Archive for July, 2012


FDI’s Waltz

Target in Bangalore, Spars in Mangalore, Wal-Mart in Bhopal and there is still more to come. It’s hard now at this stage to get rid of any news regarding the foreign direct investment (FDI) in retail as every news paper ,be it ,economical or commercial, is bombarded with these pieces for a year now. But how does one make sense of the situation and is it really inevitable?   Its hard to pick a side especially if you come from the creamier side of the social strata and now that India has turned into materialistic heaven, Indians want even more. Purchasing power is no longer an obstacle.

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After observing how crowded Spars Hypermarket is on a regular basis , is this really healthy for all of our society? No longer will one need to have a Sabzi wala to sell you vegetables at your doorstep. So how is he to procure his daily wages?

Reports have said that several tones of food grain have been rotting in sheds or have not been reported for rodent infestation. People are now hoping that FDI in retail will prevent such situations and make better use of our food resources. But again it won’t be any different from privatization. Where a foreign company ties up with an India  businessman or company to supposedly ‘help’ boost the Indian market. The rich become richer and the poor become poorer. Not all growth equals development and with such a huge population it is hard to make sure that development actually trickles to the nooks and crannies of the society.

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The most important advantage of having Wal-Mart and other stores coming to India is that inflation will be under control. There won’t be an undue fluctuation in cost of crops or food grains.  However this also can be a negative aspect of the FDI in retails. Already after living on and below the poverty line, families with minimal wages have to spend on food grains and with the on going privatization of water all most all their income with be gone  towards availing just food leaving no window for other necessities.

The government of India has not yet defined ‘multi-branding’ but in simple terms it means selling several brand under one roof. The government has limited to a maximum of 49 percent foreign equity participation. Furthermore, it nullifies any middleman dealing that may pocket these families innocence.

FDI in retail is perceived to create more jobs and employment opportunities to people without any threats to kirana shop and small entrepreneurships. However this entirely may not false. Ration shops are the main source of survival for the BPL (Below poverty Line) families and simple labour jobs may create job opportunities for the large chunk of unemployed force in India.

Farmers and small producers will benefit in the long run from better prices for their products and produce, while consumers receive higher quality products at lower prices, along with better service. It will be mandatory for retailers to source at least 30 percent of the value of manufactured goods, barring food products, from small and medium-sized, local enterprises.

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It is not that FDI in retail is going to displace all of our society and it definitely won’t cause damage beyond repair. But since India is the most sought after market , it will be good to have some international diversity in the market just to see what everyone else around the globe consume. Food franchises are welcomed with whole heartedly, why not in retail? Whether one is for or against FDI in retails, to me it seems inevitable.

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“It was as if when I lo…

“It was as if when I looked into his eyes I was standing alone on the edge of the world…on a windswept ocean beach. There was nothing but the soft roar of the waves.”
― Anne Rice, Interview With the Vampire

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