Why FDI in Retail is a good idea…

Highly exaggerated presentation and quite misleading. This presentation saying that a Rs.40 goods would be available for Rs.20 is baseless. We need to understand the difference between Modern Retailing and FDI in modern retail. Modern Retailing is not new in India, even tier two and three cities have Reliances, Mores and EasyDays. They have displaced many local retailers in the neighbourhood, not because of price, but because of brand and fashion. My rice costs Rs.40/kg at the local shop at the end of the street and it varies between rs.38-42 on a daily basis at the modern retailer few streets away. My family wants to go to Easyday thinking they will get rice for Rs.38, but the occational Rs.2 or 3 savings is not sufficient to justify cost savings for an ordinary man like me who can only eat few kgs of rice per month. Talk about vegetables, 1 kg potato costs same Rs.23 in Reliance or Easyday as outside, may be a Re less. Same for fruits. Please don’t try to mislead people by showing attractive 50% discounts.
You talk about rotting vegetables, what percentage of retailer revenue you think is from vegetables you think? Do people go to Easy Day to buy vegetables? no, they go to by groceries and provisions. These products have longer shelf time and don’t rot like you are informed. Ofcourse there are some cases of rotting pulses, but thats too miniscule to take as justification. When you buy monthly groceries for Rs.2000 from easyday, you don’t have even Rs.100s worth vegetables, what about remaining 1900.
Coming to FDI in retail, this is a different topic, please do not deviate from this by trying to justify modern retail. FDI in retail means, huge profits are eaten up by foreigners at the expense of our local retailers. I am not being a hypocrite when I say this, I know that our companies make profit from foreign operations. but the difference is, we have an opportunity here to improve our processes, change the way we do retail, implement regulations to control the middle men, learn the best practices from foreign companies etc. This is what our retailers and govt should try to do, than asking US and Europe to take over our retail market. Ofcourse this is an attractive topic for educated and foreign grown people, but this is a technique of current govt to camouflage their incompetencies in resource management. If you can’t handle it then let others handle it, don’t give it away to foreigners. UK has learnt a hard lesson by letting Tesco take over their retail market, but they are at a point of no return. We still have a choice, lets make it wise.

Opening up of the retail sector to multi-nationals is not the nirvana it is claimed to be. All of India’s incompetence and failures will be fully exposed to the ruthless pursuit of profit by them. Domestic producers receive prices for their produce that have bankrupted them in the UK as they cannot compete with the likes of China on price. The British worker a consequence has been forced to accept a reduced standard of living. The tale is the same for America and other advanced Western countries where national champions have not protected them. India should first improve its capacity to take on the competition before opening the doors. There is no case for opening the floodgates for cheap imports from China: they have flouted everything in the WTO rule book. They are only cheap because they have manipulated the markets to everyone else’s detriment. I am sorry to disappint the free trade purists, things are bad enough for Indian industry without a wholesale opening of the floodgates to China and Chinese capital. The West is relying on China for their capital needs, and Chinese influence over their policy and management is already evident.

Shantanuji,

The presentation is certainly misleading.
1st: Prices aren’t decided the way shown.

2nd: What about the small enterprises which will be hit badly?

3rd: Kautilya says “All are your citizens and their well-being is your responsibility”. Aren’t the retailers and traders too Bharatiy? Isn’t their pain and grief is answerable too?

4th: have they thought of probable ecological and bio-diversity problems in rural area considered? Change in the eating habits? Cultural impact? Or mindless profit seeking attitude only way?

5th: Big Retailers have the tendency to get into contract farming for their needs. This will push farmers to produce what they demand. Certainly if they will ask for particular sort of produce in large number to make more profits, that means the more area will be cultivated for that particular crop. Now considering this scenario if food grain production goes down then wouldn’t there be a threat our food security? And then the same farmer will be buying the grains from the market, which he may be able to afford. But all are not farmers, many of them are labors too. Would they be able to procure the grains from open market with soaring prices. E.g. this year Jawar prices were Rs.35/Kg, which last year was Rs.18/Kg. Jawar is main food in Maharashtra rural area. PDS does not give Jawar on ration card. Jawar is highly nutritious and healthy food with digestion friendly qualities.

We have to remember that more than 30million got hungry today even after huge grains production. We have to remember that PDS system is in shambles. Finally foreigner will be investing here only for money and not to solve our problems.

I think at least food is not a commodity which we can leave upto the market to decide prices. If grain production is high prices are bellow production cost and if production is high, prices are out of reach.

I would say if commodity pricing and agricultural procurement are main issues then why do we need an external trigger to resolve these issues?

FDI in automobile, telecom, banking, services is good since these sectors are liberalized long back. But agriculture is still in the clutches of govt. They have very strong grip around it through subsidies, freebies, tight pricing policies etc.

For IT, real estate, telecom, automobile government provided infrastructure, finance (FDI, FII, cheap loans). Various insurances too are available. But take example of agriculture; lack of good connectivity, store houses, processing units, worst condition market yards, lack electricity, no irrigation facilities.

Its all about asking people what they want and imposing what you have. FDI in retail is certainly not a solution to the problems of farmers. If it is please give data about what percent of farmers will be benefited in long term, considering food security issue, ecological/bi-diversity issue.

Jai Bharat!

Putting this here for the record…
Excerpts from FDI in Retail: Examining Some Issues in Agricultural Products by Girish LN:
…
Actually such arguments on both sides are generic in nature. By themselves they are not wrong and things could very well pan out that way (i.e. both ways). However for this to happen there are many prerequisites. Let us briefly examine some parts of this reality.

1. Policy Environment: Any business in the country – local or MNC will need to follow local law, rules and regulations. Thus permission for FDI cannot supersede other provisions in the country. The MNC will need to follow import regulations, pay import duty, and fulfil all statutory requirements. To list just a few:
a. Import duties – for food items are quite high. For instance for cheese, butter and ghee it is 40% Honey attracts 60% duty.
b. APMC rules – restrict the ability of any player to deal directly with a farmer.
c. Storage may be subject to Essential Commodities Act.
d. Government control on sales (releases into market) as in Sugar
..
2. Shopper Habits: The mass retail format requires purchasing behaviour which may not fit with existing Shopper Habit. For instance in (most of?) Urban India, milk is delivered at the doorstep early in the morning. How many of us will be willing to break this habit and a) go to a supermarket after 9 in the morning, or b) stock up for the following day(s)?
…
3. Uniqueness of Food Basket: To use an example, India is the world’s largest producer of pulses accounting for 27-28 % of world production. But it is also the world’s largest Consumer, and the largest importer! Indeed Shortfalls are imported, but the uniqueness and variety consumed by Indians means there are simply not that many sources. For example Canada produces chana but not tur. Burma is a major supplier. An international retailer seeking to dominate pulses economy cannot simply plug in to their sourcing system and undercut Indian farmers. It will need to develop new sourcing infrastructure and may end up doing most of it from within India.
4. Competitiveness of local production: In many agricultural products India is a significant as well as competitive producer. India is the no 1 producer of Pulses and Milk, no 2 in Wheat, Rice, Groundnuts, Potatoes, Onion and Sugarcane. It is also the third largest producer of Eggs (Source: Ministry of Agriculture). In many of these it is also competitive. Other than edible oils where India is quite dependent on imported palm oil, in no major item of daily consumption India can be easily undercut with imports. A retailer seeking to bypass the Indian farmer will need to develop and use sources that can ‘beat’ him in price!

