IS FDI IN RETAIL SECTOR GOOD FOR INDIA? Introduction : The Recent announcement by our Prime Minister Mr.

Manmohan Singh about 100 % FDI in single brand and 51% in multi-brand retail has stirred the country into consternation. The stalwarts of the nation are left cracked into two, those favouring the decision and the others disapproving it. Now the question arises, what is meant by FDI? Is such a liberalization good for a developing country like India, with teeming millions under BPL, several lakhs of people unemployed or underemployed, with innumerable small cottage industries and trades going on in every nook and corner of the country? Meaning of FDI : FDI means Foreign Direct Investment . Allowing FDI in Indian means opening up of the economy for investment and market penetration for Big foreign companies and firms. According to the Delhi High Court, Retail means sale for final consumption. Retailing sector can be divided into two: Organized and unorganized. The organized sector includes trading activities carried on by those licensed retailers who are registered for sales tax, income tax and other such taxes whereas the unorganized sector includes the traditional local kirana shops, small owner manned shops, convenience stores, betel shops, and pavement vendors etc. Single brand retailing means a retail store with foreign investment can only sell one brand. For instance, Adidas can sell only Adidas products but to sell Reebok products, it has to seek permission and could sell only in separate retail outlets. Multi -brand retailing means selling of multiple products under one roof. The FDI policy in India is made and monitored by The Ministry of Commerce and Industry, GOI. About 97% of the business in India is under the unorganized retail sector and is second in generating employment after agriculture. It constitutes about 10% of the GDP. Why is FDI good for India? 1. By Allowing 100% FDI in retail, the Indian companies can access, learn and adopt best global management practices, designs and gain technical knowhow. 2. Easy availability of Cost effective and qualitative goods will improve which will benefit the consumers, who will be kings in the world of consumerism. 3. There would be unprecedented and substantial growth in Indias GDP and overall economical development. The Indian consumer would get variety of International brands and products in India, per se. It will assist in raising the income of the farmers, bring agricultural growth. It will help in checking inflation. FDI will provide necessary capital for long term investment in the country. Examples of US, France, Greece, Iceland, Poland, Vietnam, Thailand, Slovak Republic, Switzerland and Turkey have shown positive record in FDI. Moreover, example of China shows that the local traders are not necessarily, completely destroyed. More Employment would be generated as new jobs would be created.

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10. Industrial organizations like FICCI, CII, Retail Association of India, large firms abroad all favour FDI. Why FDI is unhealthy for India? 1. The income of farmers will not improve because open market system does not work for altruism and social service. Already farmers are committing suicide because they are unable to procure remunerative prices for

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their produce or are unable to repay their loans or due to crop failure. Imagining that Big Companies would leave or lesser their profits on seeing the poor plight of the farmers is highly unrealistic and impractical. Big retail cannot co-exist with local traders and Kirana shops. In the battle of giants for profits, chances of survival of small retail are negligible. The concept of direct farm-to-store is misleading as the middlemen will not be removed in the process. Big retailing is like altering habit because in western countries people go for bulk buying at the week-ends wherein they end up buying four when they actually need just one because of the attractive deal for the day offer. In western Countries, canned and tinned food is their staple diet. Women do not cook, families are nuclear, bulk purchase leads to unnecessary storage and consumption which leads to other problems. All this would make the Indian consumer spend-thrift which suites the interests of the investors .The concept of Aparigraha ,Swadeshi, and trusteeship gets blown up in air in the very land of Lord Mahavira and Mahatma Gandhi who preached to consume only what is necessary. The positive results of FDI in agriculture are yet to be proved. What FDI in agriculture introduced in India in 2006 cannot achieve cannot be expected from FDI in retail. Like under British rule, the British forced the farmers to produce cash crops instead of food crops because it suited their colonial interests, similarly the foreign giants would force the farmers to produce what they require for example because Lays need potatoes for their chips as raw material they might encourage its production at the cost of pulses. The suggestion that consumers will get easy availability of goods is a false notion as anybody is hardly facing a lack of access to food or groceries except in some rural areas (may be due to faulty PDS). Large retailing is all about minting profits. The competition is cut-throat and there is no room for mercy. One rival flourishes at the cost of another. Chances are high that the markets may have to face monopolistic prices. Consumers will hardly benefit and small retail will be ruined. Brands will go to any extent to get and retain the market share and contain their rival. The displacement of local producers will result in more unemployment because more than 80% of the population is self-employed because of small retailing and trade. Example of Vietnam clearly shows how due to introduction of FDI to its economy, small retailers were displaced and direct employment generated was very limited.

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10. Big giants would need land to set up new malls so the already high prices of real estate will soar up making the dream of the middle class to afford their own homes more distant. 11. FDI in retail is a political gimmick to divert the attention of the public off from the Coalgate scam. 12. Consumers will not get cheaper goods because the heavy cost of infrastructure, overheads, air-conditioning, parking, staff, transport, storage etc will all be compensated from the customers pocket. Conclusion: Purchasing olives or detergent in an air-conditioned mall for just a few rupees cheaper isnt worth throwing millions out of employment. However, India is in dire need of foreign money, in other words dollar to sustain its growth trajectory. The market is facing a slump and jobs are decreasing in huge magnitude. To stop it FDI can even thought in other areas with retail too. Difficult words: Aparigraha: Doctrine in Jainism which means to limit possessions to what is necessary or important Gimmick- clever act, machination; stalwart-strong, firm, uncompromising leaders; bottlenecks-obstacles Altruism-unselfish concern for others welfare.