FDI in retail in India- The Arguments

Just compiling the arguments in favor of FDI in retail that I gathered on my Twitter timeline. The most common arguments seem to be grouped as this:
FDI in retail will be good for farmers and for supply-chain maintenance in India.
sardesairajdeep
India is a nation of farmers, not middlemen. If the farmers benefit, we should celebrate opening up of retail. gnight.
1/12/11 4:27 AM
sardesairajdeep
Every reform in this country has bypassed agriculture. And we are supposed to be a country with 600 million farmers.
2/12/11 4:24 AM
MeShamimKhan
@bhavinjadav other way farmers will get direct market and competitive bargaining, your opinion?
27/11/11 8:53 PM
srivatsayb
@bhavinjadav farm to fork…do you understand the concept? there will be no middle men!! @Sshankara
27/11/11 8:08 PM
So why is this not good enough to prompt us to roll out red carpet for the Walmart?  Because the reality of the actual way these large chain multinational retailers function is different. I’d not expect commoners to understand this in India as they’ve not seen their business strategy as of yet-thankfully; but I’m amazed at how someone like Rajdeep Sardesai who is supposed to be well informed before making such statements be such opinionated. 
As I said in the previous post, the MNC retailers’ strategy in initial years is to wipe out competition by offering low prices across the board- even if that means the company takes some losses, but eventually their model of business is that all costs and liabilities are ‘externalized’. This means that these cheap prices and discounts are at a cost of farmers- not of them. 
A few examples:

And these are the relatively very wealthy Australian farmers that are suffering this way. God only know what will happen to the Indian farmers if they are crunched in the same manner. 
Also, the sourcing for these companies will become multinational and this can fall through the cracks in laws for export import in India easily. When minced tomatoes from Maxico can be packed in tin-cans and brought in at cheaper rates, who will eat fresh Indian grown Tomatoes? What will the Indian tomato growing farmers do then? They will be forced to either drop their prices at the level of Farmer or grow the crop the MNCs tell them to grow. 
Regrettably though- not everyone in India thinks of the farmers as a part of the whole economy, and there is this narrow mindset of the middle-class, credit card wielding consumer in India that think only getting something slightly cheaper is all that matters. Some believe that Farmers of India are always going to miss out and nothing can be done about them.
RisingIndiawins
@bhavinjadav @indiantweeter @sshankara and people got cheaper milk. Thats what matters. Get more efficient.
27/11/11 8:42 PM
raggedtag
@bhavinjadav remember? India? the farmer and producer is ANYWAYS screwed. Middle man eats the prime chunk.
28/11/11 5:00 PM
So far, the only benefit the large chain retails will bring are a competition in the market and a better supply-chain management. Why can’t the Indian owned and run retail chains do the same? Tata, Ambanis, Adanis etc have been in the retail business for a while now, and if there are adequate reforms placed in the market by the Government, they can be made to develop the supply-chain logistics in India and have a healthy home-grown economical buzz.
We have suffered a lot from the cheating, food adultering Kiranawallas of the cornershops.
RisingIndiawins
@bhavinjadav @sshankara you want to eat fake sweets , chemical created milk and get cheated by your local baniya – good luck to you. i wont.
27/11/11 8:17 PM
Don’t go thinking the big-chain retailers from countries of paler skinned people are much different- they’re just more sophisticated and politically correct in doing their own type of adulteries.
Check these:
Some argue why we shouldn’t have FDI in retail while most other segments like manufacturing, telecommunication, motor-vehicles industries etc in India have welcomed FDI in India and actually hugely benefited from it. Also that while we do export stuff and have huge international business relations and even irregularities in them, why can’t we have one more?
anandmahindra
Ok,then expel automotive MNC’s!“@SourRicha:@amitkasatEasy to say efficient will survive;first strengthen the locals,then remove protection.”
28/11/11 5:59 PM
srivatsayb
@bhavinjadav then why are we exporting Iron Ore or any other raw material? ..this is a different world, u cant expect other countries contd
28/11/11 1:50 AM
srivatsayb
@bhavinjadav to open markets for you and also let in workers(like you in auss) while closing your markets for them!!
28/11/11 1:51 AM
There’s a basic difference between allowing FDI in the sectors where having that investment will actually mean opening up of a whole new avenue and generation of a significant amount of operations and jobs. 
Motor-vehicle industry is a good example. The home grown motor industry wouldn’t have met the demands of the huge population of India in terms of either quantity or quality. Bringing in more in the market is a necessity to meet the domestic requirements, and at the same time it creates new industry, operations and employment. Also, the cheap labor and more flexible local governments like in Gujarat are attractive for these multinational Auto-giants.
FDI in telecommunication business brings the international connectivity which is clearly very important for a growing economy. Also, the technological upgrades are required to be quicker in this industry- waiting to develop similar technology over again may mean missing out on important business, and hence accepting them directly is pragmatic and allows India to be at a competitive level at every other business front.
Its not the same with food and farming related retail business. These retailers are not coming in India to make more land suitable for agricultures or to help the farmers improve their productivity by providing them with the necessary irrigation/ fertilizer etc. They are not going to turn more of population to farming and give them employment. The supply-chain logistics when operational will create a few new jobs for sure, but the price that you pay to the ‘Outsider’ for buying home-grown food-grain is not a sustainable one for this reason only. 
Yes, bring the large-chain retail business with it’s advantages of new jobs, new supply-chain logistics and it’s competitive edge in the field- but keep it home grown and then the economy will truly be prosperous.
If you don’t believe me, hear it from a guy who knows little better:
BarackObama
Today, support small businesses in your community by shopping at your favorite local stores. #SmallBusinessSaturday
27/11/11 6:40 AM
But alas, for whatever reasons, we Indians still haven’t come out of the mentality of  “Nothing can be done”, “Foreigners do it better”, “Foreigners can be trusted blindly while our own Indians can’t” etc etc and the feeling goes right down to a complete feeling of worthlessness for India and all India has achieved in these years since independence.
appu_sivamani
@bhavinjadav @Sshankara very well said very well said. But they should avoid Indian big thief ambani into it. He will be much worse
27/11/11 9:01 PM
RisingIndiawins
@bhavinjadav @sshankara homegrown chains are not good enough – just the same dudes in suits. MNCs are professionals.
27/11/11 8:37 PM
RisingIndiawins
@bhavinjadav you cant – western companies have mastered these areas. We are bloody amateurs.
28/11/11 6:53 PM
namasteDetroit
@Sshankara @bhavinjadav then lets just shut down. no foreign money in any sector. be like we were before MMS opened up markets.
27/11/11 9:44 PM
The worst hits were when I was told this:
RisingIndiawins
@bhavinjadav @sshankara dude – you use nothing which is made or invented in India- so SPARE ME this patriotic bullshit
27/11/11 8:42 PM
srivatsayb
@bhavinjadav haha…great that you are in Australia and opposing Indian retail FDI..all the best…
27/11/11 8:27 PM
Well, all I’d say is that this firstly means that I atleast don’t have vested interests in either supporting or opposing FDI in retail in India and am just writing objective analysis of what I make of this issue; 
and finally- “Phir bhi dil hai Hindustani”
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s