5. Cost of current supply chain: Many commentators have used the argument of multiple layers in the current system increasing total cost of the channel. This is certainly true for some product categories but is not universal. Using two of the examples covered earlier – 1) Processed milk is delivered by the manufacturer to kiosks and street-corner redistribution centres in a single operation. From there it is delivered to homes. Currently we in Chennai pay Re. 1.00 per litre for this last mile service or a mark-up of 4.3%! In the case of unprocessed milk, there is often no middleman! 2) Margin between the farm gate price for broilers and the price paid by the consumer is estimated at about 20 to 25 percent. To reach the position of controlling the supply chain, a retailer needs to achieve lower cost or add value through other means – commodity-wise, as we saw that the dynamics in each commodity can be different

As long as the buying organisation is unable to cross these hurdles, it will be difficult for it to make a monopolistic impact on the supplying system. Just as it may be difficult for them to replace current systems easily, they may well end up playing too marginal a role to have an impact on the wellbeing of the farmer! Unless of course there are significant, lasting systemic changes!

Thanks for continuing the discussion…More soon

Shantanu

I’d like to address the concerns raised when I find some time. In the meanwhile I’d like people to go through the slides here:
http://sabhlokcity.com/2011/11/can-india-catch-up-can-australia-or-the-west-more-broadly-do-better-2/

The key point to note is that growth is a function of productivity, which is a function of innovation, which is a function of the level of freedom (and competition). (see the slide on the growth model)

Wealth of Nations (Adam Smith) is not created through mercantalism (sheltering the economy) but through competition.

There is no doubt that many people will lose jobs in retail as the sector becomes more productive. However, as prices fall, consumers will become wealthier and buy OTHER things.

These other areas will create MORE jobs.

You never look at an economy in isolation, but as a well-integrated, well-oiled system.

And as far as poverty is concerned, India DEFINITELY needs a negative income tax to eliminate poverty (e.g. see http://sabhlokcity.com/2011/12/indias-increasing-poverty-even-as-growth-takes-off/).

The problem is that virtually no one in Indian policy circles understands BASIC economics.

That defect needs rectification through MASSIVE increase in economics education across India.

All very interesting and robust comments, Shantanu, and all against FDI in retail.

Not surprising, because the issue can be made very emotive by saying thousands of retailers will lose their livelihoods as GREEDY MNCs take away all our hard earned wealth, the return of the East India company, the Chinese will dominate our govt through our markets, etc.

However, who has brought any data or real analysis to this debate? Only the original presenter, Vijay, and you, Shantanu, and Nanda with his rebuttal, and to a lesser extent, Ganesh. Everyone else is just either regurgitating what some politicos or media chaps have been saying or just lashing out based on raw emotions.

Let me try to answer Nanda’s points first in this post, as logically as I can:

First, I would like to know which industry in India has been dominated by foreign companies, after that industry has been opened up post 1992 or even earlier? Anybody? I know a couple of industries, but I would like to hear from the critics.

Let me take a couple of examples, where the reverse is entirely true:

Milk and milk products – Amul kicks the collective butts of Nestle, Kraft and Danone.

Motorcycles – Bajaj and Hero are global scale manufacturers, even the Chinese could not compete in India.

Trucks – Tata Motors dominates the markets not just in India, but parts of Africa and Asia, now expanding its LCV range into Europe

Jeeps and Tractors – Mahindra dominates India, while expanding into the US and Europe. Where is John Deere in tractors? Ah a oh so distant third in India. How about the Pajeros and Land Rovers of the world?

Restaurants – Have all the Udipi joints and other small restaurants closed down because of McDonald’s, KFC and Pizza Hut? Have any of them changed over? In fact, McDonalds had to introduce the first home delivery service in its history in India – we are like that only!

The point I am trying to make is that competing in India is not easy, in fact, it is the reverse – it is very complex and very demanding – and, this is because we are a value-for-money society that will not easily pay for a brand or luxury.

If you travel to the US or UK, companies out there are scared of our companies. Indian companies that go global are well respected as worthy and fierce adversaries. Let us not underestimate our strengths and be mindlessly afraid of the foreigners – we can show them a thing or two, if not more.

Finally, the whole cost and systems structure of a new MNC firm and an Indian firm is so different that it typically takes a new MNC at least 3-4 years to “Indianise” their cost structure, and even then, many of them fail. Some succeed so well that we consider them Indian companies! (Hindustan Unilever comes to mind, but, of course, that is not a very good example – although, HUL is now exporting its best practices to other countries in Europe, as well as managerial talent)

Then, Nanda takes us through the whole big box vs unorganised or small retail shops very well – it seems to me that people, in general, do not necessarily oppose big box retail, as that is a completely separate argument. The other thing that people may not realise is that big box retail has existed in India for many years, even before the advent of Big Bazaar or Spencers or Reliance – they were Bata, Akbarallys (in Mumbai), Apna Bazaar and Sahakari Bhandars. I have been shopping for groceries in Apna Bazaar since the early nineties.

Nanda then chooses to pay extra to his local retailer than the big box owner – while that may be an admirable choice for him, why is that a choice that has to be forced on others? For others, the daily saving of Rs10 (Rs300 per month) may be a significant part of their monthly expense – should we also force them to suffer so as to protect the local grocer?

And, what about the flip side of the story – without adequate competition (and local grocers were very good at driving out any new kirana or “moodikhana” shops from their catchment areas), the local grocer was free to sell foodgrains and pulses “loose” by weight (which he invariably cheated on, mixed chalkpowder in flour, grit in rice and wheat, other impurities in turmeric, chilly and jeera. How soon we forget how we used to curse the local “baniya”. Because of Big Bazaar, the local groceries were forced to switch to standard packs, instead of loose, adulteration has come down significantly and in general, retail foodgrain and pulses prices have tracked below inflation over the past 20 years (this is hard data). So, take off those rose tinted glasses please.

And, some local grocers have commented at how big box retailers actually increase their profits – they buy the 2 for 1 or 3 for 2 offers on white labels from the big box retailers, and then sell them singly in their local areas, adding to their margins. Those who prefer the convenience of the local grocer and those who like Nanda who does not want to deal with faceless, big corporations are also happy – they are still getting the white labels at a price cheaper than other brands. So, a win-win here?

And, then white labels that the big box retailers can stock helps the small and medium sized manufacturers – who other wise could not compete with the HULs, Britannia, P&G or Marico’s of this world. And, the consumer benefits from lower prices, but same or similar quality, as the Big Box puts its own credibility behind the white labels.

And, finally, has anyone looked at the employment numbers of organised retail – it is now the second largest source of new NET employment in the country. Would you deny all these people their jobs, because your local grocer can not compete effectively?

I have not touched FDI in retail in this post – because I wanted to clear the whole Big Box vs unorganised retail first. I have also not touched upon vegetables or fruits in this comment, as that is, as of now, a tiny portion of Big Retail for various reasons. (I will explain this in another post).

I invite comments on this aspect of retail, before we move to FDI.

Cheers

Supratim

Shantanu,

Good to see that the policy wonks of EPW, who are still stuck in Marxist Leninist USSR (glorious may be his reign!), are being called to task by commentators on EPW itself.

That is really, really good to see. I was going to start shouting, selecting data, data massaging, unwarranted and unsupported conclusions before I read the comments!

Cheers

@ Malavika:

See my post above re: competing with China – we compete very well with them on certain products, not so well with them on others, and absolutely fail on still others.

I have a question for you – Power is a hugely scarce resource in India, and the gap in availability can reach 8 hours sometimes even in the suburbs of Mumbai. Typically, a power plant costs Rs4.5-5.0cr per MW to build (@ Re/$ = 45). Chinese companies have started competing against BHEL, etc by offering the same quality or better quality plants at Rs1.5-2.0 cr per MW.

Are you going to say NO to them?

Cheers

Some excerpts from
FDI in retail: Whom are you kidding, Mr PM?
http://www.rediff.com/business/slide-show/slide-show-1-column-fdi-in-retail-whom-are-you-kidding-mr-pm/20111130.htm

Big Box retailers do not help farmers, in fact they squeeze them more.

