Sunday, November 27, 2011

FDI in retail.


Now that the Congress administration has opened FDI in retail without any due diligence some columnists in the media have taken strong ideological positions regarding FDI in retail without actually giving any reasons as to why.  Walmart has been criticized roundly in US for its business practices. Walmart customers like Walmarts rock bottom prices not bothering to think what that does to the local small business and Walmart suppliers.

Chief ministers and former chief ministers like Jayalalitha, Mayavati, N.Modi, Mamta B, BJP and AP former CM CB Naidu are opposing FDI in retail. There is good reason as to why several popular, local and state level leaders in India are opposing FDI in retail, they have pulse of the of the people and they are elected unlike the appointed honchos at the top of UPA.

Big box retailers  especially Walmart squeeze suppliers bone dry. In US the suppliers could not meet Walmarts procurement prices without shipping their manufacturing to countries like China. Doing so enabled China to master manufacturing know how and expertise. This massive transfer of technology helped China become the manufacturing powerhouse and also a net exporter. US has become a debtor nation from a creditor nation.  Having the worlds reserve currency Dollar, helps US at least in short run. Can India afford to import manufactured goods at the expense of local manufacturing? India with its weak laws and without anti dumping or anti trust laws is going to be a free for all. As it is India's oil import bill in 2010 was nearly 76 billion dollars, can we afford to import more stuff that can be made here?

Congress govt is bombarding the news papers with advts about how FDI will help farmers. This is a cruel joke, the producers, farmers/manufacturers do not benefit from big box retailers. The end retailer gets higher percentage of the proceeds than the producer. The producers(farmers) benefit it they have direct access to the retail market and multiple retailers rather than three or four big suppliers.

Several nations like Germany, France, Japan, S.Korea  restrict big box retailers. There is no reason for India not to do the same, since it is in the interests of its people.











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1 Comments:

At 2:05 PM , Blogger cricfan said...

useful and sensible post.

 

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