontiyaagiddera?
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All I see is FUD – Fear, Uncertainty and Doubt, a successful tactic (http://en.wikipedia.org/wiki/Fear,_uncertainty_and_doubt)
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India is a country of shopkeepers and it will remain so for next 5-6 decades. A corner 10 Sqft paan patti is nothing less than a Walmart Superscenter and on top of that its an original multi brand indian retail establishment/institution. You can buy single cigaret/bidi, gum/mint, comb, toothpaste, soap, anacin/metacin, Vicks/Zandu balm, banana, newspaper, batteries, lottery tickets, phone recharge coupons, soft drinks,etc. Hope business schools start looking at these shops seriously.
Kirana Dukaans and pallya-kai vendors are not mom&pop shops. I think we shoud stop using this borrowed jargon.And finally as a consumer I welcome FDI in Big box retail.
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Anitha,
Are you a paid stooge of the BJP, that you are making your presence felt all over cyberspace to clean the BJPs image?
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I grant that FDI is needed in all those sectors. Also, I concede that reforms in manufacturing should have been a higher priority.
But then, all sorts of FUD is being created by the anti-FDI brigade. These people would have jumped up and down even when the economy was liberalized, when IT and telecom companies were setting shop here, etc. etc. Nuts.
Let them come into our metropolitan cities. Even over a period of 10 years they will not displace any corner store.
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indian middle class families take pride in the fact that their sons and daughters work in mnc’s. in some cases, marriages are also determined by mnc quotient. but when it comes to fdi ,there is east india company syndrome. manmohan,montek,chidambaram knew this long ago, hence they are implementing their agenda with ease. did some one protest in india when tata motors bought jaguar, bharti airtel ventured into african markets, mahindra bought ssangyong motors? answer is no. because indian middle class saw job prospects.
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@Vinay,
For years the left liberal historians had free run to write history to suit their ideology. Under the broad patronage of Congress. It was a win win situation for both the parties. Congress could win over the minority vote and these cunning people could demonstrate before the world their secular credentials by distorting history.
When someone, anyone, questioned them on the authenticity of their history writing, they would scream in unison that the person questioning was either a right winger or a RSS stooge. Mind you, they never answered the valid points raised. Their only line of defence was how dare this puny person question us and how dare this person expects us to explain?
Your line brought this to my memory and hence I am sharing this with you. Please don’t feel bad. For the record, I am not a paid stooge of any political party.
Now that it is clear, let’s move on.
Our PM Sri MMS has today declared that the idea to bring in FDI in retail was to curtail inflation. And to improve productivity. And, and, and yadda yadda yadda….
Bloody hell, they were in power for the last seven years. Did they not think of improving productivity then? Did they not think of improving economy then? Now when inflation is spiralling out of control, now when the government is staring at empty coffers which cannot sustain the pet project of the Super PM, the Right to Food and the MNREGA scheme, they are thinking of economy???
And my friend, let me tell you this. This is purely an eyewash. The government does not want this winter session of parliament to function. They bloody well know that FDI is a touch subject and the opposition parties will disrupt the parliament on account of this. This is precisely what they want. So as to escape from the responsibility of passing the Lokpal legislation.
And sadly, the opposition parties are playing right into the government’s trick. What they should have done was to make this government bring the lokpal legislation first and then the FDI issue.
Bloody set of jokers, our opposition parties.
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The Readers of Churumuri seem to have spoken and ***only*** 18% are for FDI in retail without any strings attached.
Almost a third are against FDI in retail period.
Just more than half are OK with FDI in retail with some conditions. This is interesting. I suspect most of the conditions wouldn’t be liked by potential sources of FDI, so in theory this group would mostly migrate to the 30%.
So the Nay’s seem to have it :-)
Would be interesting to see what conditions people want to be attached to the FDI in retail though.
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@Anitha,
I just wanted to point out your opposition to stores luring their customers through freebies and discounts on needless things. If there is someone willing to sell and somebody else willing to buy, who are you to dictated your larger moral good on an individual. For me, this point alone by you, is sufficient to gauge the moral undertones of your argument. It reeks of an ideology for the larger public, a collectivist ideology which doesn’t take one anywhere.
And as for the market economics that you speak of, I suggest that you remove the lens of parochialism and see it for what it is. The society will not and should not remain stagnant. What you want in essence is for the shopkeepers son to become a shopkeeper. If not, then who will run the next generation of stores. Every market changes the available opportunities for employment of the people. The trick lies in empowering people to be prepared for it, not in shouting hoarse against an open market.
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Let me break the question “Does FDI in retail good for India?” into multiple parts.
1. Does Multi-Brand Supermarkets benefit Indian Retail?
2. Does FDI in Retail benefit India?
3. Which part of India will benefit and which part will suffer?
Here are my opinions:
1. Super-Markets will benefit India. Because, without them, we rely on small traders, crude ways of transportation and storing that results in a lot of wastage. A country like India cannot afford this level of wastages. If these supermarkets are created by retail co-operatives, meaning that small traders pool in and create a large supermarket that can invest in procurement, warehousing and distribution, this will help them as well. (Somewhat like the White Revolution of Amul).
2. FDI in retail will be harmful to India.
First thing that will happen is the destruction of Kirana shops / small traders. It may be the big metros first, but they will move to smaller towns and big villages soon.
Secondly, they will displace local competitors who cannot fight the financial muscle of Wall-Marts and Carrefours. For those proud IT folks, let me remind them that for every TCS that thrives in global competition on the basis of cheap labour, there are hundreds of Parle Agro Foods (Original owners of Thums-Up, Gold Spot etc.), Kali Cola, etc. that have died.
Thirdly, when the local competition is inflated, they secure all supply chains and then, they can dictate the prices. This a country like India cannot afford. Once they secure them, buying out government to remove the controls is not very difficult. The Wall Marts can then easily become East India Companies.
We should also realise that all Wal Mart contributed to USA is to siphon American funds faster to China and make a buck in the process. What is not good for USA is not good for India either.
3. These are corporates. They do not serve the customers or the suppliers but the shareholders. If the retain supply chain is controlled by a few number of big brands (much worse if they are foreign), they can easily practise oligopoly and we can be confident that Indian government, as usual, will not control them. This will mean that both Suppliers and Customers will suffer in the long run.
What the country needs now is the improvement in value added jobs. I welcome FDI in manufacturing because it creates jobs. In retail, the net job losses be so severe it will damage the country. To make things worse, most jobs that created will be menial jobs, such as shelf-stackers and check-out clerks. This is very similar to the burger flippers employed by McDonalds at the cost of some local restaurants.