“Regarding farm incomes, let me illustrate. Till 1950, a farmer in America used to receive about 70 per cent of every dollar spent on food.

In 2005, it had come down to not more than 3 to 4 per cent. If the middlemen have been squeezed out, as is being made out, farmer’s income should be increased.”

Walmart increases poverty. In fact several Walmart employees made use of Medicare in California. I,e Tax payers subsidize Walmart.

In this eye-opening study, entitled “Wal-Mart and Poverty”, the comprehensive study clearly brings out that those American states that had more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up.

“Equally important, the counties (districts) which built new Wal-Mart stores during the period 1987 to 1998 also had high poverty rates,” the report concludes.

Interestingly, increased poverty growth from Wal-Mart operations comes at a time when poverty rates nationally in America were otherwise going down.”

@Patriot
“another query about trade deficit – which is what you are really talking about when you say can India afford more imports.”

Yes, India cannot afford to let its manufacturing get hollowed out like US and UK. US has printing press, how do you expect India to pay?

“As an individual, you have run a serial and increasing trade deficit with your local grocer – what are you going to do about it? What are you going to sell to him/her to compensate for all these imports to your sovereign household?”

Dude, my household is not a sovereign, and my local grocer or carpenter is not my competitor. Read up on ECON 101.

@ malavika:

You say:
“Yes, India cannot afford to let its manufacturing get hollowed out like US and UK. US has printing press, how do you expect India to pay?

“As an individual, you have run a serial and increasing trade deficit with your local grocer – what are you going to do about it? What are you going to sell to him/her to compensate for all these imports to your sovereign household?”

Dude, my household is not a sovereign, and my local grocer or carpenter is not my competitor. Read up on ECON 101.”

This is an invalid demarcation, if you are an economist or have studied economics. Nations, like individuals, should concentrate on producing what they can do best – whether that be potatoes (Ireland) or cars (india, china, us, japan, germany) or IT engineers (US, India). There is no difference, as such, except if you seek to make sacred cows out of a certain human activity and not another.

You did not get my second point at all about your trade deficit with your grocer – you are raising an important point about trade deficits – and how you pay for them (competition is not the issue here, you talked about balance of payments). The economics is the same if you are an individual or a nation – especially, as you so kindly point out, if you can not print your own currency. This is not a trivial point.

Please read Adam Smith and Von Mises more carefully. Also, Ricardo on trade theory, and even Krugman’s work on international trade that won him the Nobel prize (as an aside, Krugman was such a good economist, before he became a Democrat mouth piece).

Cheers

@ Patriot,

You are mouthing platitudes rather than answering concrete questions.

You just don’t get it, Household is not a sovereign. Which economic theory says that? You are indulging in false analogies.

Yes, read Krugman now. He is all for ‘controls’ now. Read up on Warren Buffet and export controls and this
http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html.

Also read up on Bill Gross, Jeremy Grantham etc, they actually walk the walk by investing money. They don’t indulge some theory, like Nobel Laureates of Long-Term Capital Management L.P. (LTCM).

You still did not answer how will India pay for cheap trinkets from Walmart and IKEA.

How will majority of Indians benefit? Not just an extremely selfish and self centered consumers like you.

How will farmers/manufacturers benefit?

US now has current account defect of nearly 2 billion dollars and the stimulus provided to US citizens flows to China. US covers this by printing, what should India do?

@ Shantanu,

Some where in one of your posts you mentioned that ‘if FDI in retail is good it should be allowed’. You need to define ‘good’ here.

IKEA, Walmart give cheap stuff for consumers in the short term.

However they also cause extreme hardships to the society as a whole, impoverishing artisans(Carpenters), farmers, traders and manufactures.

I am still waiting to see some evidence of how these big box retailers help artisans(Carpenters), farmers, traders and manufactures as touted by the Congress establishment.

Dear Shantanu,

This is what dr.subramanian swamy has tweeted:

“Foreigners get loans at 4% interest. Indians get at 12%. How can we compete.China had wiped out their traders so they need.”

US has printing press, how do you expect India to pay?

LOL!!! When a clueless person makes statements based on what they have read in news without understanding, hilarity ensues. The poster of the above also had the nerve of asking others to read ECON101.
BTW, even India can devalue its currency ( or run a printing press ), nobody is stopping them. In fact the present socialist government is devaluing its currency by inflation as we speak.

To all those who believe in protecting the small retailers and local kirana shops I ask you this:

Do you support reservations in India?

If not, then why reservations in business?

It’s only competition that brings about innovation and works best for the consumer. Think of the biggest of capitalists in the telecom industry viz. Tata, Birla, Ambani, Mittal, Voadafone etc.; when the capitalists compete with each other the consumer benefits.

Jai Hind.

Sorry, I missed the most important point. I would have liked a vigorous debate and consultation about this issue, and then a decision. It seems to me that the decision has been taken before a public (parliamentary) debate. (Perhaps, everyone was engrossed in the ever so important debate about corruption and Lokpal so forgot to worry about this minor issue).

The only issue is about the Entrepreneurship of the small retailers. If they still want to stay in the small retail industry and do not want to enter into the niche market, which big retailers cannot cater, is to provide best return or exchange policy, quality goods and best customised customer service.

Secondly, they need to get together and establish the technical, testing and research centers where the small entrepreneur can get his products tested and get quality approved at the minimal cost.

Thirdly, consumer protection needs to get tighter. Consumers need to avail their rights and should not allow the crappy goods business and demand quality audits and certification from the retailer.

If the above three steps are taken then soon the big retailers gets wiped out.

Then the vicious cycle begins again. The small retailers will take-over these big retailers and the retail industry is back to square one. OR The market will differentiate as the consumers will be more aware and the industry shifts into new gear.

।। नमो भारतम् , नमो संस्कृतम् ।।

@Selfish Consumerist(Patriot)

“Oh, BTW, my job is investing money,”

That explains it. You belong to the FIRE(Finance, Insurance, Real Estate) group shuffling paper and coming up with CDS etc.

I am an engineer and after 2000 realized the fraud of Wall Street wallas and learned about investing. Now we are fine investing our hard earned money.

If your job is to manage money you should know that Bill Gross suggested bringing back manufacturing to US. It is on Pimco.com.

You did not read the links I provided regarding Buffet’s import certificates. Which you should know already.

http://www.pbs.org/wsw/news/fortunearticle_20031026_03.html

You still did not answer how to pay for Walmart, IKEA imports. And how it helps Indian nation.

@ Malavika:

Ah, indeed, stoop to abuse when logic fails.

You have not explained your allusion to Enron and answered my questions about it.

And, you have not provided an answer to my question about household trade deficits – if you do that, you would be automatically answering your question about how would India pay for IKEA or Walmart imports. BTW, do you know how much India already exports to IKEA and Walmart? In absolute $ terms – pls find out, you may be surprised.

And, ah yes, you are an engineer – that is why you would call me selfish – a lack of understanding of basic economics and human behaviour. Adam Smith wrote about the Invisible Hand about 200 years back – I am sure you have not read it or even heard about it. Self interest drives all of us – some of us are even aware of it!

And, yes, I have read that particular article of Warren Buffet, where he urges the US citizen to save more. How is that applicable to India where our savings rate is already 10x that of the US? Please explain.

Here is what Bill Gross actually wrote:
http://www.pimco.com/EN/Insights/Pages/School-Daze-School-Daze-Good-Old-Golden-Rule-Days.aspx

He is saying that US college education currently does not yield a positive or good RoI – so, why go to college?!!!

And, he is commenting, as a fact, that manufacturing has moved out of the US – no where can I see him advocating bringing the smokestacks back to America – on the other hand, he does wonder about what will create 20 million new jobs in the US.

It is amazing how people/media distort even written essays.

