FDI in Indian retails- Boon or Bane?

The Indian economy has continuously recorded high growth rates over the past decade. As per the
Indian Prime Minister, Dr. Manmohan Singh, the Indian economy is expected to grow at around 7.5%
over the coming years. One of the major contributors to the growth shall be the Foreign Direct
Investments (FDI) and it is predicted that over the next two years, India could attract FDI worth US$
80 billion. The latest available data from the Reserve Bank of India shows a 77 per cent jump in the
FDI in the first half of the current financial year (April-September), compared to what was US$ 19.5
billion during the same period a year ago.
FDI refers to an investment made to acquire lasting or long-term interest in enterprises operating
outside of the economy of the investor. It is a major source of external finance which means that
countries with limited amounts of capital can receive finance beyond national borders from wealthier
countries. In case of India , countries such as Singapore , the US and the UK are amongst the leading
sources of FDI. The sectors which attract higher inflows are services, telecommunication,
construction activities and computer software and hardware.
Another sector which is looking at benefiting from FDI is the retail sector. There have been
discussions about FDI being opened up in retail which has drawn a lot of support from international
retailers like Walmart and Tesco. It is also being seen as the means to put a structure in place to the
highly unorganized retail structure prevalent in the country. The additional benefits in the form of
lower costs and enhanced technologies make it an attractive proposition.
However, the policy decision is faced with some resistance from internal organized retailers as well as
some representatives of the unorganized sector. The entry of new competitors in the retail sector is
being viewed as a threat by current players in the market.
Retailing is one of the pillars of the economy. India's retail sector contributes to 14-14-15% of the
GDP. WE have one of the world's largest retail markets. It is estimated to be us $500 billion. Its very
fast growing.
Until 2011 India has denied fdi. In november 2011 Indian govt had announced reforms in both multi
brand retail and single brand retail which paved way for innovation of the market. Fdi has brought in
competition of the Indian retailers with global mncs like wal-mart, tesco, carrefour. Inspite of strict
opposition Indian govt had allowed full ownership in single brand retail from jan 2012 with a
requirement of sourcing 30% of goods from India. Multi brand retail was given 51% of ownership
allowance from from foreign retail in dec 2012. Because of heavy uproar from the opposition, only
some states would allow for this.
Hello Everyone.
I am in Favour of FDI.
On one we talk big about globalisation and on other hand we stop it if what we sell is buying is good
but if what the sell is buying then it is bad.
Yes it is true that the FDI has cons but they do not underline the pros.
When the country is capable of doing something we should not stop competition rather we should
raise our standard to meet them or take them down.
Talking about the good points there are many.
1. Liquid money to Govt.
2. Infrastructure.
3. Jobs.
4. Better choice to buyers.
5. Standard of living.
6. Demand for the local commodities.
And many more,
Yes there are bad points as well we should properly implement the rules and have proper guidelines
to minimize the negative points.
But totally stopping the FDI will be a Loss to country as well as to the local retailers as they would
not know their status and will be in disillusion that they are at the top of chart.
Dear All,
FDI in retail sector is good for India, so long as we are not upto the mark in doing.
The retail properly. Our country has a vast population which is a big market. Day to day retail needs
of Indians are increasing day by day both quantitatively and qualitatively. The private retailers in
India are interested only in their well being. Government doing retail has its own deficiencies due to
the uniqueness of Indian market. For maintaining quality of products, there must be competition
between public sector and private sector. Why we should be enamoured by the fancy packaged
products of FDI and find fault with them.
Instead the ultimate users of retail markets that is buyers must become choosy about their day to
day needs and ensure that they get the best either from Indian retailers or FDI developed retailers. If
inviting investment into our country is of paramount import there are various neglected areas where
nobody wants to look at. Government can regulate FDI to an extent by allowing them to do retail
only and only if they cater to the neglected areas, as also plough back the profits generated out of
their investments into our own country without allowing them to take it out at least for a 5 year
period.