So, the small traders, wholesaler merchants will lose their livelihood. Consumers and Suppliers will save some money in the short term. Country’s economy will suffer due to the job losses. And if not careful, these companies can easily become blood sucking leeches.
Finally, I smell a fish in the undue haste with which this government has approved this, without tabling it in the parliament, without consulting opposition parties or sate governments. Coming from a 2G-fame government, I can easily foresee a busy Subramaniam Swamy in 5-10 years time!
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The question is what these foreign players bring that our local players lack? India is a nation of shoplifters, mostly done by the employees themselves. Like in most aspects of Indian life, shrinkage rate (pilferage before sale) is highest in the world. He who tames the shrinkage rate win the retail war.
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British came to India to do business and then……..
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Anitha:
My comment was actually directed to the other post, where you had accused some people of being Congress agents.
I blame the BJP and the opposition here. The hypocrites were about to introduce the FDI bill in 2002 themselves, and now that someone else is implementing their agenda they are making a hue and cry. Same thing they did for the nuke deal. Worst sort of political opportunists. So they don’t have any principles, any agenda – their only agenda is to disrupt what the government is doing, keeping national interest last of all.
If the BJP feels that FDI in retail is in national interest (which they do, that has been their policy), why are they opposing it? This shows that they put their own narrow agenda before national interest.
pdk:
Even I feel that FDI should be allowed “with conditions”, and I don’t belong to the nays. We should allow FDI in retail, it is high time. Your interpretation of the poll results is incorrect.
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http://ibnlive.in.com/news/q2-gdp-growth-slows-down-to-69-pc-from-84-pc/207168-7.html
Manmohan did that, did this, increased GDP ,increased growth….
Mining gone everything gone. just 6.9% GDP.
economists!! harvard graduation!!!
Leave them and they will sell everyone and everything. and now FDI.
Maana maryade enadru idiya ivakke.
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Vinay:
What are the conditions?
My point is the conditions would have a very small chance of being enforced/legislated since they will almost surely be against the interests of the global giants (I may be wrong). But yes, it would be good to see the conditions before jumping to conclusions.
As to why the BJP opposes what they themselves proposed, I think they just want to differentiate themselves from the Congress in the minds of people. They will not do anything to reverse the FDI decision. I believe all the opposition is just sound and fury signifying nothing. Sure they look totally passionate on TV but remember TV is also called the Idiot Box :-)
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Shakunthale:
You wrote “I just wanted to point out your opposition to stores luring their customers through freebies and discounts on needless things. If there is someone willing to sell and somebody else willing to buy, who are you to dictated your larger moral good on an individual.”
That is perfectly fine in theory. But how will the stores make money then? By squeezing the suppliers. Who are the suppliers – farmers, smes etc. All the freebies and discounts harm the producers. Not good. Please read this wikipedia article: http://en.wikipedia.org/wiki/Criticism_of_Walmart
No, shopkeeper’s son will probably study and become a lawyer, doctor or whatever. But others will take up shopkeeping in the long run. What is wrong with being a shopkeeper by the way?
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Very interesting comments. Liked Anna Saaru’s comment. Hilarious! Anitha Indian governments are not exactly punctual on delivery. So you have to take it easy on that issue. Amazing for someone who is opposed to FDI in retail Anitha has spent some shopping in non-traditional outlets! Anitha by your own logic why should any body buy bad stuff from these retail stores? You have a choice right? So there is no problem in FDI for retail? You see how I did that?
Supply chain is not a trivial thing. Please do some Wiki research or at least consider Anna Saaru’s offer:)
Vinay great rejoinders to everybody,
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Shakunthale:
You wrote “I just wanted to point out your opposition to stores luring their customers through freebies and discounts on needless things. If there is someone willing to sell and somebody else willing to buy, who are you to dictated your larger moral good on an individual.”
That is perfectly fine in theory. But how will the stores make money then? By squeezing the suppliers. Who are the suppliers – farmers, smes etc. All the freebies and discounts harm the producers. Not good. Please read this wikipedia article: http://en.wikipedia.org/wiki/Criticism_of_Walmart
No, shopkeeper’s son will probably study and become a lawyer, doctor or whatever. But others will take up shopkeeping in the long run. What is wrong with being a shopkeeper by the way?
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@Doddi Buddi
naanu offerre kottilla . aagale neevu?
Naavu Walmart alla buddi.
btw i was happy that we have some ladies commenting against commercialization else got tired of sonia , uma , sushma , jaya , maya etc.
namma henmaklu bari maneyolage serkondu english serial nodode aagoythalla antha kasivisi iththu. adu swalpa dooravaythu.
Honestly I feel along with Walmart and GREED we will be forced for GE GM crops and seeds.
You are all earning well , very educated santhosha . adre swalpa nimma oorinavara kadenu gamana kodi swami.
See Veerappa Moily’s son is doing a commendable job. We need more of that. Rural people cannot learn english and compete with this harsh world. dont harrass them.
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@Bhupati Ranga,
For those proud IT folks, let me remind them that for every TCS that thrives in global competition on the basis of cheap labour, there are hundreds of Parle Agro Foods (Original owners of Thums-Up, Gold Spot etc.), Kali Cola, etc. that have DIED.”
A small error:- Parle Agro Foods did not die. Ramesh Chauhan cleverly sold his brands to Coco Cola for a cool 60 million DOLLARS which helped him build up his Bisleri brand through which he created a market for mineral water in India.
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Anna Sambar
Saar you will be soundly castigated for your prejudiced views on women:) You will be single for a long time, we in the forum fear. Just wait for backlash from Anitha.
On other matters, Yeddy likes FDI (Female Deity Intervention) in his retail life–like de-notifying land, other deals and so on.
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Will it reduce inflation, and cost of goods ?
is it more a desperate bid by this govt to get in fdi, as the demand for rupee dries up thanks to its expenditure nrega party that might just lead the country into record deficits and inflation in this and following year ?
Most importantly if the congress does not have the numbers on the floor why just blame the bjp and left while forgetting dmk and mamtas tinamul ?
is this a tactic to stall the parliament and blame the opposition?
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@pdk
There is nothing wrong with being a shopkeeper. My intention was not to harp on the mereits or demerits of being a shopkeeper. All I intend to say is that we should head in a direction which will remove barriers and allow peole to trade. Whether it’s a MNC or a trader on the footpath. remove the protectionism and allow people to trade. The “invisible hand” will take care of the rest.
Yes, the thought is idealised and I do understand that western nations tend to protect their narrow self interests during trade agreements while lecturing others (hypocritically) on the merits of free trade. However, I think India should take the lead and reap the benefits of trading. That is the only way towards a healthy and prosperous society.
