just4kix
Well-Known Member
Currently this is a hot topic in the news today. The government has taken a very bold step and allowed foreign direct investment up to 51% in Indian retail sector. Predictably the government side benches are applauding the move stating "next gen reforms". Equally predictable has been the opinion from the opposition benches. The leftists/socialists were always opposed to such a move but BJP's opposition is surprising as it was promoting this move in 2003-4. But let us leave the politics aside and not comment on why which party is behaving as it is. What do you think of the move? Most forum members are from middle class and I think would be in support but let us give weightage to each section of the society.
There is already a slew of Indian retail chains such as Reliance Fresh, More, Spencers, Big Bazaar, Pantaloon, etc. These have not caused any significant dent on the local corner stores. So why should forign brands affect the market? In fact, some of the big brand retail stores are loosing out due to high running costs. Besides, logic tells me that the large stores will have to establish their shops mainly in the outskirts as there is hardly any space in the cities (where these shops are being allowed). The cost of driving to the shops and return may outweigh the savings achieved.
I think that all sections of the society will benefit as well as loose. My views are as under:
To summarize, I would say that on the whole I would welcome the foreign brands. Those who say that farmers will be further impoverished, local traders driven out of business, etc., I will reply,
"Are the things hunky-dory today? When the auto, telecom, electronics and other such sectors were opened, the inefficient were wiped out, there were more choices available to the consumer, waiting lists were eliminated, and so many other benefits were realized. So why not reforms here?"
There is already a slew of Indian retail chains such as Reliance Fresh, More, Spencers, Big Bazaar, Pantaloon, etc. These have not caused any significant dent on the local corner stores. So why should forign brands affect the market? In fact, some of the big brand retail stores are loosing out due to high running costs. Besides, logic tells me that the large stores will have to establish their shops mainly in the outskirts as there is hardly any space in the cities (where these shops are being allowed). The cost of driving to the shops and return may outweigh the savings achieved.
I think that all sections of the society will benefit as well as loose. My views are as under:
- The middlemen will be reduced if not totally eliminated.
- Farmers will be assured of a market.
- With logistics facilities such as cold storage, food waste can be reduced and even eliminated.
- Hoarding can be brough down. There will be better price control because there is potential of this.
- Isn't competition good? Does the swadesi adjective still cut the corners? Haven't we tried to be swadesi and failed. Here I would like you to read India Unbound by Gurucharan Das.
- Buyers will benefit from competition, reduced prices, availability and standardization. We may have a lot of consistency. For example, it may not be the case where we get real good quality onions todays and rotten/fungus ridden tomorrow.
- Giants such as Wal-Mart, Tesco, CarreFour, etc., are known to cut intake prices. So farmers may get less per produce.
- Giant retailers demand certain quality/standard of goods. For instance, KFC wants the chicken to weigh a minimum 1.25 kg. The small farmer may not reap any benefit unless he can meet the standard. So he will not get the market access and still sell goods at low prices because overall purchase prices have fallen.
- There has been opposition to giant retailers in the west of late.
- Large scale operations come with a lot of automation to cut down costs. So there may not be any significant employment generation. Are we repeating mistakes of the western nations?
- Where is the basic infrastructure (roads, electricity, land) to create the new infrastructure?
- 51% FDI allowed in retail sector does not mean that everyone will establish offices here tomorrow.
To summarize, I would say that on the whole I would welcome the foreign brands. Those who say that farmers will be further impoverished, local traders driven out of business, etc., I will reply,
"Are the things hunky-dory today? When the auto, telecom, electronics and other such sectors were opened, the inefficient were wiped out, there were more choices available to the consumer, waiting lists were eliminated, and so many other benefits were realized. So why not reforms here?"