Foreign Direct Investment: A Concept Far Away From Neo-Colonialism

Posted on September 28, 2012 in Business and Economy

By Harsh Choudhary:

The Indian Government has stepped towards the growth of economy in the long-run by allowing fifty one percent in Foreign Direct Investment (FDI) in multi-brand retail. The much awaited reform has been passed and now and the global retailers are welcome to get going with the national retailers. India happens to be a potential market and thus, this reform will attract many foreign investors to invest in this fruitful tree of Indian retail.

The interest of global retailers is quite obvious due to their profit and their dream of attaining monopoly in the future in this competitive market. So, does it not benefit the foreign retailers more than the indigenous ones? Or is it just another form of neo-colonialism? The dependency of domestic retailers over domestic suppliers might lead to the decrement of progress rate upon the entry of their global competitors. The foreign retailers have wide global sources of goods and services and this is an edge over their domestic counterparts. The Foreign Direct Investment can thus diminish the local retailers and get their roots strengthened in this fertile ground. The indigenous manufacturing units might be closed and unemployment would be increased. The global retailers, who in need of less human resource, but on automation, would not be able to provide the enough job opportunities.

The Indian market is one that is not much organized; there are shops on the footpaths and in the malls. It is composed of people who are fully dependent upon the small-scale retail shops and thus, the so-called reform might make them move out of this marketing sector. Only the organised firms, which are very less in this domain, will be able to survive and benefit. The monopoly may arise and that will directly benefit the global retailers and sure will cost us a lot in the future. This reform would however not be able to promise employment to the already settled small scale retailers after they would be thrown out.

This is simply providing us with a glimpse of neo-colonialism: the economic colonialism of the Indian market by foreign retailers. The involvement of global sector retailers in the internal markets of India might lead to domination by them. The multinational corporations would exploit the natural resources and the people of the Indian retail sector. It might be the same situation as that time when the English came to India for business and then continued exploiting us in all forms for more than two hundred years. The apparent business first took the shape of neo-colonialism and then ultimately transformed into colonialism in all sectors, be it the political, economical or the cultural sector.

But today, India is nothing like it was used to be almost two hundred years ago, it is now considerably developed. The many economic policies of India after independence have lead to the maturity of the retail sector. The retail sector of India ought to be confident to compete with the global retailers at this stage. The policy of FDI in multi-brand retail is very well and innovatively formed and primarily focuses on the development of India’s retail sector. The third proposal of the policy states that fifty percent of the total FDI shall be invested in back-end infrastructure which will thus improve the quality of goods, their manufacturing process, the agricultural market infrastructure, storage and a lot more.

Also, the expected problem of unemployment will be efficiently checked. The policy allows the foreign retailers to set up their firms only in the cities with a population more than ten lakh. The small range influx of the foreign retailers will help the government to test the consequences. Plus, the establishment of retail shops of foreign investors will be passed through the state checkpoints where they have to comply with their terms and conditions. Thus the well-planned structure of the policy and efficient checking is promising opportunities to the indigenous retailers without them having to suffer any losses. The wise working will surely make a progressive market for the local retailers and will abandon any issue that might be the reason for neo-colonialism. The government, according to me, has come up with a very well-formed policy which should be appreciated and welcomed by all.