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FDI IN RETAIL TWO SIDES OF A TALE

Every day we turn the pages of any news paper we will definitely find some news about

strikes, agitations, hungamas, and riots because of price rise. The simple reason behind this

is the basic theory of demand and supply of economics. It means we dont have the supply

as per the demand. Population is increasing but the supply or the production units are not

coping up with it. The revenue earned through taxes and other income generating sources

are not enough to mitigate such situation. In this crunch situation the Govt. had two ways

through which it can bring money to the economy from which one is borrowings but its not

ideal because it will widen up the fiscal deficit margin. The next one which Govt. has

adopted is FDI (Foreign Direct Investment) in Retail sector. And we dont have any better

option left with us. Literally its nothing but investment made by foreign Big or Giant

institution in the retail sector of Domestic country with collaboration with some domestic

institution. Just like Wal-mart opening up its store with Bharti near Vijayawada.

Earlier Govt. has approved 100 percent foreign direct investment (FDI) in single brand retail

and now the Cabinet Committee has approved 51 percent multi-brand retail, a decision

that is severely been criticised at political circle but appreciated at economical circle will

allow global mega chains like Wal-Mart, Tesco and Carrefour to open outlets in India. .

Currently, the share of modern retail is a mere five per cent in the total retail trade sector.

Like the two sides of a tale or we can say two sides of a coin whenever this topic has been

raised in parliament or in public place it has always attracted a debate consisting of two

parties one who are in support of this and one who oppose it.

The people who are in support of this normally state some points which are discussed

below:

The nod for FDI in multi-brand retail can bring in Rs. 450 crores in the sector. Mandatory investment of at least 50% in the back-end infrastructure. 30% mandatory sourcing from small and medium enterprises.

Consumers will have the luxury of choosing from wider spectrums of products at a

affordable price due to stiff competition and also consumers will enjoy international

standardised retailing. 50% investment in back-end infrastructure will not only improve ourcountrys infrastructure but also generate the employment in the country. Foreign retail

majors will ensure supply chain efficiency which includes cold storage, refrigerators,

transportation, packaging, processing etc. Biggest beneficiaries would be the small scale

producers (enterprise) as they will have access to international market. Big retailers will sell

the products at a very competitive price so they will directly source it from farmers or from

real producers so the farmers will get best price and the intermediary or the middle man

cost will be erased or decreased.

The people who oppose this are with some viewpoints they are:

It will lead to a closure of 10 thousand small kirana shop across the country It will endanger livelihood of 40 million people

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Cartelisation may be created Farmers may get remunerative price initially but eventually they will be at the mercy

of big retailers.

When big fishes enter the pond they eat all the small fishes first. This situation is just similar

to that when big companies will come they have the potentiality to bear the loss for few

years which they will do in order to wipe out all the small retail outlets or shops. When the

whole market comes to their grip they will fix the prices as per their suitability and the

consumers will have no other option left with them. This is the situation of Cartelisation. Big

retail giants are coming to do business in our country not for charity purpose their first and

foremost objective will be the profit so they wont see the betterment of the society and

growth of the nation beyond their business. They will fix the prices with the farmers

producing in large quantity which can provide on a regular basis to their store so the small

farmers cant find their place to sell their vegetable and crops in big retail outlets.

Now a good step has been taken by Justice R.M Lodha who has asked the center to pass

some legislation which will give protection of small traders against FDI.

Nobody has seen the future and nobody can. In this situation of immense pressure we

dont have any better option left without accepting it. If our regulatory body i.e. Govt. of

India became strict and will keep a keen vigilance over FDI in our nation then the day is not

far when we can count us as one of the developed and economically powerful nation

among the others in the world and if not then we will be the worst victim and will fall in

such a situation which we cant imagine right now.

Submitted by:

Rakesh Kumar Swain12MFC018