FDI in Retail Sector

I think there are two categories of citizens in India - Politicians and Non-politicians. Whenever, some special qualities like telling blunt lies without hesitation and repentance, mending ways by hook or by crook, sycophancy, being manipulative etc. starts to show in a child, family members proudly say – he/she will become a politician one day. What more to say about this category. Words may look for cover with shame. They are such people who give a new meaning to the word “confidence”. With crisp currency notes popping out of their pockets, they can be heard saying, “If I have taken even a penny, hang me.” Sometimes I feel that it’s our eyes that are seeing things.

Let’s not be more ironical towards them and come to the main point of discussion. Recently I have been hearing about this FDI in Retail. When I enquired about it from different sources, I came to know that it is - Foreign Direct Investment in Retail sector. Indian Government has opened the Gates for Foreign Retail companies to have 51 percent stake in multi brand retail and 100 percent stake in single brand retail. Yes, then what? Will they invest directly in my home budget? Then what it has to do with me if some Walmart or Tesco opens up in my neighbouring mall. Retails means those Big Bazaars which sell the most under quality material with the most bizarre sales personals (they always seem to be out of place), Reliance Fresh where I have never seen anything fresh, Reliance Mart, Reliance Trends (I wonder they have also been divided among Ambani brothers, because I fail to understand the difference). However, I think I have understood the meaning of Retail.

Then where were we, yes, I was saying that how does it matter to us that Foreign companies are directly investing in retail or indirectly investing in politics. Since last 4 – 5 years, the crores of rupees that these companies have been investing on our politicians and lobbying for this policy, they deserve at least some returns. The only mistake that they did was that they only invested in a few politicians who were in power. Had they not done any discrimination between Government, Coalition and Opposition, they would have shipped by now double their investment. Now if there is an opposition party then they are bound to oppose. The name is to be blamed – opposition.

Forget it; we have nothing to do with it, who is investing where and where not. We are only concerned whether we will grab some job openings for our youngsters or not. And jobs will be created because they are not going to import people from their own country though they may import the cheapest of products for us to consume. I have also heard from different sources that China is the number one supplier of Walmart. Although Chinese products have been banned in India but paralally we have been enjoying their products, assembled and sold by Indian companies (for e.g. the heavily mushroomed cheap mobile market).

We should only be concerned about the employment that any new policy creates rather than the political farce that follows. If the politicians are so concerned about SWADESH and swadeshi companies then why do they deposit their money in Swiss Banks. They should have deposited in our swadeshi banks. And who says that the farmers will suffer and die? They are already suffering and many are already dead. And who else is going to suffer, the middleman? Who is this middleman, are they organized? Do they actually pay their taxes? I don’t think so. They deal in cash. They run chit funds and community. They have their own loan and interests labyrinths. They are the real parasites who actually feed the politicians and political parties with their party funds then why not these politicians will protest at the top of their voice in their favour.

The country will benefit only when the organized sector grows and jobs are created because when people will have job, they will have money to spend and pay tax to the Government. It doesn’t matter to the common people and even the Government, whether a foreign or a domestic company is making profit. They both will share their earnings in terms of salaries to employees and taxes to the Government, rest would be their profit and they are going to add a few more floors on Antilla with it or buy an IPL team.

On one hand Government is marketing its new policy saying that it will control the inflation and the consumer, farmers and producers will equally benefit. The farmers will be paid better for their produce and the consumer will have to pay less due to the lesser cost of procurement and supply chain. Millions of jobs will be created. On the other hand the opposition parties are saying vice versa. According to them this will lead to monopoly, oligopoly and many more polys and the retailers will control the market and the farmers will be exploited and consumers will not get the benefit as the prices will be controlled by the retailers. Jobs will be created but at the expense of the small traders.

According to me both factions are right. Organised retail will organise the supply chain and bring visibility and transparency for the Government to benefit and have a better control, but who says that growth of retail sector controls inflation. It is a myth. I don’t find their prices any lower than what small traders charge. All the money that went to the middleman will be gulped by these retailers and it is true that due to the various polys like monopoly, oligopoly etc. neither the farmer nor the consumer will benefit.

You must be wondering by now as on what opinion I am – for or against the policy. I am for the policy but not because of the reasons cited by the Government, but for reasons of my own. Reasons of my own are the reasons of our own - our benefit. They are:-

• This will create better jobs in retail, logistics, storage, refrigeration and transportation. It is not that people are not working in this sector but mostly unskilled and exploited due to its unorganized characteristic. May be our youngsters mind will shift from Computer Engineering.
• Our pathetic domestic retail companies will have some quality competition to improve upon or leave the battle field. If they compete then it will be heaven for us as we all have witnessed the benefit of competition among the telecom service providers.
• We will get a few more options to spend our weekends.  
• I would certainly like to see these middlemen’s ouster. They control the price according to the consumer’s status. Prices of commodities vary according to localities. If the price of a dozen banana in Laxmi Nagar is 20 bucks then it will surely be 30 bucks in Defence Colony, both being very famous localities of Delhi. But unfortunately this will not happen, because as India’s history says, whoever comes to India becomes an Indian and intermingle in such a way as if they were never an outsider. Similarly, we will absorb Walmart and other foreign retailers also and nobody will suffer. Our middlemen and small traders are too smart to suffer and will find new ways to benefit from the situation.
• The retail sector will grow only in the Urban area and will have a negligible effect on the rural population. And the population along with its versatility that India boasts, anything can actually dissolve in it without affecting its uniqueness of identity.

Now let us see which course this flow takes from here. Although, Walmart is a failure outside North America especially in Asian countries so it will be interesting to see its approach in India if they overcome this political drama.