Hi folks. FDI (foreign direct investment) is a burning issue for many months and years. Till 1992
Indian government followed licence permit due to which India had lack of foreign currency, so they
were unable to buy crude from gulf countries, in the government of P. V Narshima Rao, finance
minister Dr. Manmohan Singh proposed 'Globalization' term in contemporary budget, which opens
the door for foreign investors in India, thus foreign investor can invest in India and this situation is
called FDI in economic term.
FDI is very important for India because it gives the chances to Indian government to earn foreign
currency from foreign companies. There so many examples of FDI in like SEZs, PPP model these
things gave boost up to India economy to reach on its zenith.
Shine India dazzling buildings marvelous infrastructure is a boon to India which given by FDI.
If we talk about economic power of India in the Asia and in the World it happened due to FDI India.
FDI is good in retail sector, Indian government has been provided 100 percent investment to
companies it means that companies can purchase and sells goods in all over India easily.
But 100 percent FDI in retail has drawback too, it has removed hawkers from the market.
Which occupied a large no of place in the market. Thus hawkers has lost their jobs and they have
nothing to do now.
So government should take care of hawkers too.
Hello Friends.
FDI in Retail sector:
No I am not in the favor of FDI in retail.
"Competition is always in the favor of consumers, monopolies not".
1. They adopt Predatory pricing strategy.
Predatory pricing (also undercutting) is a pricing strategy where a product or service is set at a very
low price, intending to drive competitors out of the market, or create barriers to entry for potential
new competitors.
How it works:
Big brands like Wal-Mart, Tesco etc. Buys goods from farmers or manufacturer in dirt cheap price
then they sell those products to customers after adding up their margin on it. This process continues
till other competitor exit from the business.
After then they start up rising their profit margin on the product because it is only available in their
stores.
Painful Experiences:
1. On feb.2008 European Union adopted a declaration because of farmer's protest around the euro
zone. In that declaration it was stated that - evidence from across EU suggests large super stores are
abusing their power to focus down prices take suppliers to unsustainable levels and impose unfair
condition on them. The declaration came because of farmers protests in front of super markets
across European countries like France, Italy, Netherlands, Belgium the nature of the complaints are
similar in the zone, which are as follows:
The giant retailers were squeezing the pricing paid to the farmers for products like milk & meat etc.
And in some instances forcing to sell at below cost prices.
2. On jan 2010, Bob Russell, MP of Britain told that "Britain was a nation of small shopkeepers all of
that has changed and it is because of the super markets lead by the giant companies. It's impossible
for small shopkeepers who have so much to offer to compete with the prices of super market. One
on six small stores in Britain has gone out of business in the last decade."
3. New initiative started in USA which is named as small business Saturday which promotes small
scale businesses in which buyers buys goods from small shops on Saturday to help and promote
small scale businesses across the country including New York, Boston, Los Angeles, and Miami.
4. Amul being most successful cooperative society still farmer are protesting and R. S. Sodhi MD of
Gujarat Cooperative Milk Marketing Federation Ltd. (Amul) said that "farmers get the least returns
from the modern trades and so called efficiency benefits only get by large retailer as they constantly
drive down the price rates.
5. Another example of Pepsi, when the Pepsi factory was under its setting up process in the Punjab,
the farmers of Punjab protested because the Pepsi authority committed to purchase the potatoes of
the farmer but later on the reject and told the farmer that there potatoes are not up to their
standards which is used in making up wafers chips and they have imported potatoes from the
foreign countries.
6. Only 30 % is mandatory to purchase from Small and medium enterprises (SME's). What about rest
70%?
7. The large supermarket will import rest 70% which will increase current account deficit of the
India. It will demotivate the small and medium scale industries. Hence it will increase
unemployment.
FDI means foreign direct investment where business in the country by another country. According to
me India is now a developing country. There is need of FDI in my point of view, because this increase
the flow of money business and technology such as in telecom automobile etc. An increase in FDI
may be associated with improved economic growth due to the influx of capital and increased tax
revenues for the host country.