The sort of protectionism, and talk of larger good (essentially asking people to adjust their moral compasses to what one personally believes in) reaks of socialism. It is something that hasn’t served us well enough. The protests that you see today are a conditioned thought process which makes us look up to the government to protect individuals interests in every aspect of life. FDI is just one such case. At the end of the day a MNC is not an alien organisation. It has been built by human beings like you and me, albeit from a different corner of the world. People chose professions based on the prevalent market in the society. One need not fear what happens to the trader on the street. Anitha is worried about small stores, what about those private vendors who sell vegetables in numerous markets and streets. Do you think they are professionals. They have chosen a livelihood based on the market. And they will chose one again based on the market. Just like you and me.
I have written in haste and there might be much nonlinearity there. But the eventual point is that I cannot comprehend the baseless fears of peole like Anitha who seem to advocate protectionism for the larger good. Nothing can be better than peole being able to trade in an open market. Be it Walmart or our local vendor.
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FDI in retail need not be the end of the local vendors or small traders. Whoever sells good quality goods at competitive rates will survive and thrive. Like for example, refined cooking oil is Rs.68/ltr at the corner Parameshwari Traders but 78 in Reliance Fresh. Why would I go to Reliance?
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When the popular vote says Yes, but with some safeguards, the question to ask is can the safeguards be maintained in the long run and do you know how complex they might be to enforce?
Lastly when the US congressmen and women have voted to keep pizza in the list of vegetables thanks to the tomato content… are Indian politicians not sitting ducks, as it is in dollar terms the purchase price per mp and mla is rather cheap…
We may get branded apparel and mdf furniture on the cheap and it might just kill the imported kitchen cabinet business but i highly doubt if it can cut the cost of the food and vegis
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Shakunthale:
You agree that no other country allows free trade and yet you want India to remove all barriers? I don’t get it.
As to charges of socialism, FUD, protectionism and all that, I find it better to think about issues without applying filters, so I normally avoid them in discussions.
Protests, opposition – they are all justified. Shouldn’t we have a debate before policies are decided?
And to think that FDI in retail was passed keeping in mind the interests of the citizens of Indian is a bit far-fetched. We just don’t know why it was taken so suddenly. We can only guess. As this piece points out: Maunam Mohanam
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I have this question for all the people who are saying that FDI in retail will reduce prices by eliminating unproductive and expensive middlemen.
Most of you are salaried people, right? ( I am not, I am a self employed person). So every year there is a revision in salary, usually upwards, for doing the same job you were doing the previous year. How is this justified? And when you jump jobs, you are looking at 30%+ increase in salary, To do the same job again, but in a different compnay. How is this justified? What is the new thing you are bringing to the table?
And if you had not taken that salary hike, whatever cost saving your respective companies would have done, don’t you think that could have been passed on to the end customers?
Also think, instead of continuing to pay you an exorbitant sum as salary, the companies could very well sack you, recruit a fresher, train him/her at 20% the cost they are paying you as salary, pay this new comer 50% less than what they are paying you and still get the same job done. Right? And again pass on the cost benefit to the end user or reward the shareholders??
(Please spare me the usual rhetoric that experience cannot be replaced etc. Because in more than 90% of the jobs, experience is not a great differentiator.)
But this cannot happen. Because if it happens, the very same people who are clamouring for FDI in retail arguing that this will lower the prices—damn the millions of people who might lose their livelihood from businesses they have built over the years—- will be up in arm agains their employers to protect their livlihood!
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Here is what thegreatbong says:
“And so this whole “They will come and wipe us out” is just a load of panic-mongering. What will likely happen to Walmart and the larger chains is exactly what happened to McDonalds. Like McDonalds, Walmart will not be a player in the lowest segment of the market where traditional local stores, the “little guys” whom everyone is crying for, will be safe.They will have a largely urban presence and minimal penetration in the backwaters and villages where the little store selling Exide Batteries, Nirodh Condoms and Five Point Someone will continue as if nothing has happened. If anything, it will be the large Indian retail chains that might feel the pinch, which is why it is they who are driving the anti-FDI movement while claiming of course to be representing the ”the poor store-owner.” (for a full text, read http://greatbong.net/2011/11/30/on-fdi-in-retail/
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@pdk
I am of the opinion that we must do what is right and what would give us the best chance to prosper. Hence my opinion that India must dissolve trade barriers on its own volition, since that is the best option for her, irrespective of what other countries say and do.
I definitiely think there should be a debate but if no one wants to talk in the parliament and the only form of debate our politicians know of is to throw chairs and shout, how would it be possible? Policy makers have to debate and about that there is no argument. But how, where and when? Traders protesting by closing down shops and forcing some others to close down, do you call thata debate? It’s unfortunate that decissions are taken in this country at the whims and fancies of policy makers, but the absence of an honourable debate is our own shortcoming. I do not see a way out in the current climate.
@Anita
All I can say is that you have s skewed (or perhaps none at all) of how the market functions. A salaried employee might expect a raise and he may or may not get it depending on what the employer opines of him. If the employer thinks (and that is very important, because he is the one who is paying) that the employee brings in value, he will pay him the extra money. And to add to this this is also determined by the market climate. Ever heard of a buyers market and sellers market? I am amued by the fact that you are able to see this seemingly simple thing through your parochial prism of socialist (or dare I say communist) and expect to bring down a man who is just striving for his own good.
Whle I have nothing much to say regarding the middlemen, I do think that they are a party to the final cost of an agrarian product. There are two parties who take risks and invest in trading agarian products. The farmer is the primary risk taker because he choses to grow a particular anticipating demand, while also hoping for the forces of nature to assist him with no or very little crop insurance. The secondary risk taker (albeit many orders magnitude lesser than the farmer) is the seller who hopes that there is a demand for the goods that he has bought in wholesale inorder to sell for retail prices. the farmer and the final trader have their own investments to make regarding the resources required to ply theitr trade. And thus they add value to the product and rightfully deserve the price. In between all this, the middleman without adding value to the product, without risking anything, eeks a living out of somebody elses risk which I think is not correct. The ability of big retail stores to source directly from the grower may or may not bring down the prices, but it will at least ensure that the money s earned by people who rightfully deserve it, i.e. the grower and the final trader.
All I can request you to is to get down from your high horse of morality and public good. Trade is never bad. It’s selective protectionism that messes up the matket place. The government, in my opinion, must just act as a facilitator of free trade, acting against peole who use force and coercion. Therein lies everybodys prosperity.
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@Shakunthale
In your long and verbose posts, you do not account for the socio-cultural disparities in India that would severely handicap even a genuine attempt at free-marketization.
Economics cannot be viewed in an isolation chamber, sir. And however successful an experiment is in a laboratory’s sanitized simulation, when it comes to the field, expect the unexpected.