Also, for those who don’t know PIMCO or William (Bill) Gross, PIMCO is the largest bond investor in the US, probably in the world, and Gross is the co-founder and co-CIO of PIMCO, along with Mohamed El-Erian.

In the US, PIMCO is part of the group, derided by the socialists, as bond vigilantes – the socialists/leftists think that the US government is in too much of a thrall of investors in bonds, who can stop financing US trade deficits, if the US does not get its act into shape.

A bit of a diversion this, but I wanted to nail all the so-called reasons put forward by Malavika to oppose FDI in retail.

Cheers

Excellent points, Anubhava and Anil.

Nice analysis, Aaryan.

Cheers

@Patriot
I accept the points about the Bajaj scooters that you make. I would still argue that the GOI needs to support local business to innovate, before activating the FDI. The FDI should be unleashed in a controlled manner,to allow time for the local business to innovate and upgrade their practices. Otherwise the contrasts that exist in India- of the very rich and the poor will become even more stark. FDI has the capacity to abuse the aam admi in a very serious way, through its size, political alliance and its financial capability.
Re: rather too much America than China.One of my worries is that the US has tried its best to use Pakistan strategically in that part of the world, initially against the USSR, and then probably against India.
If the USA and China join together for their mutual interests, that region, mainly India could be in a precarious situation.

->Protestors against FDI in retail broadly say it will kill employment as people will buy cheap products from marts. For saving money people will not go to local retailer. Hence I divide the current battle is between savings and employment.
->Though I do not agree to the debate as the retail industry will surely create employment and Local retailers have there own advantages (previous message )to be in the industry.
->But For those who think differently , I suggest

Stop cooking at home , Go to restaurants or other options
Stop walking and use rickshaw or taxi
Stop shaving at home , Go to Naai ( Barber )
Start breaking windows as much as possible
Stop using emails , write letter on paper and mail it
Stop buying readymade clothes and start getting clothes stitched from local tailor
Stop using any measure of saving money as that kills employment

MR Venkatesh on voodoo economics.

“By setting up a few malls in our cities one is not sure as too how the government can control inflation across the country. Either our government is too naive or simply believes in voodoo economics. Mostly the later, it appears.”

More important is the background to FDI in India policy is made in USA

“In the run up to the visit of American President Barack Obama to India in 2010, Wal-Mart chief executive Mike Duke arrived in India a few days earlier to set the stage with a strong pitch for liberalising this industry.

Duke is reported to have stated that 100 per cent FDI in the Indian retail sector would ‘help contain inflation in India’. He added that FDI in retail would contain inflation by reducing wastage of farm output, as 30 per cent to 40 per cent of the produce does not reach the end-consumer.

Also, “In India, there is an opportunity to work all the way up to farmers in the back-end chain. Part of inflation is due to the fact that produces do not reach the end-consumer,” Duke said.

If controlling inflation was supposed to be an incentive to the consumer, Duke offered palliatives for Indian manufacturers too. According to him, allowing FDI into this sector “will also enable Wal-Mart to increase sourcing of products from India by developing more vendors here.”

Well, if press reports are to be believed, the Kaushik Basu report in 2011 faithfully reproduced these arguments put forth by Mike Duke.

For the uninitiated, fashioning policy formulations by working through the government is part of a larger business strategy adopted by multinational retail giants.

Those who have been following developments in the past few years know that Wal-Mart alone must have spent millions of dollars in India for lobbying with our government to open up retail sector for FDI.

President Obama, no less, too is reported to have lobbied hard with the Indian government during his visit to India last year.

Is the Kaushik Basu report merely a part of this larger design? Or is merely coincidence? Was it a command performance? Well, your guess is as good as mine.

Nevertheless, we seem to ignore that the Doha Round negotiations are underway for over a decade now.

By unilaterally opening retail to foreign trade, we run the risk of getting far less in the multilateral negotiations of the Doha Round. And in such a scenario, we could end as net losers.”

http://mrv.net.in/index.php?option=com_content&view=article&id=243%3Avoodoo-economics-fdi-in-retail-will-curb-inflation&catid=2%3Aindian-economy&Itemid=3

@Shantanu,

“Malvika re. data about WalMart etc’s investments in infrastructure – part of the answer is of course they will have to because there is no option if they wish to operate successfully). Thanks all..”

No. Wishful thinking.

Walmart will not pay a dime. They will make govt build infrastructure for Walmarts benefit and not for India. In US Walmart employees apply for food stamps and medicare(free health care for poor) paid by tax payers. It is just foolish to expect them to behave like angels in third worlds countries.

They are entering Indian market to make money not for charity as others have pointed out.

@Sudhav

“FDI has the capacity to abuse the aam admi in a very serious way, through its size, political alliance and its financial capability.”

Absolutely true. Those arguing for FDI in retail should explain how it benefits Indian farmers, manufacturers and artisans(Carpenters, etc). There is ample evidence of big box retailers pernicious effects on the local community.

Instead all I see is name dropping and fuzzy logic. US is suffering from the effects of huge trade imbalances, its unemployment is huge officially 9% (real 16-17%). In spite of zero interest rates the real economy GDP, unemployment is stubborn. The only result of zero interest seems to be increasing stock asset prices.

At least some US business men and intellectuals like Gross, Buffet, Grantham etc see the writing on the wall. I don’t see why we should adopt a failed Anglo Saxon model. Countries who managed to keep their manufacturing like Germany, France and Japan are doing ok. B.t.w they severely restrict big box retailers.

@ Sudhav – said in #53: “FDI has the capacity to abuse the aam admi in a very serious way, through its size, political alliance and its financial capability.”

Actually, what you said is conflicting with the business model of all the big retailers. Yes, they will be here to make money, but not squeezing “Aam Admi”. If they do then the effect will be on the Govt. and Govt. need to be shrewd too.

@ Malavika requested in #63: Those arguing for FDI in retail should explain how it benefits Indian farmers, manufacturers and artisans(Carpenters, etc). There is ample evidence of big box retailers pernicious effects on the local community.

It will not directly benefit Farmers, manufacturers and artisans, as they are in direct competition for their current products. Thus, they need to innovate and become suppliers to these big retailers. How? There are tons of examples – One: The solar power and bio-energy… in Canada these small suppliers became the suppliers to these big retailers (The project was co-funded by Wal-Mart and Toronto’s TTC). Two: Totes, shelves and Buggies – These small manufactures and artisans became the suppliers to Wal-mart, IKEA, Home-depot etc. for their store fixtures, Cold shelves, warehouse structures etc. Three: Chips: The Potato farmers came out with an innovative idea – their co-operative is producing organic 0% trans-fat chips and Wal-mart and other retailers are supporting their green drive to win the good will of the municipalities and the consumers……Lastly: The consumers in Ontario, Canada are demanding better quality products and they are loosing customers as most of them started shopping online.

http://hk.nielsen.com/documents/Q12010OnlineShoppingTrendsReport.pdf

।। नमो भारतम् , नमो संस्कृतम् ।।
.

For a long time there were efforts for FDI in the retail sector so that the trader can reap the benefit of FDI. Retail trade contributes around 10-11% of India’s GDP and currently employs over 4 crores of people. Recently, a great debate has cropped up against the government plans for FDI in the Indian retail sector. FDI in retail is fundamentally different from that in manufacturing. FDI in manufacturing basically enhances the productive employment in most cases; but FDI in retail trade may create job losses and displacement of traditional supply chain. One of the main features of rural India is disguised unemployment. Farmers, evicted from the agricultural sector, engage in small retail trades for livelihood. The main fear of FDI in retail trade is that it will certainly disrupt the livelihood of the poor people engaged in this trade. The opening of big markets or foreign-sponsored departmental outlets will not necessarily absorb them; rather they may try to establish the monopoly power in the country. However, so many positive factors are also there in favour of FDI in Indian retail service.
So dear try think in every one prospective.

