Should India Allow 51% FDI In Retail Sector?

Guess what? I am supporting FDI (Provided FDI is limited to foreign countries!). According to me, India does not need foreign direct investment. What it really needs is proper nurturing by Government.

For those who have seen news recently know what will be the bad impacts of FDI in India. Even China has placed stringent restriction on such type of Investment. Thailand has destroyed its retail market because it has allowed 100% FDI.

Is it beneficial to Farmers? I don't think so. You see that if we Indians even after so many years have not been able to benefit our own farmers. Will the foreigners do it?

I think that Farming is actually a very profitable business. People think that it is dependent on weather. It is not so. If farming has been a failed business, it is due to the unavailability of electricity, irrigation facilities, government's wrong minimum support prices etc.

To tell you the truth, do you know how minimum support price is fixed? It is dependent on the cost incurred. And how is this cost incurred fixed?

The labor done by farmer (who owns a farm) =INR 102.75 per day.
Laborers employed by the farmer= INR.102.73 per day.

So how wrong that a master earns just 3 paisa more than the laborer?(ridiculous) On what basis are you establishing these figures and prices?

(The figures are true as per my knowledge in markets around Nagpur)

Only if we are able to fix our internal drawbacks, I don't think that we will ever require an FDI.

Here is what we can do.

1. The government can invest in our own infrastructure.
2. Indian companies or Indian private players can come in farming sector and improve the farming infrastructure.

Are these suggestions that hard to implement?

Issue

Guess what? I am supporting FDI (Provided FDI is limited to foreign countries!). According to me, India does not need foreign direct investment. What it really needs is proper nurturing by Government.
...
...
Only if we are able to fix our internal drawbacks, I don't think that we will ever require an FDI.

Your response is very confusing. FDI - which we are talking about is inward FDI by *foreign* companies 😨. Or are you referring to outward FDI? Are you supporting Indian government's decision or opposing it?

oops sorry for confusion. I am trying to say FDI looks good outside India. We do not require it here. (In marathi- Durun Dongar Sazre!) 👍

To make it clear: I am opposing government's decision for 51% FDI in retail.

I won't say a big no for allowing 51% FDI in retail sector. Too early to say no to the new changes. I do not want to sound like a pessimistic still, do you think that we are doing wonders with our current policies??

For me, for an example in farming sector, at-least FDI will stop the benefits of middleman who take unnecessary advantage and eat the margins from the poor farmers. After allowing FDI in retail sector farmers may tend to get higher prices for their products by directly purchasing by these retailers. Since ages middlemen are keeping the prices given to farmers low. Big retail companies will find direct purchasing profitable thus farmers may get a better deal for their products. Consumers also stands to gain as prices may go down due to direct purchase and competition.

Although one may say that I am trying to live in illusion world, but you never know. And look at the history FDI worked wonders for China, South Korea, Singapore and other countries. You never know if it will click for India as well. Also, its not something written on stone; if it won't work decision can always be reverted back ???

Your Thoughts Please.

-CB

It is true that farmers get less than a Rupee for the their potatoes. It is of course pocketed by midle men. But why can't we invest our own money? Why do we need foreign direct investment?

We can have more food chains like Haldiram and Narula. Depending on others will not solve our purpose. To me, investment is necessary but it should not be foreign killing our businesses.

One more fact- It is true that around 10 million jobs will be created. I agree. But it will be on the cost of 50 million self employed people in retail sector. Walmart and other food chains have been notorious even in their home countries America!

Investment by our companies in farmer's interest will be more beneficial. It will take time it will be a sure shot option of removing most of the drawbacks in our Public distribution system.

Do u think Haldirams is not selling for very high margins??

Yes it is also doing the same thing
Its MRP's are more twice the selling price to wholesalers

@Issue : It would have an Indian partner even if it is allowed 51% in company
Dont you go for ICICI Lombard , Bharti AXA, Vodafone Essar , Bajaj allianz, Tata Docomo

Aren't Lombard , AXA, Vodafone , Allianz foreign companies. Have destroyed the indian insurance or communication sector

In Fact NTT Docomo in India has revolutionized the pricing with paisa billing
the same will become with retail sector

Gandalf

Do u think Haldirams is not selling for very high margins??

