FDI in Indian retail sector, a Boon or Bane ?

Now a days all of you may hearing about the FDI entry into the retail sector of India. It become a very hot issue
in the current scenario .so, I finally want to throw some light and ignite your brains through my article ,coming to
the point what is FDI and why there are lot of opposition to it in the country?
What is FDI?
FDI= Foreign Direct Investment.
hen foreign companies invest in India for manufacturing, production, sales etc. by themselves !"##$% or by
partnering with some Indian firms.
What does mean by FDI in Retail?
&etail means when product is sold to the ultimate consumer !common man%
". FDI up to '"$ in single brand retail store with prior govt approval.
(. FDI up to "##$ for cash and carry wholesale trading and e)port under automatic route.
*. FDI is not allowed in multi brand retail sector retail segment.
IF FDI COMES WHAT HAPPENS TO INDIA?
Ni+e ,ompany opens outlets in -angalore, Delhi and .umbai selling nothing but Ni+e /hoes, Ni+e wrist0watches
and Ni+e t0shirts only. 1his is single band etail. FDI in /ingle0-rand &etailing was permitted in (##2, to the
e)tent of '"$. 1hese were mostly outlets for sportswear, lu)ury goods, apparel, fashion clothing, 3eweler, hand
bags, life0style products. -ut neither the 4olitical parties nor 5ocal 6iranawala raised any voice against this, why?
-ecause these are 7high0end lu)ury items for brand. ,onscious upper middle class and rich class people. It doesnt
hurt population at large. It was not li+e people would stop purchasing from local garment store to get Ni+e or
8didas.
M!lti"band etail
-ig -a9aar and /pencer opens mall in 6a+inada and above cities: selling t0shirts of multiple0brands such as
&eebo+, Ni+e, 8didas, 8llen /olley, ;an <uesen, 4eter =ngland etc.>and> they also sell unbranded t0shirts (you
know those buy one get threet-shirtsfreefromunknowncompanies.)/o this is multi0brand retail: when an outlet sells a
product !t0shirt, tie, shoes anything% of more than one brand.
Those in #a$o!%
"% It will cut intermediaries between farmers and the retailers, thereby helping them get more money for their
produce
(% It will help in bringing down prices at retail level and calm inflation
*% -ig retail chains will invest in supply chains which will reduce wastage, estimated at ?# percent in the case
of fruits and vegetables
?% /mall and medium enterprises will have a bigger mar+et, along with better technology and branding
'% It will bring much0needed foreign investment into the country, along with technology and global bestpractices
2%It will actually create employment than displace people engaged in small stores
@%It will induce better competition in the mar+et, thus benefiting both producers and consumers. 1his sounds very
good for economy and why many parties and politicians etc who dont care for public and 3ust want publicity in
media opposing it ?
ell indeed they 3ust want publicity and they dont +now about the core matter, they give there suggestions to the
innocent viewers of useless debates in the news channels. 8s there are both sides of a coin there are some serious
negatives in this regard to ma+e it a nice topic for debate competions and ma+ing me to write a article
Those in Against%
It will lead to closure of tens of thousands of small retail stores.
hich may endanger livelihood of ? crore people.
It may tame inflation initially but will fuel the inflation once .N, companies get a
stronghold in retail.
Farmers may be given lucrative prices initially, but eventually they will be at the mercy
of big retailers.
/.=s will become victims of predatory pricing policies of big retailers.
It will replace ordinary middleman with sophisticated corporate middleman.
,reate cultural and ecological problems by twisting the food production and availability
as per the profit margin.
It will promote cartels and creating monopoly.
/mall mom and pop shops or 7+irana stores will see their bottom lines impacted as the
li+es of almart and ,arrefour move in.
Con&l!sion%
=ntry of foreign players must be gradual with social safeguards so that the effects of labour dislocation can be
analy9ed and policy fine tuned. Foreign players should initially be allowed only in metros cities only. Aradual
opening of the retail sector over a period of *0' years to give domestic industry enough time to ad3ust to the
changes. .ore stringent ,ompulsory corporate social responsibility reBuirement !e.g. 8s+ them to open " school
and " clinic in every city where theyre operating etc.% &egular monitoring of mall0inventories to see that India is
not used as dumping ground for ,hinese products. there are many countries in the world which developed only by
FDI li+e 1hailand: /ince "CC@, "##$ FDI. 4ositive result: 1hailand has now become an important shopping and
tourist destination. so why cannot India ? If the FDI was allowed with proper precautions it will be a big boon for
a country or else it will be a nightmare for economy .

-sunil Krishna
manuri