The liberal can also become slave to his/her ideology/high horse. :)
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Anitha N :
Completely wrong!!! How can you say that experience does not matter? Maybe there isn’t much difference between a guy with 5 years experience and another with 6 years. But there is really no comparison between a person with 5 years and a fresher, or even one with 2 years.
It is incredibly silly to claim that “experience does not count for much”. At the end of the day, if the company feels that they can replace an experienced guy with someone less experienced, they will do it. They aren’t here to do charity to anyone. Or do you think they are??
And you say that you are self-employed. Are you a small retailer by any chance? That would clearly explain your stance here. Vested interests, as usual.
Shree Kar: Awesome points by greatbong.
Shakunthale: Nice writeup.
Basically, what we are seeing is inferiority complex in the quasi-socialist masses of India and too much expectation from mai-baap sarkar. I blame Nehru-Gandhi family for this pitiable inferiority complex that so many Indians have developed.
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@shakunthale:
yaakri nimage ivella. how many flaws you have in your comment!!
“If the employer thinks (and that is very important, because he is the one who is paying) that the employee brings in value, he will pay him the extra money. ”
TATA thought his uncle’s son was the best he handed over
Ambani thinks he needs $1 billion house. he built
Reddy thought he wanted to ruin karnataka he did
Mallya thought he will increase airfares by buying deccan he did.
what more freedom do you expect giving a lame limp di*k excuse of ‘risk taking’ . Mosa maadodanne kasubu maadkobedri.
“All I can request you to is to get down from your high horse of morality and public good. ”
Ellarannu moral horse inda kelagilisi ellaru corrupt annodanna eththi hiditheeri . This shows you are against anti corruption crusade of Anna and congress supporter and your comments are politically motivated.
Wonder what Kalidasa would have written seeing your comments.
Ellidiyappa Dushyantha. Marethu hodya ivalanna?
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Anna Saaru:
If an employee expects a salary higher than the “market rate”, he will not get the job. As simple as that. Anyway, your way of talking, throwing about accusations like “congress supporter”, “against anti-corruption” makes it sound like you are a demented troll.
Or maybe you are a thieving trader who is shit scared that people will stop coming and buying your adulterated stuff???
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@Twistleton
I accept your views that economics of sanitised chambers is worthy of contempt. However, I do not see how the idea of free trade can be classified as such.
On the issue of class disparities, socio-cultural situations posing a threat to existence of free market. it’s my opinion that our long held socialist view of society has resulted in such disparities. Pigeon holing people and their abilities for a real long time has resulted in an aversion to risk taking and will to survive on their own merits. I think there is a need to reverse this trend and reach a stage where people become accountable for their lives. This will not happen in the absence of competition. The affirmative actions that the government implements in an attempt to bring people on par with everybody else, so that they can compete too, is good. However there is also a pressing need to push the individual to thrive in competition. I think this will result in a more robust environment. I have tried to sum up my views outside of the singular issue of FDI. If you find it verbose, my apologies.
@Anna Saaru
I refuse to be drawn into your rile comments. While it is applicable to me too, I just wish to quote Anton Chekov for your reference.
“One can prove or refute anything at all with words. Soon people will perfect language technology to such an extent that they’ll be proving with mathematical precision that twice two is seven.”
As for your gripe about Ambani’s and Mallya’s, I do not consider those crony capitalists to be the torch bearers of free market. And therein lies the flaw of your argument and my explanation.
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@Shakunthale,
Bravo!
Free market economy is the best medicine for all the ills plaguing the country.
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Shopkeepers giving point upon point,
Dont worry, Vinay will give your sons jobs in the Walmart outlet operating out of land owned his IT company.
IT folks,
Please stop masking your desire to shop at Walmart, Jayanagar with talk of allowing non-sons of shopkeepers becoming shopkeepers.
anna sambar,
Person writing with female nick on internet forum becomes ‘namma henmaklu’?
GE/GM crops may be the one of the ways to avoid the hunger and starvation in India. After all green revolution which avoided more starvation was also courtesy of the West – not rural villages. What solution did you have in mind?
Doddi,
Heg iddhira buddhi?
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Shakunthale:
You yourself accept that free trade does not exist anywhere in the world. So it automatically becomes a thought experiment in a sanitised laboratory, right?
I still haven’t seen a single condition which needs to be attached to allowing FDI in retail. I hope someone from the 51% of “allow but with conditions’ posts a few conditions.
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Anonymous guy:
Give me one reason why the rest of us, shopkeepers or not, should cry with the shopkeepers in their perceived fears?
http://economictimes.indiatimes.com/news/economy/agriculture/fdi-in-retail-farmer-bodies-throw-their-weight-behind-retail-fdi/articleshow/10939054.cms
FDI in retail: Farmer bodies throw their weight behind retail FDI
Large farm lobbies are backing the government’s decision to allow foreign supermarkets to set up shop in the country, saying it will shorten the supply chain and get growers a larger share of the final selling price.
Most farmers, however, want the government to go a step further and make it mandatory for retailers to buy 75% of their produce directly from farmers, bypassing the restrictive ‘mandi’ auction system.
“Traders and middlemen are sucking our blood. But no political party is talking about our interest because we are not organised like labour unions, nor have deep pockets like traders,” said P Chengal Reddy, secretary-general of Consortium of Indian Farmers Associations ( CIFA).
“India has 600 million farmers, 1,200 million consumers and 5 million traders. Both farmers and consumers are benefited by FDI in retail,” Reddy added.
So much for the people who are whining about the damage that FDI will do to “farmers, the backbone of the Indian economy”.
***
These politically connected unions of traders make too much noise when compared to their population. They take up a disproportionate amount of attention.
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I see most of the supporters of FDI in retail keep tom tomming about the benefits it gives to farmers.
Farmers don’t get enough money for their hard work, point taken. Though this can be set aside in numerous other ways than allowing FDI, let us consider it for the time being.
Middle men make lot of money at the expense of farmers and consumers, debatable, but let us concede this too.
“World class cold storage chains will reduce wastage of food”. I wonder what is so world class about cold storage facilities, still point taken.
FDI in retail will create “Millions” of jobs. When studies made in countries which have big retailers operating from years have pointed out that in majority of cases jobs have been lost and when created, they are at best low level, low salary jobs, wonder why people are getting so hyped up about this.
But,
Will the multi brand retail shops continue to give the same price to the farmers when the current crop of middle men pack their bags and retire?
Will the multi brand retail shops be the good samaritans they are portrayed to be when bulk of the competition has vanished? Right now, in certain pockets of Bangalore we are seeing only the big retail chains operating. For those who doubt, please go towards ITPL and Whitefield or towards Marathalli and Sarjapura Road etc.