Host countries often try to channel FDI investment into new infrastructure and other projects to
boost development. Greater competition from new companies can lead to productivity gains and
greater efficiency in the host country and it has been suggested that the application of a foreign
entity's policies to a domestic subsidiary may improve corporate governance standards.
Furthermore, foreign investment can result in the transfer of soft skills through training and job
creation, the availability of more advanced technology for the domestic market and access to
research and development resources. The local population may be able to benefit from the
employment opportunities created by new businesses.
Hello,
Fdi in retail has its own advantages and disadvantages to Indian economy:
Advantages:
1. Due to economies of operation. Production facilities will be available at cheaper rates thereby
availability of large variety of goods to ultimate consumers at reasonable and cheaper rate.
2. Availability of new technology leads to give development of infrastructure in domestic country.
3. Long term cash liquidity.
Advantages:
1. Agriculture.
2. Breakdown of small shops.
3. Decrease in rupee value.
4. Internal resources.
5. Manpower in rural area.
6. Productivity.
Therefore, FDI in retail can be allowed with some good regulations which cannot affect on rural part.
In a developing country like India allowing FDI may help in booming the economy. But, this will only
be up to a certain period of time only. Initially, India will get employment but that may also affect
the middle class people who are mostly depended on small business. The employment provided by
FDI will be of low class like, sweepers, security guards, etc. FDI saying that the farmers will be
benefited but, their land used for cultivating the crops by spraying large amount of pesticides will be
infected.
Ex. FDI using one farmers land for one year. It will cultivate large amount of crops by using pesticides
indirectly affecting the land's quality. After one year that land will be poisoned. Then FDI will shift to
next farmer spoiling that farmers only land.
The quality of food items will reduce due to mass manufacturing and large storing and high demand
because only one firm is there to satisfy the need. But, now there are many local small firms to do
this.
Also, allowing FDI we will have development of particular class of people only. Small business
families will suffer. Remember the implementation of LPG in 1991. This led the many consequences
into the Indian society causing a lot of corruption and development in only some classes of people.
Indian investors were affected and only foreign investors were profited causing instability into the
Indian market.
If we want development we need to have FDI only foe some period of time. Allowing foreign
investors to invest in Indian companies. Creating more Indian entrepreneurs and helping them to
rise their organizations.
A country is only developed if all class of people are developed. Purchasing the thing one rupee
more will not matter because that rupee will be in my country only.
Example- One local market with 10 small shops. There are 10 Indian owners, 10 Indian managers and
almost 100 workers who are treated equally. But consider that whole market into one FDI mall. One
foreign CEO, one foreign manger, 10 Indian sweepers, 10 Indian toilet cleaners, 10 Indian security
guards.
Giving this kind of employment will make us slaves.
I strictly oppose FDI in India.
I want to support my opinion with some statistics.
1. China receives $ 116 Billion as FDI inflow and considered as one of the best FDI destinations and
the main reason is it has increased its integration with the world and has taken a path to true
progress. Whilst India suffers from economic and FDI stagnation due political friction as it receives
only $ 16 Billion FDI inflow and that too has got a downward trend as foreign investors lose faith in
Indian market and politics.
2. Secondly, political and social situation of the country is alienated with prejudices such as decline
of small retail shops and increase in unemployment. This serves as biggest hurdle in economic
development.
3. Thirdly, it would increase quality of product and services to consumers and would serve as an
effective measure for the elimination of those middlemen who are parasites thriving on the cost of
consumers.
4. Fourthly, it would give impetus to globalization and appreciate employment opportunities in
MNCs, BPO and KPO sector.
5. Fifthly, it would act as an incentive for technological progress and would keep India at par with the
latest trends in technology.
6. Sixth, it would increase internal competitiveness of the economy and an apt old saying goes with
it. "Competition appreciates performance".