Yes it is also doing the same thing
Its MRP's are more twice the selling price to wholesalers

See in a similar way, foreign retail brands will also charge high just like HaldiRam. You just said it!

See, initially the foreign retail chains will be giving out products at lower prices. Once the local unorganized retailers are finished, they will be selling things at exhorbitant rates. They will be just trying to get monopoly.

Gandalf

@Issue : It would have an Indian partner even if it is allowed 51% in company
Dont you go for ICICI Lombard , Bharti AXA, Vodafone Essar , Bajaj allianz, Tata Docomo

Aren't Lombard , AXA, Vodafone , Allianz foreign companies. Have destroyed the indian insurance or communication sector

In Fact NTT Docomo in India has revolutionized the pricing with paisa billing
the same will become with retail sector

Yes, there will be good effects as well but it will be limited to those 10 million jobs. Just think of it, the market comprises of 50 million people today! Will it be good to have 10 million salaried people and lose 50 million self-employed people?

By the way, telecom revolution was also contributed by many Indian companies including Dhirubhai Ambani's Reliance etc.



Yes, there will be

I agree with what all of you have said, but there still are things one must consider here.

While some of you are of the opinion that instead of allowing foreign players make out a business here, we should let the Indian players do the same. Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation.

It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. All of a sudden when they noticed the north Indians coming in numbers and driving taxis and opening up street side stalls selling fruits and veggies and other stuffs, they felt endangered and started beating them up and protesting against them asking them to go back and not take away those work opportunities from the local marathi manoos. I dont understand where did the taxis and the roads go when the north Indians were missing until a few years ago. Could the same marathi manoos take up those work and feed their families then? They did not care and not that someone else is doing it, they dont want them to do it to.

A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do?

We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the prices to their advantage.

Though, like CB mentioned, there is a possibility that allowing FDI may erode away the middleman business. But on practical grounds this really wont be possible again. What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets.

Remember, these foreigners are coming here to do business, and not to show mercy on our poor farmers!

But all in all, I support allowing more FDI into our retail market. The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.

A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period.

I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best 😀

@Issue : Then why are you all worrying if they would charge exorbitant rates . Then simply do not by from them instead go to a kirana and buy local products


i cant understand
Then What are the other reasons against FDI ???

optimystix

I agree with what all of you have said, but there still are things one must consider here.

While some of you are of the opinion that instead of allowing foreign players make out a business here, we should let the Indian players do the same. Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation.

It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. All of a sudden when they noticed the north Indians coming in numbers and driving taxis and opening up street side stalls selling fruits and veggies and other stuffs, they felt endangered and started beating them up and protesting against them asking them to go back and not take away those work opportunities from the local marathi manoos. I dont understand where did the taxis and the roads go when the north Indians were missing until a few years ago. Could the same marathi manoos take up those work and feed their families then? They did not care and not that someone else is doing it, they dont want them to do it to.

A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do?

We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the prices to their advantage.

Though, like CB mentioned, there is a possibility that allowing FDI may erode away the middleman business. But on practical grounds this really wont be possible again. What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets.

Remember, these foreigners are coming here to do business, and not to show mercy on our poor farmers!

But all in all, I support allowing more FDI into our retail market. The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.

A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period.

I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best 😀

A great diplomat. Think of taking up Politics as a profession

optimystix

Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation.

I disagree. The first question that needs to be asked is; do we really need malls? Do we *really* need imported products? Do imported products imply quality? Or are we seeking comfort in believing the advertisements that are false, misleading and deceptive?

Buying fresh vegetables from the hawker who brings them at your doorstep every morning is more luxury than wandering kilometers inside a mall while pushing the shopping cart and even saner than spending 1.5x the money on the same goods. Think about it.

optimystix

It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. ................They did not care and not that someone else is doing it, they dont want them to do it to.

I think this is off-topic. Can't find an analogy. Even if it is; it's a separate issue.

optimystix

A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do?

What do farmers have to do with the FDI? The issue of farmer suicide is *not* a money problem; it's an administration problem. The government is clearly misleading people by saying FDI will help the farmers.

optimystix

We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the prices to their advantage.

Companies like Walmart, which are likely to enter Indian markets through FDI won't have a magic wand to eliminate the middle-man.