And most importantly, will the multi brand retail shops sell only akki, bele, tarakari?
What happens when these multi brand retail shops start selling, for example, paints manufactured in China at half the price what Asian Paints is currently selling to us? Ask Asian Paints to shut shop because they are not competitive?
Or they import sugar because Brazil or Carribean countries have got a bumper production and they are selling at throwaway price? Ask all sugar mills here to shut shop because they are not competitive?
Or they sell industrial tools from Taiwan because they manufacture better quality tools at half the price compared to Mico Bosch here?
Ask Mico to shut shop because they are not competitive?
Or they sell garments from Bangladesh and Srilanka, because the cost is low there? Ask our garment manufacturing units to shut shop because they are not competitive?
Everyone here are assuming that Wal Mart will open one big shop at some corner of a big city and many people might not go there. What if they mushroom across the city like Foodworld, More, Reliance etc? Since they have blanket permission to open stores, they can open any number of stores, right?
May be this will not happen overnight… may be this will not happen in next five years. But it is bound to happen becuase it is currently happening in the home country of Wal Mart. Many manufacturing setups in USA have shut shop, unable to bear the onslaught of cheap goods from China and other countries.
What do we do when our soul is murdered?
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Anitha N:
The problem with this defeatist mindset is, you assume that India will forever be a poooor country which cannot manufacture anything worth it.
Most of the FDI opposers are from that era/mindset which believes that just like people have their “place” in society, nations have their “place” in the world, and that India is destined to be a poooor country.
If there is dumping happening from China, the government can slap tariffs. You people are soooo worried about Chinese goods, do you know that almost everything around you is made in China? You are already importing Chinese stuff for almost everything. If you stop buying Chinese stuff, you may as well live in caves.
Now, in the USA this is a real problem, because manufacturing in the USA is never going to be economically viable and competitive when compared to China. But that is not the case with India. So first of all, you need to stop comparing the US and India. Anyway, the “giant store selling everything” model of the US will not work in India. I think you can work that out for yourself, no need to explain it.
Instead of asking for parallel reforms in manufacturing and labour laws, these shopkeeper and trader lobbies are using FUD to scare people about Chinese dumping. Unbelievable!!!
FDI is coming in, whether the opposers like it or not. And the BJP has truly shown itself to be a skunk here. They were the ones batting for 100% FDI back in 2002, and now they are screaming against it, just for political opportunism. Screw them! First the nuke deal tamasha, then this. I’m not forgetting this.
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We need FDI in manufacturing not Retail.
This link http://www.madaan.com/sectors.html seems to indicate that we have allowed 100% FDI in power, roads, some manufacturing.
Are there are any companies coming in creating jobs in those sectors?
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The Greater Common Good (GCG) factor should be kept in mind while allowing FDI into retail market in India.
Big industrialists, farmers and consumers will benefit.
Traders may lose – but it is an insignificant minority.
Competition will drive down prices – inflation is going to come down!
Congress should not rollback its initiative. Parties who are opposing this – are plain stupid – don’ they realise that by backing the trader community – they stand to lose the vote of 90% of the aam admi?
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first of all where is the space for wall-mart and its parking zone?
ninty percent shops and all pushcart and platform vendors are near bus stops.
in small shops you have sachets rs 2 or 3 for everything.
tv adv emphasises sachets.
WHY???
Will I get Lime-pickle for my curd-rice, will i get amritsari aam-ka-achar for my sarson ka saag????
will W-M get one oFF or TWO Off things.
Will it sell less THAN MRP.
Comeon let it come and go.
we were allways traders and will be traders.
and who is going to wait to check-out.
not me.
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@Anita
I concede. There is only so much I can say when you refuse to see or fail to understand what free trading means.
@pdk
Every market condition that we have today, from mixed econmoies to ultra conservative socialist economies have merely been initial opinions put into practice by the ruling folk. India moved on from being a licence-quota raj system to a mixed economoy system with partial liberalisation (the reasons why it was done is immaterial). Likewise, there is no reason why the country should not adopt further measure to change the economic landscape.
From your comments I understand that we differ in our opinion on introducing FDI in retail but you seem to be fine with FDI in other areas where you deem it necessary. All, I am saying is that the benefits that stands to be reaped from allowing FDI in specific avenues of your interest are to be had from FDI in retail too. Maybe we cannot come into an agreement on this particular issue. I will hope that the government goes through this legislation while you will hope that it will work as per your wish. Since neither of us are in decision making capacities, let us just keep our fingers crossed. Thank you for the honourable debate.
P.S. You might find this link which was posted by one of the readers above to be interesting read.
http://greatbong.net/2011/11/30/on-fdi-in-retail/
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For the record, from Huffington Post:
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pdk,
“In short, we’ve earned lower prices, but at the cost of consolidating the entire system in the hands (and pockets) of a few corporate food giants.”
This would be a dream come true for millions of Indians who dont get basic nutrition.
Going the other way – small family farms etc. – would lead to more starvation here, since our population is not decreasing.
The Indian traders who currently have a monopoly will continue to squeeze farmers and consumers. They are no different from an MNC food giant in that they care little about country or consumers.
If they have to compete with corporate food giants, it can only be good for the hungry millions.
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So Wal-Mart (in 2011) is new KFC (of 1995)?
In 1995, KFC was blamed for everything wrong in 2010, ie global warming from growing chicken feed, unknown health problems after eating their chicken, cruelty to birds, etc
What after 15 years? There is KFC in every neighborhood.
.
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upa got it all wrong, fdi in retail had to come later. this should have been the last step taken to curb inflation and promote growth. govt should have concentrated more on domestic issues resulting in increasing inflation. unless there is a ceiling on commercial land prices, all other measures will only be cosmetic.
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One more perspective:
http://economictimes.indiatimes.com/opinion/columnists/swaminathan-s-a-aiyar/online-shopping-is-the-real-threat-to-small-shopkeepers/articleshow/11067116.cms
Online shopping is the real threat to small shopkeepers
Faced with opposition from its own allies like Mamata Banerjee, the government has shelved its proposal to allow Walmart and other multibrand foreign retailers to have majority stakes in Indian hypermarkets. Critics have accepted the bogus claim that foreign retailers will kill small Indian shopkeepers.
In fact, the Walmart model is a 20th century concept that’s rapidly becoming obsolete in the 21st century. Internet shopping now threatens the hypermarket, which may survive in small towns with low land prices, but looks doomed to becoming a minority player.