7. Seventh, it would provide India a voice in international forums and market and increase its
importance at global level.
8. Eighth, in edible sector only when McDonalds and Kentucky Fried Chicken (KFC) came into India.
Intrinsic Indian industries such as Haldirams and Bikanerwala had gone global to acquire foreign
markets.
9. Ninth, China being largest recipient of FDI. Neither did it lose small businesses or cottage
industries nor it became a slave of other countries. A well controlled and cleanly managed FDI
operates in China which has accelerated its economic growth rate.
In conclusion, I could say that what India needs in FDI appreciation with NECESSARY and SUFFICIENT
degree of control over it. Here the words SUFFICIENT and NECESSARY means a lot as it advocates
both welfare (check on exploitation, unemployment etc. ) and also relaxation of meaningless
restrictions to take a path and initiative of true progress.
According to me FDI is good as well as bad for our country BECAUSE. If govt is allowing it then
automatically few things will get develop such as:
1). Employment.
2). Economy.
3). Lifestyle.
4). Awareness about the foreign brands.
But in other side similarly the effect will be on,
1). Agriculture.
2). Manpower in rural area.
3). Productivity in some sectors.
4). Breakdown of small shops.
5). Decrease in rupee value.
6). Internal resources.
And many more things. If we 'll see it as from a different angle then the positive side is much more
less than than the negative side for FDI in India.
Lastly I'll suggest that, there should be some tight rules and regulation for allowing the FDI in India
and which 'll never make a effect on the rural market as well as in our core production system of
agricultural products.
Thank you. :).
Hi friends,
I hereby speak in against of FDI in India. For which to support I have a short story to tell.
My Father has a medium size grocery shop in the market. He explained this scenario with the real
facts which he faces often in the competition.
He told me that if a small or medium businessman opens his or her shop in the neighborhood then
we can tackle the situation with hard work and dedication.
But when a big firm like 'more market', 'reliance' or 'big bazaar' opens their outlet then during the
first six or eight months of their operation they offer a huge and continuous discount which helps
them to draw away the customers from traditional markets.
This way the local traders lose their ground and are forced to shut down.
Once the locals are gone then they start their real agenda and capture the whole market.
So, you can now imagine what damage the 'big' players are going to do (of course removing
competition instead of creating one).
Hello to all,
I would like to put some points in the against of FDI.
It is very simple perception to all that is, if Indian government allows FDI in retail sector then it will
certainly sort out a number of jobs in retail sector. Friends as country like India is facing problems
like unemployment, corruption, anarchy etc at a large extent.
Allowing FDI in India will have drastically effect on its economics and overall development. That is if
FDI is establishing in a particular section of a sector it will modernize its working infrastructure, more
advent of technology and installation of machines will definitely replace manpower in India.
And we are also unemployed and facing the same problems in getting jobs, don't we. We know this
fact very well. I want to clear one misconception about this fact FDI will not create jobs but cut jobs.
According to a statistics FDI is vacating approx 12 lakh people in India from various sectors and for
example we are well known to this fact that there are approx. 12 lakh people employed in Indian
railway, suppose this people are withdrawn suddenly from this sector then where will the people go
for bread and butter. Think. What will be the situation.
Then you can imagine the consequences after 15- 20 years. If someone is talking about the
development of our country. Listen carefully India will develop when its downtrodden society,
backward people in village side will develop. We know FDI will not benefit the rural areas, then why
are we talking about the development of our country by FDI.
Also it has same adverse effect to other sectors also. By the time Indian market will go in the hand of
foreign company and then they will regulate as their policy. Only talking about the technology and
black money that FDI will give is not sufficient for the development. Who will talk and contemplate
about the small issues.
Once Gandhiji said "INDIA DEVELOP WHEN ITS RURAL AREAS WILL DEVELOP".