The worst: Walmart will directly sell the products imported from other countries. The company would take huge amounts of profits from India and the process would even kill more farmers. Of course, the middle-men would die too. I clearly see that the problem of middlemen or farmers not getting the benefits is a problem that should be associated with administration. If the government is failing in administration; it should resign, instead of letting someone else do the damage.

optimystix

What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets.

Why is this good?

optimystix

The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.

Nothing hurts me more than the above lines. Are you thankful to the British for that? Why can't Indians build their own infrastructure? Because, we don't have the money? Sick! Get those billions of trillions of dollars from Government treasury and Swiss Banks then. *THAT* is the real fix to the problem.

optimystix

A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period.

Your words assume that Indians themselves are good for nothing. Had there not been foreign hand; Indians would have died of poverty. I object.

optimystix

I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best 😀

It's already too late. Ever since Independence, the ruling parties have done damage after damage. First they borrowed money from the world banks and deposited in their pockets. Then declared that India can't repay - so they opened Indian markets for the GRAND LOOT - called 'Globalization'. Sick - we're 'proud' of it!

There were some good points by Durga. Not quoting her as you can read her reply above.

You see, computer industry was there since 1960's in USA and started blossoming there. But when are we getting into computer business? It is actually in 1990s. So we are lagging.
Sam Pitroda, Narayana Murthy etc are responsible for making our country techno-freak. There has to be some pioneer for any industry and others then follow suit.

For 60 odd years there was no pioneer in Agricultural sector. So that industry was lagging. This is actually Government's job to nurture entrepreneurship among people so that people get more ideas for developing infrastructure and boosting country.

Now Optimystix: It is true that I liked your post but it is for the poitive points about FDI that I found interesting.

Regarding looting our country, Do we want that our country should be looted turn wise once by Foreigners then by Politicians then by foreigners and again politicians?

I only know one thing that 50 millions jobs should not get compromised for a short term vision of creating 10 million jobs.

Try to make infrastructure strong on our own guts. Why to use foreign crutches?

The best way to stop this argument is to start our own businesses rather than going for salaried jobs, earn money and develop our country.

Always remember India is not an investment option. It is our country for heaven's sake and it is more than any anything for us.

@Gandalf: The point is Walmart won't just sell fresh vegetables. Their main business will be to stuff the stores with foreign, non-agri products. The mental slaves people have become that they think anything in a shiny package is 'good for health'. I belong to the world of advertising and know how easy it is to fool common people with repeated lies.

Just an example: Fair & Lovely (and now, Fair & Handsome) show a blatant lie on TV that they make you fair. Show me *ONE* example where a dark person has turned fair. The bad part is; each of their advertisement makes people believe dark-skin is actually a bad thing and hinders your chances of success in life. People usually don't have time to 'use' their brain. They'd readily believe any actor posing as a 'doctor' by wearing a white apron.

The_Big_K

@Gandalf: The point is Walmart won't just sell fresh vegetables. Their main business will be to stuff the stores with foreign, non-agri products. The mental slaves people have become that they think anything in a shiny package is 'good for health'. I belong to the world of advertising and know how easy it is to fool common people with repeated lies.

Just an example: Fair & Lovely (and now, Fair & Handsome) show a blatant lie on TV that they make you fair. Show me *ONE* example where a dark person has turned fair. The bad part is; each of their advertisement makes people believe dark-skin is actually a bad thing and hinders your chances of success in life. People usually don't have time to 'use' their brain. They'd readily believe any actor posing as a 'doctor' by wearing a white apron.

Hence, there comes the real need for education
Though i think even if they stock up piles of foreign brands but taken the cost into consideration it would be bought only by upper middle class and the richer classes who any way prefer foreign brands quality over indian

Take a car as an example, richer class would still prefer a BMW , Mercedes over a Indian Car like Tata or a Maruti

India's Middle class is estimated at 150 million whereas the total population is 1.21 billion
22% of population lives below poverty line
Shouldn't we worry about eradicating poverty and illiteracy

Creation of job opportunities would give a boost to both literacy rates since it will lower unemployment rate
It is presently estimated at 9.4 % i.e 94 persons per thousand are unemployed

Advertising has been a field to fool people
Coke, pepsi and other carbonated drinks are manufactured for less than 5rs/Litre
and sold at around Rs 33/litre

Some positives that i feel would boost india's growth story with FDI
1. Increase in Knowledge of retail industry in India to rural areas means Larger Exposure
2. Farmers will be able to know the different new technologies available
3. Our Villages would be able to prevent loss of crops and wastage because he could not sell it and it is perishable
Won't The companies bring their profitable technologies and would implement it in Indian Farms
and decrease the food wastage

Rabo India's Report to Ministry Of food processing estimates food wastes worth at a whooping 58000 cr every year
I see no problem if they are getting utilized
Think of the overall population rather than a 12% middle class or a 10 % of upper class
Think of a wider population of around 75%

This was the point i intended to make by the post of article from business standard

optimystix

The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.