In the massive annual shopping spree during the Thanksgiving season (end of November) in the US, 39% of consumers said they bought goods mostly through the internet, against 44% who mostly bought from brick-and-mortar stores and hypermarkets. A small proportion also made purchases through catalogues. The internet proportion keeps rising.
Arvind Singhal, a top marketing guru, says that in Britain, no less than 4,000 megastores have been closed in the last seven months because of competition from e-commerce (internet sellers). That shows what the future holds.
In the US, small booksellers were decimated in the last two decades of the 20th century by large book chains like Borders and Barnes and Noble. But these chains in turn are now threatened by Amazon, the giant internet book-seller. Amazon offers the lowest prices, and also offers second-hand books at steep discounts. Borders has gone bust and Barnes and Noble is desperately seeking a saviour.
The Indian left highlights resistance in many communities in the US and Europe to the opening of new Walmarts, to preserve small shops. They ignore the fact that Walmart has been a saviour of the poor, by increasing their purchasing power. Indeed, while Walmart kills neighbouring shops, the extra money it leaves in the pockets of consumers finances extra spending by them in unrelated areas. This more than offsets the shrinkage of neighbouring shops, according to some studies. These are, of course, hotly contested by Walmart’s critics.
Many US municipalities refuse to allow Walmart to open new hypermarkets because of the threat to local shopkeepers. Yet the real threat now comes from internet shopping, which municipalities are helpless to ban. New technology and convenience are overcoming traditional regulations.
Walmart’s so-called Big Box or hypermarket model will fail in India. The Big Box requires acres of parking space, and so is typically located on the outskirts of a city or in small towns where land prices are low. Even poor Americans own cars and will drive 20 miles to a distant Walmart. But Indian land prices are astronomical even in city outskirts, making low-cost hypermarkets impossible. Only a small minority of Indians has cars, and because of traffic jams they will not spend hours to drive 20 miles to the outskirts of towns for shopping.
Small Indian shopkeepers do not have the discounting capacity of a Walmart. But they often evade sales tax and income tax, which hypermarkets can’t. Consumer theft does not hit small shopkeepers but can hale profits at hypermarkets. India is a world leader in consumer theft.
Thanks to cheap labour, small shops can provide home delivery at low cost. Many shopkeepers know their customers personally and extend them credit. For all these reasons, the aam bania will easily compete with hypermarkets in most locations. If India continues to grow rapidly, after some decades labour will become too expensive for small shopkeepers to offer home delivery. Other developments like a Goods and Services Tax may also reduce their ability to evade sales tax and income tax.
But long before these developments reduce the shopkeeper’s edge over hypermarkets, e-commerce will swamp both. E-commerce is still constrained today by limited credit card usage, but this is expanding very fast. US experience shows that e-tailers may legally escape sales tax. Municipalities cannot ban e-commerce.
The same will be true in India. Fifty million small shopkeepers went on strike to scotch foreign hypermarkets. But neither they nor Mamata Banerjee can stop e-commerce. That’s no disaster. The traditional bania is willing to stand in his shop 12 hours a day, but not his educated children. Just as the children of farmers want to get out of farming, the children of shopkeepers want to get out of retail.
We need economic reform to help them get jobs in new areas. The “Doing Business” studies of the World Bank show that India is one of the worst countries in the world in which to start a new business, get a building permit or get contracts enforced. Reforms to remove these obstacles are even more important than reforms to bring in foreign hypermarkets.
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Anonymous Guy,
I doubt Walmart/Carrefour are looking to tap into the pockets of the millions of Indians who are unable to afford proper nutrition. Remember the criteria for entry of Walmart – only cities with > 10L pop. Of course, there are poor people in such cities too. But I doubt they will become Walmart customers anytime. The US has food-stamps. We don’t yet. And Walmart is not exactly famous for its nutritious food. Ready-made dinners loaded with salt, sugar and trans fats are more its domain. Apparently there was a 2009 study by an assistant professor at University of North Carolina which concludes thus:
Any nutritious food (Walmart’s Healthy Food Plan Raises Healthy Skepticism) they provide will be more expensive.
Nastika,
I don’t remember the anti-KFC protests too much, but I doubt KFC was blamed for ‘everything’. Here are some specific complaints via google-search(link):
MSG is supposed to be bad. And their deep-fried stuff is not very healthy. Look at how McDonald’s tries to hook children – having outlets in malls which give ‘Happy Meals’ – junk food with free toys (of the latest kid movie running in the nearby mall). Of course, people should be allowed to choose. But that choice should rest on a solid foundation of information. ‘Informed choice’ in short. We’re not there yet, and may never be. Still, we seem to be wise enough to not throng these places in droves. But the main worry is how long will this wisdom last. What about the next gen?
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pdk:
You commies are just too much. :(
When people provide arguments to you, you resort to your final weapon of “this generation is intelligent, but who knows whether the next generation will be intelligent too”!!!
Just accept it – the KFCs and Pizza corners and McDonald’s’ have not harmed us in any way that the commies would have us believe.
Our nation and our market is large enough for everyone to coexist. There is space for everyone. People look at McDonald’s or Pizza corner as a once-in-a-month fun activity. All the rot about “changing the eating habits of innocent Indians and slowly killing them” has been proved to be just that – rot and crap.
Try eating Mysore Pak, Jalebis, Rosogullas, Pedas, day in and day out, and see how quickly you need to sit for a root canal session. A normal person is expected to use his common sense. Everything is fine in moderation, and everything becomes harmful in excess.
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Vinay,
I really love the way you resort to name-calling and ad hominem attacks. Way to go, man.
As to the generational thing. A lot of us used to walk/cycle/bus to school/college. I’m sure the number of students who do that now hasn’t changed over the years, since availability of two-wheelers/cars has not increased at all. You see, changes don’t happen over generations at all. And I did not attribute anything to ‘intelligence’. I mentioned wisdom. Even so I may be wrong. It could be more due to habit. And habits change.
Indian sweets are generally associated with festive occasions. I don’t remember anyone touting Mysore Pak, Jalebis, etc as daily food, though I believe some Indians in the North/West do have Jalebis for breakfast. I’ve yet to see any sweet shop guy offer kiddie toys for buying a kg of Mysore Pak. I’m sure they are missing out on a good opportunity to make us healthy.
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pdk:
Habits change, cultures change, likes and dislikes change. There is nothing you can do to prevent it.
With economic progress, people choose to simplify their lives. Kids whose parents used to walk take the bus, and kids whose parents used to take the bus use a two wheeler for college. Is that a problem? That is a natural effect of economic progress.
Or would you prefer that we remain fossilized and static, for the sake of “good health”?!
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Vinay,
Earlier you wrote,
I was countering the claim that KFC was blamed for ‘everything’. It wasn’t as per the link I gave. The things it was blamed for were not off the mark too, as the excerpts from the link show.