At last I would like to say that there is a great need of establishing company in India. Indian
industrialists are opening their companies in foreign. Why are they doing so, is their lack of talent or
entrepreneur in our country.
Thanks.
Hi friends.
There are some advantage and disadvantages of FDI in retail sector.
Advantages:
1. It will boost economical level and GDP of country.
2. It will also increase the employment rate.
3. Infrastructure sector will get better.
4. Relationship with foreign countries will get better.
Disadvantages:
1. Entrepreneur's will be destroyed.
2. Small industries will be affected very badly.
3. Developed industries like reliance, tata, aditya birla group. Etc. Will get great competition from
FDI.
4. Large part of our economy will become fully dependent on FDI.
Hello Everybody,
In my opinion every thing have good and bad side so before forming any opinion about anything we
should look at both its side. FDI has both benefits as well as loss.
The advantages of FDI are:
1). New jobs would be created.
2). India will get the facility of the latest technology in the world.
3). The economic condition of India will improve by the taxes paid by the companies that has
received FDI or by the company set through FDI.
4). Competition among companies will generate better product.
5). Bribery, corruption, cronyism will decrease considerably.
6). The living standard of people will improve since goods will be available at lower prices.
The disadvantages of FDI are:
1). Small retailer will suffer.
2). People living in small towns or village will not get its benefits.
3). The main aim of FDI is to make profit so it will not focus on environment of India or health of its
workers which are Indians.
So finally I conclude that FDI can be made a Boon to India if the government of India impose proper
rules on them.
I can give pros and cons but I think taking a side and convincing others on it, proves how good I am
at convincing.
I am against of FDI in retail.
I think Indian government should correct its system, ease the procedure for starting a business for
an entrepreneur and help in financing those entrepreneur. It also should increase the investment in
research and development in each sector whether it is food or in technology. If we have a better
products and technology we our self will be capable of making a good quality products at cheap
prices. We will also be able to sell our technology in foreign country and do business over there.
We should not be very proud that foreign co's are coming to India. We should be proud when our
products are available in all the countries (like KFC, pizza hut or McDonald).
Foreign co's are very much aware of the corruption level in India, they will try to take advantage of
this situation and buy those middle men and get their work done. They will make India more
corrupt. We all must have heard how WALL-MART has paid for lobbying in India. It was reveal by the
US itself.
It is said that FDI will create jobs. I agree. But I want to ask one thing why India is so eager to do
jobs? when they have the ability and opportunity of doing business. Why America has so many co's ?
because their has promoted entrepreneurship not jobs. All big food chains of America sell a very
simple foods but what made them to earn billions of dollars its r&d and help from government.
I don't understand who gave authority to govt to dictate how I should spend my money or where I
should spend my money. I see a lot of hypocrisy in this topic.
1) We call ourselves democratic but want a authoritative action in this issue. Let companies come in
and then let people decide if they should shop in those places or not. That is democracy. I don't have
the right to tell other people where they can or cannot shop.
2) Another hypocrisy is with all of us, we are OK with Pepsi, coca cola destroying our local beverage
companies, we are OK with buying cars, phones, computers from foreign companies, BUT if these
products are sold in a wal-mart it is wrong ?
If people who say this will affect local business are sincere, shouldn't they buy only made in India
products ? All these imported products are causing greater damage to the economy in that case.
3). IS it a good idea to prevent foreign companies to protect local business, I say no. Local business
should be able to compete with any foreign brand. IF we have a son/daughter we want them in the
best school and compete with best students to get the best results from them. Competition drives
performance. We won't tell, I want my kid to be in top 5 ranks in a bad school. We want our local
businesses to compete and do better than foreign companies. Then we want them to go out of India,
open shops in other parts and drive exports.
Govt should not show partiality to companies based on their origin. People can if they want to, if
people decide we should buy made in India products that is ok. Govt dictating that all people in
state/country cannot buy products from a shop A is totalitarian and very bad for personal liberties.
We as citizens should not give up our liberties to government.