S Gurumurthy on FDI :-
Noted corporate adviser and national co-convener of the Swadeshi Jagran Manch (SJM) S Gurumurthy has said that allowing Foreign Direct Investment (FDI) in the retail sector will be dangerous to the very existence of over 1.2 crore retail traders in the country.

Inaugurating the state convention against FDI in retail sector organised under the aegis of the SJM, he said that India was an entrepreneur-driven country. He said the advocates of FDI do not understand that they were destroying the very existence of the 1.2 crore retailers and thereby pushing around 8 crore people depending on them into peril.

‘’They cannot provide employment to 1/120 of the strength of the self-employed people. Retailing is not just self- employment but self-learning,’’ he said.

He pointed out that 92 percent of the total population are self-employed.

He said that in China, which has a regimented economy, 53 per cent of the total population were engaged in agriculture while in India 65 per cent of people were engaged in agriculture. The majority of them are small farmers and contribute the major chunk of the agricultural production. He said if retailers were pushed to hardship the very development zeal of the country would be affected.

The ordinary ignorant people cannot understand the hidden dangers involved.He criticised the media for not reflecting the sentiments of the people as the media was going after the advertisements from corporates.

It is high time for the nationalists to raise the awareness level of people and agitate against subjugation and enslavement of the country, he said.

Kerala Vyapari Vyavasayi Ekopana Samithi patron Alex M Chacko and state vice-president Peringamala Ramachandran spoke. M Gopal presided. K V Rajendran welcomed the gathering.

Regards

Hitesh Kumar

“We think different and ignore your suggestions.”

Well said, Malavika. When logic does not provide an answer, ignore and keep praying to our (false) socialistic and communist idols.

Very good attempt at selling FDI in retail.

Let’s take Lays potato chips example…. Potato from farmers still bought @ Rs. 2 per KG, Chips sold @ Rs. 20 per 60 Gms which means same potato is being sold at Rs. 333 per KG after changing from potato to chips.
Some Questions here:
Has it helped farmer?
Has it helped consumer?
Is there new technology required in this field?
Who gets the difference between 2 & 333 except some money that is actually spent in changing from potato to chips?
In your example at top Rs. 38 are there in India only but here about 300 are going to foreign company?

The point I’m trying to make is that a foreign players are not keen to enter in India to pass on benefit to India, its consumers or farmers but what they are looking at is high profits they can earn here by manipulating system. They know our saving rates, our growth in spendings and ‘onorganised’ is their biggest competitor.

Media will always support FDI in retail because Kirana store do not give any Ad to them and Walmart etc. will.

One last point ‘benefit to consumer’ could equally be played when Gandhi ji was calling for swadeshi and India was lightinh Holi of Foreign Clothes.

@Patriot

“And, all those who are against FDI in Retail:

I am still waiting for an answer to my question in the first post: Name one industry that foreigners dominate in India, after that industry has been opened up to FDI.”

Carbonated soft drinks market in India is dominated by Pepsi and Coca Cola.(btw, I am not against FDI in retail)

I stay in sharjah, a place full of shops, both big and small and as far as i can see,there seems to be place for everybody.Carrefour is just a 10 min drive from my place,but even closer there are innumerable small stores.As a housewife,both carrefour and the small groceries have their unique advantages.Carrefour has some items which are not available with the local groceries but the local groceries stock all the ordinary items we use on a daily basis.Hence,on a daily basis,I buy the daily essentials from the local grocery as it is within walkable distance, offers prompt home delivery and personalised service and has very long working hours,none of which Carrefour offers.Also,it doesnt make sense to go all the way to Carrefour in the traffic,search for a place to park,walk all the way into the huge store,stand in a queue to pay and sometimes wait for the security to check ur bag,and drive back thru the traffic,all for a bottle of milk or a kg of tomatoes.I could buy stuff in bulk from Carrefour and store but that too doesnt make sense when i can get fresh stuff everyday from my local shop.This logic is going to be all the more sensible in India, considering that powercuts make it difficult to store fresh food and also many people do not have a vehicle or even if they do,the price of petrol,traffic chaos and bad roads might make it unattractive to drive all the way to a supermarket.
I do visit Carrefour once or twice a month to buy things which arent available in the local store.This is how all my neighbours and friends seem to be doing.As a result, you can see that both the big and small stores are co existing.Hence all this hysterical fear about small stores closing down seems unfounded.
The comparisons with UK or US are also not very valid.First of all,everybody there owns one vehicle atleast.Traffic and roads are not big problems so driving up to any place is not an issue.There are no powercuts so storing fresh food is possible.Also,they eat a lot of ready to eat stuff which can be bought in bulk and stored.Most people,both men and women work so buying in bulk during weekends and storing makes more sense.Also,I got the feeling that the locals do not want to put in the same kind of effort which the Indian small grocers put in, e.g working long hours, home delivery etc.Naturally,they can’t compete.In fact in the UK,almost all shops close by around 5 except the Indian or Sri Lankan owned small shops which are open till late at night.
Considering that in India,the entry of foreign supermarkets is only on a limited scale(unlike in many other countries whose examples have been cited),it seems to be a case of gross exaggeration to say that millions of jobs will be lost.( the govt does also say that their model is unique and has checks and balances based on studies from other countries – i dont know how valid they are but given it is being started on a limited scale,it should be given a try)
Also,nobody seemed to be too worried about the pathetic state of our farmers – all the sympathy seems to be with the kirana shops.If at all there is any sympathy for the farmers,it is claims like predatory pricing by the big giants etc -never mind that they are presently,being fleeced to death almost, by (Indian)middlemen.Since anyway there seems to be very little hope for the poor farmers at present,lets give big retailers a chance and see if they can improve the state of the farmers, a little atleast(doubt if things can get worse for them than it is now-it already is at tipping point).Interesting and tragic too,that none of the critics have created the same kind of ruckus or patriotism? in protest against the dismal state of the farmers and poor in general.

The pertinent question that arises is why cannot the Indians in India create and multiply their own local businesses and brand names to do what Walmart et al are doing? There are few ‘chain stores’ in India on a local level, and even fewer on a national or international level. Surely it is within the realms of possibility to create ‘chain stores’ and ‘supermarkets’ within a defined workable time frame. What is the sticking point?
There will always be middlemen, perhaps fewer in the future. What makes people think that large supermarkets will be generous to farmers? The big supermarkets have the capacity to drive prices down when purchasing from the farmer, (and probably, therby to the customer). This FDI threat must become the impetus for local business to diversify, multiply and to supersize.
Finally,I believe to fully deliver the above, there needs to be further rapid and vigorous improvement in the infrastructure, FDI or no FDI.

@ Shantanu: Good summary. I was just talking off line to some on-the-ground small retail entrepreneurs, and the common concern is hope Govt. handles this FDI properly, else it will create more “handicaps”. (small retailers who came into this business by virtue of necessity due to the death of the main bread earner and/or college drop-outs due to financial circumstances).

।। नमो भारतम् , नमो संस्कृतम् ।।

B.t.w Americans are being encouraged to buy in local farmers market. Local schools are taking children to farmers markets. And money spent in Farmers markets by Americans in increasing at a higher rate than the grocery sales at supermarkets/big box retailers.

@ Shantanu,

” It is very likely to greatly benefit the poorest of the farmers who are at the complete mercy of the mandi middlemen (also read Tavleen Singh on “Hysteria over FDI”)”

No, it is very unlikely that big box retailers increase farmers income. Read my previous links which clearly showed that for every dollar spent by consumer a farmer got 70 cents in the 1950’s. Now it is just 4 cents. Another example is the experience of British dairy producers.

Tavleen makes lots of claims without any evidence.

A better option is to have farmers markets in all urban areas on Govt land. CB Naidu of TDP did exactly that and they are a big hit in Hyd. So, these farmers markets are loading their veggies in trucks and sell their produce in front of gated communities!