Yes, habits change. We should try to ensure that they don’t change into self-destructive habits by providing easy access to junk food. There is a link between childhood obesity and consumption of junk food, to which kids are attracted by ads and other techniques. And the kids who are hooked today are the parents of tomorrow.
We can’t now prevent KFC/McDonald since they are already here. But that doesn’t mean we close our eyes to the issues involved.
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pdk,
I dont see how the nutrition argument does anything to exclude Walmart or any other foreign store in India.
Who is providing the healthy alternative here anyway? Better nutrition comes in only after the vast majority have food to eat.
Any extra nutrition is good in India – be it sugar based stuff or empty carbs from Walmart. Empty carbs is anyway the normal Indian diet, and a choice the people make.
If the government recommends a food pyramid, it will be a joke, since most folks cant get 3 square meals a day.
BTW you can also search for papers related to ‘starvation deaths in India’, ‘malnutrition’ etc. That should give some perspective when you try to extrapolate US specific studies into the Indian context.
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Anonymous Guy,
If you are arguing that Walmart is welcome here because, in addition to other benefits, it will provide junk food to the large section of India that doesn’t have money to buy food to eat, that is OK. As long as we are clear about things.
But my view is that it won’t happen because that is not what Walmart is here to do. They are here to increase their profits and get into a lucrative market for them. They can’t sell ready-made lunches/dinners for Rs 15 or even less, which is what they’ll have to do to to help the starving. But I agree that it is possible, though to me it looks improbable.
As for searching for starvation deaths in India. Where do they happen? In the large hinterlands or in cities? Will Walmart’s entry prevent those deaths? If FDI in multi-brand retail the way to prevent them? Are there other ways? What should the government do to stop its citizens from starving? What is the government doing right now? These are some of the questions that come to mind.
Coming to malnutrition, I thought you are OK with it as a first step towards preventing starvation deaths, so I won’t address it.
I’m not sure where you come up with the thought that empty carbs are the normal Indian diet. There are so many kinds of Indian cuisines, that I’m surprised you should say that. In any case here is my case: Lentils – rich in protein – are a integral part of Indian diet. South India – bele saru, north India – dal tadka. Even idlies and dosas contain a variety of dals. Millets are also commonly used – think of ragi rotti, jolad roti. Curds/milk is used – protein and calcium. Vegetables are also commonly consumed. Spices I’m sure provide a lot of micronutrients. Nowadays, there is a turn towards ‘refined’ stuff which is due to ignorance – rice, oil, sugar, wheat etc. These become almost nutrition-less, but that is a very recent phenomenon. We had jaggery much before we got hooked to refined sugar. But unrefined stuff – with its better nutrition – will come back with proper awareness created.
And of course, avare kalu or shall we say hyacinth beans :-)
By the way, have you visited the supermarket recently? Have you noticed the many varieties of lentils – moong, masoor, kidney beans, chick peas, chana dal, etc People must be buying them and hence cooking them.
We still cook our food. My very real worry is that soon we will not know what is in the food we are eating – as it is in the US for instance
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pdk,
“Nowadays, there is a turn towards ‘refined’ stuff which is due to ignorance – rice, oil, sugar, wheat etc.”
Exactly.
wrt, not knowing what is in your food, again your choice. Nobody is putting a gun to your head. Same argument in India or US. Government can pass legislation if it is worried about any particular issue – that is what regulations/oversight is for. Cant blame Walmart or Reliance or corner store if they sell whatever is legal to sell. If people/government are aware of their own well being, they will make it happen, be it US or India. It is a good problem to have, since it assumes most people are well fed – like in the US.
About starvation – malnutrition occurs everywhere in India, just take a walk anywhere in the city/village you live in. Some place they may die and get reported, other places they may barely live or die anonymously like in a city. No mega city in India escapes malnutrition or starvation for a large section of its people.
Any help is welcome, Walmart or some other mart. Expecting government to find solutions wont work, since government is good at passing laws and at the max regulating. Just depending on our Indian traders to create efficiencies obviously hasnt worked. I dont see a real argument to why FDI should not be allowed – other than that it harms a relatively small section of people (shopkeepers etc.).
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Anonymous Guy,
Super-polished rice and refined oil, sugar etc are minor issues. When Walmart is the number 1 retailer and has killed all the nearby stores and is selling own-brand junk food – that is when the problem will come. If it comes. Who knows, the pro- people may have it right and it may not.
I don’t expect to win over anyone to the anti-FDI side. We all see things through our own filters. In any case, the idea is shelved pending a “consensus”. Let’s see how it goes and what happens.
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@pdk, I still can’t get the reasons for your opposition to FDI. Could you tell how Walmart can be more evil than Big Bazaar?
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Bravo Shakunthale!
Here you are dealing with a funny confluence of Left and Right. The commies and chaddies have come together for their own reasons to oppose the FDI in retail.
Commies as usual can’t see beyond anything red and thus they have flagged it down. It’s comical but understandable. At best you can tweak their ears and implore them to grow up at some point in time.
The real whacky deal is that of chaddies. It’s nothing less than tragi-comedy – a spoof on Grecian tragedies. They just don’t seem to know what they said y’day – somewhat like the Ghajini. So they need a somewhat severe punishment. They need a good old fashioned hard spanking on their bottoms but more than that one needs to tattoo on their forehead what they used to say in not too distant a past lest they forget again.
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Nastika,
My opposition to the FDI in multi-brand retail decision is because of the following:
1. It was a decision made in haste, without consensus or wider discussions.
2. The reasons it was made is not in the public domain and we can only guess as to them. Pressure from foreign companies for whom increasing turnover and profit are requirements (and not luxuries) and their governments is part of the reason. Downright silly considerations like the Sensex going down by 500 points if they didn’t take the decision were part of the equation.
3. The ‘benefits’ touted by the proponents of the decision (here as well as outside here) are almost entirely hogwash.
4. The dangers are known and are possible:
>> global sourcing of goods to our detriment
>> elimination of local competition by various means like predatory >> pricing, leading to bargaining power being concentrated in a few global companies
>> over time we may go the way of the USA where cheap, ready-made dinners become common household items of food.
That, I think, is it.
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Big Bazaar revenues are around Rs 6000 crore. That is, less than $2 billion. Walmart revenues are around $400 billion. And Big Bazaar has a debt of around Rs 5000 crore.
We’re talking of different animals here. Please get real.
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pdk:
So, what is your problem if foreign companies try to increase their profits? Next, you commies will argue that the IBMs and HPs and McKinseys should be kicked out of India, for the same reason!