The_Big_K

Nothing hurts me more than the above lines. Are you thankful to the British for that? Why can't Indians build their own infrastructure? Because, we don't have the money? Sick! Get those billions of trillions of dollars from Government treasury and Swiss Banks then. *THAT* is the real fix to the problem.

But i am afraid biggie that our current political is lacking the will to do so.

Our current political is disposing it off away from Swiss Bank and getting some alternative to it

Remember Hasan Ali alleged of holding black money of various politicians
and we openly noticed how $8 bn was transferred away

India has been one of the richest and self sufficient country since ages
Hence , Proud to be an Indian

In Todays scenario Optimystix seems to be right we haven't changed
1. May it be the MullaPeriyar dam
2. Water Supply Network of Various Cities including Mumbai
and various Infrastructure issues lead us to exploring new horizons

@Gandalf: I know politicians are the big part of the problem. But FDI isn't a solution; as it's being perceived. It's just like saying we prefer being robbed by outsiders than insiders. Going by the logic that "they at least built roads and buildings"; I can say that Indian government has 'at least' given us whatever little development (?) we have.

Administration is the main issue. Someone will have to accept it sooner or later.

The_Big_K

@Gandalf: I know politicians are the big part of the problem. But FDI isn't a solution; as it's being perceived. It's just like saying we prefer being robbed by outsiders than insiders. Going by the logic that "they at least built roads and buildings"; I can say that Indian government has 'at least' given us whatever little development (?) we have.

Administration is the main issue. Someone will have to accept it sooner or later.

Someone will have to accept it sooner or later

Who is that someone going to be ???

Another issue india is facing is Brain Drain
The people trained at premier institutes are lured by Salary rather than working for their Country .

Who are the Foreign Companies ?
Many of them are powered by Indian Brains including Likes Of NASA and Microsoft
Why don't they join a ISRO

FDI is not going to rob india.
Didn't we adopt the western cultures in our day to day life
Didn't we adopt Industrial Machines in Manufacturing sector

In the same way we need to adopt their concept of working for the all round development of country

We need to adopt some concepts that are not available or not well managed by us

Hence, there comes the real need for education
Though i think even if they stock up piles of foreign brands but taken the cost into consideration it would be bought only by upper middle class and the richer classes who any way prefer foreign brands quality over indian

Take a car as an example, richer class would still prefer a BMW , Mercedes over a Indian Car like Tata or a Maruti

India's Middle class is estimated at 150 million whereas the total population is 1.21 billion
22% of population lives below poverty line
Shouldn't we worry about eradicating poverty and illiteracy

Creation of job opportunities would give a boost to both literacy rates since it will lower unemployment rate
It is presently estimated at 9.4 % i.e 94 persons per thousand are unemployed

Advertising has been a field to fool people
Coke, pepsi and other carbonated drinks are manufactured for less than 5rs/Litre
and sold at around Rs 33/litre

Some positives that i feel would boost india's growth story with FDI
1. Increase in Knowledge of retail industry in India to rural areas means Larger Exposure
2. Farmers will be able to know the different new technologies available
3. Our Villages would be able to prevent loss of crops and wastage because he could not sell it and it is perishable
Won't The companies bring their profitable technologies and would implement it in Indian Farms
and decrease the food wastage

Rabo India's Report to Ministry Of food processing estimates food wastes worth at a whooping 58000 cr every year
I see no problem if they are getting utilized
Think of the overall population rather than a 12% middle class or a 10 % of upper class
Think of a wider population of around 75%

This was the point i intended to make by the post of article from business standard

I am awaiting CEans views on my above comment .

looks like FDI in retail is now on back burner, let's see

Agree it is assigned lower priority since there are various other major issues the government has to deal with 😒