” It is almost certain that additional employment will be created and there will be significant investments by the large cos. in supply chains, storage etc”

Once Walmart imports apparel, shoes etc from China it is not just traders who will be unemployed. The weavers, carpenters, manufacturers will be deeply in trouble. And I am thinking farmers suicides are terrible enough.

Yes, India badly needs cold storage. Instead of penalizing Indian entrepreneurs with 15%(18% in finance companies) interest rates why not give lower interest rates for Indians to get into the market of cold storage. We have no problem giving free land for real estate companies masquerading as IT companies, but have a problem giving reasonable interest loans for entrepreneurs willing to invest in cold storage.

@All:- We need Swedeshi Model

http://timesofindia.indiatimes.com/city/surat/Gujarats-farmers-have-an-answer-to-Walmart/articleshow/11011011.cms

@ Hitesh –

Thanks for the link – all models are welcome to compete. If the Farmers’ mall of Gujarat is more efficient and more competitive for the Consumer, it will be more successful.

BTW, Gujarat and Punjab were the only major states that replied that they have no objection to FDI in Retail, indeed that they welcome organised retail to their states. This was in response to a survey questionnaire that had been sent to all the states by the centre. AP, Kar, Mah, UP, MP were yet to reply, when Indian Express published the results. Interestingly, Kerala, Bengal and Chattisgarh replied saying that all big Retail should be shut down, including existing ones – at least, they are consistent in their thought process.

Coming back to Farmer’s Mall, Hitesh, why did they suddenly hit on this idea in 2009 and not earlier? Say, in 1999? Did Consumers not appreciate a clean, competitive and efficient shopping environment then? What do you think?

Cheers

@Santanu,
“30% sourcing is mandatory from small enterprises (according to the proposals)”

True, But this 30% can be from Chinese(foreign) small enterprises.Pranab was trying to drum up funds for NREGA and prop up the rupee which has lost nearly 18% this year.

Doing so, implies we punish self employed (traders, weavers, artisans) to help freeloaders.NREGA is another name for leave no Congressi unemployed.

Ah, the Luddites won yesterday – FDI in multi-brand Retail “suspended”. Jai ho, Bharat. May you remain in the eternal darkness of socialism.

While CPM opposes FDI retail in Parliament, here is a ground level functionary talking about the positive impact of Metro for paddy (rice) farmers in Burdhaman, Bengal:

“At a time when farmers are committing suicide in Burdwan over distress sale of paddy, those tied with Metro Cash and Carry have got a good price”

http://epaper.indianexpress.com/c/6451

I broadly agree with Malavika.The arguments for and against are not aligned on the same lines as socialism or communism. All that FDI could offer, can be done inhouse by improving infrastructure and inmproved coldstorage etc. The point is that the large multinationals have the potential to take over the market in a big way, and that is why there is such heated debate and polarisation. The small retailer and the aam admi would be almost powerless to express or act in any meaningful way. Of course the West has gone the way of the MNC and the big banks.. and look where they have ended up..largely as a result of poor regulation. And we all know about the inability of Indians to regulate anything properly.. and I don’t mean to be condescending.
At the moment the low interest rates (and other factors)in the West are stifling the developing economies, and the more stake they have anywhere the more they, rather than the indigenous goverment, will be in control.

@Patriot, @Shantanu,

All is not well with the anti-national GOI. If this report is true, the corrupt GOI might have already taken its share of bribe from Wallmart (http://janamejayan.wordpress.com/2011/12/09/exposing-the-sleaze-lies-and-perfidy-walmart-spent-a-fortune-lobbying-for-india-entry-gopal-agarwal/).

Sudhav’s quote…
“All that FDI could offer, can be done inhouse by improving infrastructure and inmproved coldstorage etc. ”

Yes it it true. You ask of the reason, then it is very evident becoz of corrupt and anti-national GOI.

To add more, if this ANGOI is pushing for such an FDI venture, definitely there is one more scam lurking. My counter question to you, “Do you think, the Indian masses (not the ANGOI) benefit from these international retailers?”

As for China, it knows how and when to control the foreign traders, as it did in the case of google. Also, what is the guarantee that China’s growth was due to FDI? Do you have figures n facts for this?

thankx…

@Patriot.
Don’t be ridiculous.Of course Pepsi and Coke do not control the GOI, but the big MNC would of course have some power? The more MNCs in a country, the more power they would wield.
There are economists, in the West, who are writing precisely that one of the reasons the West is keeping low interest rates is the reason I have stated. If growth is 7-9% in Chin and India, where is inflation heading??
I am not an economist, but the artificially low interest rates in the West would not be serving the developing economies.

@Ravindra,

“As for China, it knows how and when to control the foreign traders, as it did in the case of google. Also, what is the guarantee that China’s growth was due to FDI? Do you have figures n facts for this?

China allowed FDI in retail in 1996/97. By then it has become a manufacturing powerhouse thanks to Walmart and others forcing manufacturers into relocating their factories to China. It is upto uber consumerist here to prove that China grew through FDI in retail in 70’s and 80’s upto 1996. Well.. there was no FDI till 97.

Then, since 97 he/she needs to show rate of growth of manufacturing, retail, services etc. Then we will know FDI’s contribution to China’s growth since 1997. Till then FDI’s contribution to China’s growth was zilch.

@ Ravindra:

“All is not well with the anti-national GOI. If this report is true, the corrupt GOI might have already taken its share of bribe from Wallmart (http://janamejayan.wordpress.com/2011/12/09/exposing-the-sleaze-lies-and-perfidy-walmart-spent-a-fortune-lobbying-for-india-entry-gopal-agarwal/).”

It could be true, it could be false – but, it does not detract from the fundamental question of FDI, as long as the policy is not selective.

“Yes it it true. You ask of the reason, then it is very evident becoz of corrupt and anti-national GOI.

To add more, if this ANGOI is pushing for such an FDI venture, definitely there is one more scam lurking. My counter question to you, “Do you think, the Indian masses (not the ANGOI) benefit from these international retailers?” ”

Please provide evidence of your first statement – have you studied the APMC act and how that works? And, how that is designed to keep out corporations from “mandis” unless specifically exempted by a state government – and, how this policy is anti-farmer and anti-consumer in reality, rather than than pro-small retailer.

All of India’s retailing policies, whether in clothes or food or groceries or even electronics, started off by being ANTI-PRODUCER and ANTI-CONSUMER. The only people these policies benefited in the past and still benefit today are the MIDDLEMEN, the brokers, the dalals. Of course, they are crying like pigs being bled, as they see their businesses being bankrupted – but, should you favour the middle man or the farmer and the consumer?

And, yes, I do think that Indians will benefit from these MNC retailers – after all, Indians have benefited from Big Bazaar, Metro, Reliance and Spencers. Foreign retail would have to do EVEN BETTER than Indian retail to win customers – since, they are starting later.

Read the link that I sent about Bharti-Walmart’s operations in Punjab – these are actual farmers and small retailers talking, not propangandists for dalals. The State of Punjab and the State of Gujarat both want more organised retail – both states are NDA ruled (so, hopefully the ANGOI argument of yours does not work) – WHY DO YOU THINK SO?

Farmers selling to Metro are getting a good price in Bengal, while others are driven to suicide – why? What do you think the Left/socialists have to say to dispute this FACT?

Thanks to the Socialists, whether in the government or the opposition, and the lack of progress on virtually any policy/liberalisation/restructuring matter since 2004, India now risks sinking back to its “Hindu rate of growth”.

The new “Hindu rate of growth” would probably be 5.5-6%, and not the old 2.5-3.0% of the socialistic nirvana that prevailed, pre-1980s, when getting a phone line was a major achievement.

But, not the minimum 7.5% that we require to ensure that more people find gainful employment than the number that enters the job market.