The biggest lie peddled by the commies and chaddis (thanks Nitin) is about “global sourcing to our detriment”. These people talk as if the neighbourhood baniya goes out of his way to stock and sell Indian items, while the “evil faarin people” will bring everything in from China! What liars.
The reality is that China manufactures almost everything that is sold today. These so-called “mom and pop stores” (got to love the way the commie-cheddi cabal borrows words and arguments from the American discourse) also stock China-made goods.
The fact that India needs to shore up manufacturing so that we can compete with Chinese products, is a totally separate discussion. A totally different set of reforms and initiatives.
A showpiece dagger that I bought from a small store in Amritsar has the ‘Made in China’ label. If wal-mart or some future ‘Reliance megastores’, or Big Bazaar can sell the dagger to me for Rs. 250 instead of Rs. 400, I would be perfectly happy. But the commie-chaddi cabal would have you believe differently!
Manufacturing reforms and labour reforms will allow a huge chunk of manufacturing to take place in India, and sourcing will automatically happen domestically, once a real manufacturing base is established here. Till that happens, we will keep importing stuff from China, and keep crying about trade imbalance.
Nitin K S:
Awesome comment. Keep it coming. :)
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Vinay,
I know facts won’t change your mind. The Washington Consensus kool-aid is known to hit some people very hard. Enjoy.
Meantime, I’ll leave you with some reading material : Ad hominem
Cheers :-)
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@pdk, though your points are valid, they are misplaced:
> It was a decision made in haste, without consensus or wider discussions.
Talk of FDI in retail is going on for many years, even when twin towers were standing.
> The reasons it was made is not in the public domain and we can only guess as to them.
My guess is they want benefit consumers, ie common man.
> The ‘benefits’ touted by the proponents of the decision (here as well as outside here) are almost entirely hogwash.
Benefits are in black & white. There are no snake-oil merchants.
> The dangers are known and are possible:
True there are not impossible but improbable.
>> global sourcing of goods to our detriment
Govt policies can take care. Eg, Toyota or GM can’t import cars & sell them here without paying 110% duty.
>> elimination of local competition by various means like predatory
Its has *not* happened in other sectors, why it will happen in retail? Infy,TCS Wipro continue their march inspite of Accenture, IBM et al.
>> pricing, leading to bargaining power being concentrated in a few global companies
So what? Name is global. Their employees are Indians. They pay tax to Indian Govt.
>> over time we may go the way of the USA where cheap, ready-made dinners become common household items of food.
If you think FDI in retail will make me eat frozen malasa dosa for breakfast, then you must be kidding. Indians don’t like frozen food, period. Nobody can change that. If fresh stuff is available for less price, why will somebody pay extra for electricity to freeze the food?
> Big Bazaar revenues are around Rs 6000 crore. That is, less than $2 billion. Walmart revenues are around $400 billion. And Big Bazaar has a debt of around Rs 5000 crore.We’re talking of different animals here. Please get real.
Toyota is $230 billion company. GM & Volkswagen are close to $150 billion. But still Tata & Mahindra sell & sell more in India. I don’t see any concern for *only* retail sector.
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Nastika,
Talk of FDI may be happening for over 10 years now. I meant ‘wider discussions’. Public debate. Campaigning on it. If any party came to power with FDI in retail in its election manifesto’, I wouldn’t criticize it. On the other hand, decision driven by silly considerations like “Sensex will drop by 500 points” get my goat (Cabinet divided over FDI in retail sector).
If you believe all government decisions are made purely for the people, then I won’t say anything. I don’t. In any case, since the move has been suspended till a ‘consensus’ is got, then maybe even that decision is for the people, since more than half of the MPs opposed it and they know best.
The benefits – job gains, gain to farmers, lower inflation etc are getting shot down almost on a daily basis. One just has to look.
Yesterday’s analysis by Prem Shankar Jha in DH shoots down the job gains claim (Smoke and Mirrors).
Then there are these: Market economy? Or, market society?
Reasons to be wary of retail giants
None of these guys can be accused of being blind supporters of the current government, going by their other writings (don’t know about Sukhpal Singh though). And these are just some of the analysis I have come across without going searching for it, since I found them in my daily newspapers. Then of course, this link: Criticism of Walmart. If one doesn’t go by what an entity has actually done and does currently, one is fooling oneself.
Probababilities and possibilities – one’s way of looking.
Govt policies may take care of foreign sourcing of stuff. But the recently shelved version didn’t. It made mandatory only 30% of procurement from micro and small industries (having capital investment of not more than $1 million == 5 crores. Please insert the loopholes right there. Thanks).
Elimination of competition and predatory pricing. Please read up on Walmart’s history. The wikipedia link is a good starting point. When we have facts to go on, we should stick to them.
You and I may not smoke too. But I’ve heard ITC makes a decent profit.
Comparing retail to the automobile industry. Well, I can choose to own or not own a car. But food I think is essential and needs to be had daily (3 times a day) along with clothing and stuff.
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Nastika:
Excellent points!!
The problem is, commies will not hear. They will plug their ears and dance, “nanananananaa”, sticking their tongue out.
At the end of the day, the anti-FDI brigade has only FUD to offer. These are their points:
Oooh, they will kill all the bania shops. Reliance and Big bazaar won’t, but these people will.
Oooh, they will repatriate profits back to their country. Accenture and IBM also do it, but we are commies, and we would kick them out too, given half a chance.
Oooh, they will source from China and kill Indian industry. Oh yes, even Banias stock only made-in-China stuff, simply because everything is made-in-China these days, but we are commies, we need to oppose FDI anyway!
Ooooh, these evil foreign people will change Indian eating habits and condemn us to obesity and flatulence! Yes, I know your farming ancestors used to eat fundamentally different food in their time, and food habits do change anyway. I also know that McDonald’s and KFC have not made any difference to Indians’ staple diet yet, they are just ‘hangout places’. But can you give guarantee of the next generation? The one after that? What about the one after that? Don’t you see how bad this might be???
Oh, these commies! :(
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ಕಿರಾಣಿ ಅಂಗಡಿs might close down – not because of FDI in retail but because sons & daughters of ಕಿರಾಣಿ ಅಂಗಡಿ owners might not want to sit-stand in the shop from 7AM to 10PM on all 7 days a week and screw their personal lives.
ಕಿರಾಣಿ ಅಂಗಡಿs have survived by saving on labour by employing unskilled family members. With growing literacy & opportunities in organized sector, its matter of time before ಕಿರಾಣಿ ಅಂಗಡಿs are hit with labour problem.
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Was the FDI in multi-brand retail purely for the Indian farmers and consumers? Read on:
India to take up visa rejections issue with US:
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