FDI In Retail Sector: Good or Bad?

By Amit Borse:

All politicians are talking about FDI (Foreign Direct Investment) in Retail Sector. It should not be 51% FDI in multi-brand Retail, but we know that we already opened our market for 51% FDI in single-brand retail and 100% in wholesale cash and carry. It affected our market. I don’t think so because we created 35 million jobs for agricultural and non-agricultural sector. Is it good or not? Let’s find out.

As we know we are the 4th largest economy in the world. The way we are expanding and impacting the world after liberalization, we need to then improve our lifestyles comparing to other countries. We need to improve infrastructure and many more things. As a part of this, we allowed 51% FDI in single-brand retail and 100% wholesale cash and carry.

Change brings good things and bad things. This change brings a good thing for our country because we created employment opportunities and competitive environment. These two changes we see after FDI in single-brand retail. The disadvantage to our country is that we disrupted the old concept of supply chain management. In this, retailers directly purchased the produce from farmers. Now middle line is disappeared, which is a very good thing from farmers’ perspective.

Now the Committee of Secretaries, CoS, had given their nod to 51% FDI in multi-brand retail. It means Rs. 450 crores in multi-brand retail, but with stringent conditions like mandatory investment of at least 50% in the back-end infrastructure, minimum sales of 30% to come from small traders, and 30% mandatory sourcing from small and medium enterprises.

Now first go with 50% investment in back-end infrastructure, it will not improve our country’s infrastructure but also generate the employment to the country. So, it is a valid point.

Second, minimum sales of 30% to come from small traders, it will create a very good opportunity for small traders and they will competitive enough.

Third, 30% mandatory sourcing from small and medium enterprises, it will give an opportunity to small and medium enterprises to be competitive and improve their quality because whoever will come in India they are very quality conscious.

It means FDI in Retail Sector is a very good sign for consumers because they will get lots of varieties in a reasonable price, employment generation for 2nd largest populated country, and competition increase.

We see a positive side of it, now let’s talk about negative side. Are our domestic players ready for competition with foreign players? If we want to compete with foreign players then we need to be competitive enough. Kirana shops have to make efforts to retain their customers because they need to give discounts as in the malls, very good ambience to the customers, and free home delivery.

One thing which I want to address here is about the credit card. I think credit card system gives a credit limit of 50 days after purchasing of a product. Credit card defaulters are more usual in our country because people purchase the product but at end of the month they don’t have money to pay their bills. It impacts to the country after all.

It will help tame inflation in the near future. Is it possible? I don’t think so, because the way inflation is rising and we are not able to tame it any manner, what is the guarantee that FDI in multi-brand retail will help tame inflation? After allowing FDI in single-brand retail, we did not see any change in the inflation rate. I think it increased rather than decreased.

We see both sides of a coin, negative and positive, but then we need to allow FDI in multi-brand retail because if we want to grow, become competitive enough, and make reasonable employment opportunities for the increasing population, then we need to take this step.

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7 Responses

  1. Avinash Pratap Singh

    My Dear Friend,
    You need to rethink on the ideas which you have presented in this article.I do not say that your observations and study is totally wrong but i believe that we should learnt from our past mistakes.Just have a thought over it .I would like to give some information which you may think upon .In UK the farmers are competing to leave the Dairy business.I will not answer it you find it why??Hint:Read what Tesco and sainsbury are eating their margins.You talk about competitiveness :You remember Goldspot,Limca,7Up .Just try to to dig and find out which company used to sell them earlier and who is selling them now .How a small company which does business in a small region of our country can compete with a multinational which does business in 80 countries.You may talk about promises made by these companies that they will generate employment,if thay can not generate employment in their own country how can we think that they will do good for us. You may say that these companies will create competition and productivity will rise.We produce 3ton/ hectare rise US produce 7ton/hectare(Total production cost 1.2 Billion dollar Subsidy by govt 1.7 Billion dollar ) rice according to you who should dominate the market,it is Thailand who produces 2.8ton/Hectare. Wall Mart has total business of 400 billion dollar and employs 25 lacks employees in the same share of Indian market it employs 10 crore people.We made so many promises when WTO came in existence today we see the results in our country 2lacs farmers have committed suicide.There are so may others things to tell you but due to lack of time I am not posting it .I request to Youth ki Awaaz not to get carried away by the false promisses and propaganda made by these MNC’s think yourself and learn from History and guide the Youth towards the Truth.I am reachable at [email protected].

    Reply
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    […] courses which many wouldn’t have even heard of but they are quite good.Retail Management Courses -Retail management course has gottenmuch attention in the past few years. The fuelling factor has been, for sure, the […]

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  3. Antony Joseph

    1)Is UK farmers leaving dairy business due to the opening of retail diary sector to multi national companies ?
    In India , Opening of telecom sector to multinational companies is being heralded as the best decision by you and me as we are able to communicate easily, we are free from the red tapism and irresponsibility of the Postal and telegraph department. Even the Almighty could not change their colonial attitude towards their own customers.They literally used to treat you and me as slaves.Opening up of multinational companies in the telecom industry changed the way P&T department used to behave. They could not have been changed even by the Almighty.But opening up of foreign players was a boon to Indians.
    2)Maruti ,Tata motors , Mahindra Motors have been competing with plenty of the car companies having presence in more than 80 countries .Whether Indian car companies closed down due to competition from multinational companies ?
    3)When computers were introduced , people like you were crying like anything saying it will reduce employment opportunity.What is the truth?
    4)Ambassador car and chetak scooter’s mileage was meager when comparing to the mileage now offered by tata cars and bajaj two wheeler. Mobile outgoing call rate and incoming call rate was sky high before multinational players en try into Indian market.Now see the difference.Yes, productivity will shoot up when multinational companies come competition exists.
    I request you not to spread your immature thoughts .Be a sincere Indian who sees the rise of India no matter what happens.Please do not be a mosquitoe who sees only blood in the udder full of milk.
    Jaago my dear friend jaago from prejudice and pessimism.

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  4. Abraham

    THE FOREIGN INVESTMENT MEANS, THE MONEY LOOTED BY INDIAN POLITICIANS AND TAX CHEATERS, WHICH IS ILLEGALLY DEPOSITED IN FOREIGN BANKS (LIKE SWISS BANKS) WILL BE COME THROUGH fdi to india as white money.

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