But, why bother – we shall pridefully wallow in our ignorance and poverty, while holding up a battered flag of “swadeshi”.

Here is a classic that anyone interested and invested in India’s progress must read:

http://www.econlib.org/library/Essays/rdPncl1.html

@Patriot
The bbc business website has a wealth of analysis on the economy of the UK and the interactions it has with the other countries of the world.
http://www.bbc.co.uk/news/business-15817660
I quote
‘China has artificially held its currency low against the dollar to drive exports and other countries such as the UK and US have tried to respond with low interest rates and QE to reverse the effects. This is the same basic problem as in Europe where Germany benefits from a lower exchange rate which drives their export.’ India’s currency has been in freefall in recent months and there may be further to go.There will be measurable effects on the economy- FDI debate aside.

@ Sudhav,

Sorry, I commented before I read that particular link – your quotation is not even from the link that you provided?

The BBC economics editor is, in fact, saying different things to what you are saying – she is saying that China’s unbridled growth has been a major cause of the global liquidity problem (very debatable) but still not what your seemed to be quoting.

And, to say that QE is a response to China is simply puerile – that is why I wondered whether the BBC even had an economist.

But, you misquoted.

Cheers

@ Malavika,

Before calling others names – hold up a mirror to yourself.

You said there was no FDI in China prior to 1997. Ref your comments above.

I proved you wrong. China allowed FDI since 1978 and it enabled their GDP per capita to increase from 379 RMB in 1978 to over 7,000 in 1999 – that is an EIGHTEEN fold increase

Now you say that there was no FDI in China retail prior to 1997 – so what? China’s growth has continued at 9% post 1997, off an ever increasing base. So, I would assume that FDI in retail has not detracted or slowed down China since 1998.

NOW, If you could possibly explain to me how to strip off the effect of one FDI stream and analyse its impact on China, I would be glad do so. Maybe, as CFP, you know things, which I do not – I AM willing to learn. Go on …..

I could call your intellect worse names, I reckon, but I do not fight unarmed people.

Cheers

L&T Chairman, Mr A M Naik:

“Mr Naik said that he expected a steep decline in capital goods space and government policies in particular have led to slowing growth in capital goods sector. Capital goods production — a barometer of investment in the economy — plunged 25.5 percent.

Naik said, “I have been expecting it, doubtful that next year we will see even 6% GDP growth. I expect next 2 years to be slow for capital goods space.” “

Indian economy is in terrible shape. It will get worse if Rupee continues to depreciate as it is expected, because of fiscal deficit and high oil prices and wasteful expenditure like NREGA.

And the above factors have nothing to do with FDI in retail.

B.t.w I think India should roll out red carpet for companies like Intel, Motorola, Nokia etc if they want to invest(FDI) in a FAB. Reason being India does not have the expertise to make Hardware Chips and these FABs employ large number of people.

dear shantanu,

When money is exchanged between the ANGOI and these big multi-national corporates, I don’t think one can detach this issue with FDI retail. The point being that these MNC’s who have paid large sums to ANGOI would be least interested in (or let me say least effective) in tackling the middleman corruption problem, for which you seem to be projecting FDI as a kind of remedy.

thanks,
RV

@ Malavika:

And, you are probably a fool or a knave, or both. Or possibly worse.

You misquote Bill Gross and Warren Buffet, entirely out of context, and without reference to their main body of work. You drop names like Jeremy Grantham and can not back it up with links.

You quote studies from the 90’s of farmers in other nations, without making the effort to see whether their case and that of the Indian farmers is even comparable (I will give you a clue – land holdings and labour costs). I wonder if you even read the link I sent about REAL farmers talking about their experiences in India.

You want to talk about trade, but can not discuss Ricardo or Smith.

And, then I give you loads of Data on Chinese growth and FDI – you get stuck specifically on “FDI in retail” but can not explain how to separate and assess the impact of one specific stream of FDI. No, you just go on like a stuck record.

And, finally, this is what I posted at #117:
“Now you say that there was no FDI in China retail prior to 1997 – so what? China’s growth has continued at 9% post 1997, off an ever increasing base. So, I would assume that FDI in retail has not detracted or slowed down China since 1998.

NOW, If you could possibly explain to me how to strip off the effect of one FDI stream and analyse its impact on China, I would be glad do so. Maybe, as CFP, you know things, which I do not – I AM willing to learn. Go on …..”

No reply to this part either: After allowing FDI in Retail in 1997, China has continued to grow at 9-10%+ each year, till date.

So, has FDI in retail harmed China? Helped or hindered their growth?

I will let others decide, on this blog, since you have a fixed idea, which is not based on data.

Finally I found some reason to stop FDI in retail

जब मिलावट खोरी एवं नकली वस्तुओं से कीमतें कम हो सकती है तो विदेशी दुकानें क्यूँ ?

मिलावट खोर एवं बिचौलिए हमारे देश के हमारे अपने भाई बहन है ! उनके रोज़गार का किया होगा ?
हमारा गुणवत्ता से कोई लेना देना नहीं है !

आम आदमी बेवकूफ है , उसे समझ नहीं के कहाँ से किया और कैसे लेना है ! सरकार समझदार होती है ,अपनी ज़िम्मेदारी से भाग नही सकती ! उसे तेय करना होगा ! लोगों पर अंकुश लगाना होगा |

विदेशी लोग हमारे सिर पर बन्दूक रख कर सामान बेचते हैं !

फल , सब्जी , अनाज , सड़ने से खाद बनती है , छोटे कीटों को भोजन मिलता है |

If GOI take bribe from Walmart , Will it allow TESCO or Other competitors in ??

Bribes are given to allow monopoly… not to bring competition in …

@Vijay,

“The emails have killed and are killing the jobs and future chances of job prospects in the industry.”

What has technology disruption to do with Walmart or big box retailers?

@others,

China allowed FDI in retail nearly two decades after it allowed FDI and AFTER it became a manufacturing power house. So, Having Walmart which procures from China will not cause any balance of payments crisis for China. Walmart has been good to China and terrible to US.

China’s mercantile policy is to keep its currency and labor cheap and capture world market.

So, if India says 70% of products/produce sold in big box retailers should be made in India, it would be a win win situation. But these behemoths would not like it.

@Malavika

“What has technology disruption to do with Walmart or big box retailers?”

So you are OK with Technology disruptions .

Wont you think the operation of Big retailers are better in TECHNIQUE . Or who so ever have better technique should flourish.

I though you are more concerned about the outcomes when these big one will arrive.
What about the outcome of TECHNOLOGICAL disruptions ??

Both will have same kind of disruptions.
emails have increased the efficiency and business prospects , So will be done by FDI in retail, that will welcome better and efficient TECHNIQUES.

Respected Shantanu Sir
All the above articles are very important, I will read this at latter stage. ( A huge knowledge resource)

With respect to the all above comments and special thoughts
My thoughts for consideration

1 Why there FDI In Retail is necessary Without making our domestic industry Strong and more compatible with foreign players?

2 What benefit INDIA would in turn for allowing the FDI for western country (Does our currency would get more stronger?), does Indian Would be elegiable for Business Visa Norma?, Would norms for Indian Professionals be relexed)?

3 Why Government has pur such a relexed condition to the FDI investor buy only 30% of the supply from India SME or MSME, rest 70 % may be procured from China? and why not this 30-70% ration be reversed to 70-30 so that Indian Manufacturing would become more Strong and India can become a manufacturing HUB?

4: One may argue that We need Foreign currency cater our Import Bill, then Why the 12$ Billion PASCO decision is being hanging? why Corus , Land rover, Novelies, Zen telecom investment is allowed ? why not that investment is attracted to Indian retail FDI

we can go for Retail FDI
A governemnt would be biggest beneficiary , our unorganized retail is appx 19,00,000 Crore, and government does not get full amount of tax (Local TAx, Octry, IT) from all small player, and if this sector become organised the statement government would be beneficiary

B Like intense competition in telecom sector consumer is the KING, same story will be replicated in retail FDI,

China protects its domestic interests by imposing stiff import tariffs.

Something for India to learn, actually India does that already in autos. Which led to a huge manufacturing base for car parts manufacturing and now we do export car parts.

” China began imposing stiff duties — including a tax of more than 100 percent — on those American chicken parts. The move was in response to a request by Chinese chicken farmers and processors, who claimed the U.S. government was unfairly subsidizing the American poultry industry through low feed prices and then selling the “chicken paws,” as they’re known in industry parlance, into China at below-market cost.

The Chinese move raised an interesting legal question: How can the United States be dumping an item at below cost in China when that item is considered virtually worthless at home? “It’s taken what used to be a part of the bird that had to be disposed of in the United States and turned it into a revenue stream,” said Scott Sindelar, the Agriculture Department’s attaché at the U.S. Embassy in Beijing.”

http://www.washingtonpost.com/world/asia_pacific/us-china-embroiled-in-trade-spat-over-chicken-feet/2011/12/13/gIQASphjxO_story.html

@ Amod Pahadiya

“Why Government has pur such a relexed condition to the FDI investor buy only 30% of the supply from India SME or MSME, rest 70 % may be procured from China? and why not this 30-70% ration be reversed to 70-30 so that Indian Manufacturing would become more Strong and India can become a manufacturing HUB?”

Absolutely true. I would also add no imported farm produce, since EU and US heavily subsidize their farm produce.

In fact I would also add 200% import tariffs on goods from China. There is no need to make them stronger since they claim our land, occupy Tibet and are setting up another Naval base in Indian Ocean.

@ALL:-

COME ! COME ! COME ! For your Nation.

I bet how you people pay to LOCAL POLICE 10 , 20 , 50 rupees.
If once you have paid your equally corrupt so don’t talk about FDI and other parameter to save Nation.

Swami Vivekananda said “Give me 100 men of steel will and I will change the world”. He believed what the world needs is men of character than systems. His vision and teachings inspired many leaders who in turn inspired many more people in India. It would be not an exaggeration to state that there will not be a single individual of India who has not heard of greatness of Swami Vivekananda. But few will be able to dedicate their life to those ideals. Though such people may not gain popularity like movie stars, sports stars or politicians, they are spread across the country doing their work silently. They do their work unselfishly in some manner or the server serving the vision of ‘Glorious India’ without caring for name or fame.

If you are unhappy with current society, materialistic nature of people, corruption, suffering and want to do something to eradicate all the ills from the face of earth, do you know what you can do? (Yes, everyone is fired with this resolve to change the world, including me). Don’t try to create new systems, don’t complain, don’t criticize, don’t do anything to change the world around you. CHANGE YOURSELF. Be the change you want to see in the world and people around you. Only thing you have control is on your self. Change yourself: Your character, your attitude, your goals and your ideals. Transform yourself first and then world will change inspired by you. If you can’t keep your house clean, how can you keep the city clean.

@Vijay Mohan
‘What India needs is fewer jobs…To improve its standard of living, India must use fewer people to produce more agricultural output… today’s losses and gains are fleeting..’
I cannot believe I am reading this as an argument to support the FDI. The callous capitalist at ‘work’ in unison with the goverment of the day. The statements you have made are nonsensical. How can one ‘improve its standard of living’ if there is more unemployment?Of course there needs to be increased efficency, but not at the cost of rampant long term unemployment. The economists and capitalists need to work from other basic principles as well as thinking of % growth and profits. What are the unemployed to do in India? Starve? Commit suicide and disappear?
The goverment should perhaps think of introducing forced sterilisations again, not only because it will reduce the population problem, but because it will also reduce unemployment. Permanently.

@ Malavika

Any technique that increases efficiency is BETTER for society! if you think otherwise than start following point #57

It has also been explained in the arguments above and we have observed in our Dear India.

You didnt answer patriot about any sector that has been effected badly with FDI in India .

I am not interested in imitating foolishness of others.

Ok , it is tough to understand , about importing subsidized stuff

1 solution : Let it be, why are you stopping free inflow of saving/investment . if any other govt is subsiding for you! Ya this is bad for the country of which tax payers are paying to make products cheaper for indians.

{consider a shop from USA in India that gives free stuff to Indians , I would love to take that , i have no issues , the amount I am saving , I will invest on other stuff. or you will use law to protect people supplying free stuff ?? }

2 Solution : put import duties of amount equivalent to subsidy.

I would personally prefer solution 1 , as savings caused due to subsidy in other country is proven to be good for country in which product is sold . Not in the same sector , but yeah for sure in every other sector. It causes displacement in jobs of the specific industry. But we have SOCIAL MINIMUM program that takes cares for that

@ Sudhav

People always feel that they have there eyes open and others have closed.

To me I believe everyone has there eyes opened and hence let them judge themselves. If someone feels to go to Walmart , he must be FREE to do so. People like you believe otherwise that you know what is best for others and hence you should use FORCE of law to prevent other people.

Again you are giving reason that people and there way of loving is the problem by stating indirectly that population is a problem.
To understand Populations causes prosperity just move to a city in India with lower population , or compare the scenario of opening up a business in town with lower population or in a town with higher population. Why in the hell people are moving from rural to urban areas with higher population. try understanding LAW OF DIVISION OF LABOUR/TALENT. Try to get the stats of population of cities which generate maximum wealth. Compare various cities within same country.

Again people like you inside government make laws to force your perception on others and the result is a MESS , disaster. Keep promoting the disaster.

you must read and analyze further , I would suggest ” Population causes prosperity” here http://www.mediafire.com/?q2zttmvt0gn

I am well against the concept of free lunch in the world. There is no free lunch , That is why I am against most of the schemes of Governments. But if some private is offering free , I am ok , He is USING HIS OWN money for that.

Thanks & have a mindful 2012

Regards,
Vijay

@Shantanu,

You are clutching at straws!
Modern retail has nothing to do with Walmart. Germany, France, Japan and etc have modern retail without Walmart. we can too.

Using farmers(poor, impoverished) as a shield to shill for Walmart is unethical as this person Dilip Thakore is doing. So far no one has presented any evidence of Walmart helping farmers anywhere in the world.

So, Walmart is not cure for what ails farmers.

What would help is the initiatives taken by GUj govt and AP govt discussed earlier and better infrastructure. Not many in the media shill for these because there is no money to be made. Meanwhile it pays to be in the good books of a multinational with deep pockets.

According to reliable sources Walmart bought expensive space in the heart of Cyberabad long before FDI was even introduced. And they still kept the space. So, I am not surprised at the continuing Public Relations bombardment by Walmart and its cronies.

What China knows and and India doesn’t:

http://www.ft.com/intl/cms/s/0/7f5033ca-570c-11e1-be5e-00144feabdc0.html?ftcamp=published_links/rss/comment/feed//product&ftcamp=crm/email/2012215/nbe/Comment/product#axzz1mLJQGFxt

The decision on FDI in multi-brand retail has been made as far as I can see without Parliamentary approval. I was never impressed with the arguments. The enthusiasm of the Freedom Team India hardly learned from the misery that was inflicted on India when the British plugged it into the global economy by promoting cash crops. Tens of millions of Indians paid with their lives in the famines that followed. I can see that there are real failings in which exploitation is a serious problem at the different levels of Indian society. That is problem reflective of Hindu moral and ethical failings. It won’t be cured by allowing foreign nationals provide the rules of the game. The dislocation of the Indian economy and Indian politics is sure to recreate the bad days of when the British ruled India. The antidote to is for a strong government of India. All I have post Indian independence have been feeble.