Do you have something to share? Publish a blog on Legally India for free - the best will get featured on the homepage!

If you already have an account on Legally India click here, otherwise create a new account, then select 'Write New Blog' from the Blogs menu.

LI Reader Blogs

Legal blogs by our readers. NB: Legally India has no liability or responsibility for the contents of reader blogs.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that have been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Team Blogs
    Team Blogs Find your favorite team blogs here.
  • Archives
    Archives Contains a list of blog posts that were created previously.
  • Login
    Login Login form

FDI in retail: Positive and Negative arguments and my opinion

  • Font size: Larger Smaller
  • Subscribe to this entry
  • Report this post

The Indian government is thinking to open their door for foreign companies to invest in India. Here I have prepared some arguments for analysing this whole FDI issue.

Positive arguments:

  • Because of the investment of foreign companies, job opportunities in areas like marketing, agro-processing, packaging, transportation, etc. will be created. According to the Government, 10 million new jobs will be created.
  • Because of FDI, the post of middlemen in India will be removed. Because of that, farmers will get a good price for their crops and their exploitation will stop (which is going on for the last 150 years).
  • Foreign companies will invest around $100 million in India. Because of that, infrastructure facilities, refrigeration technology, transportation, etc. will be renovated. That will lead to low-inflation rate.
  • According to the Indian Government’s conditions, foreign companies have to source a minimum of 30% of their goods from Indian micro and small industries. This will provide the scales to encourage domestic manufacturing, by creating a big effect for employment and to upgrade the technology.
  • Countries like China, Indonesia, and Thailand already have 100% FDI in retail. After allowing FDI in retail, these countries have experienced tremendous growth in the agro processing industry, refrigeration technology and infrastructure.
  • Foreign companies will also create a supply-chain in the India market. Because of that, food which perishes due to bad infrastructure facilities and refrigeration, will not be wasted.

v Negative arguments :

  • FDI will lead to job losses. Small retailers and other small ‘Kirana store owners’ will suffer a large loss. Giant retailers and Supermarkets like Walmart, Carrefour, etc. will displace small retailers.
  • Supermarkets will establish their monopoly in the Indian market. Because of supermarket’s fine tuning, they will get goods on low price and they will sell it on low price than small retailers, it will decrease the sell of small retailers.
  • Jobs in the manufacturing sector will be lost because foreign giants will purchase their goods from the international market and not from domestic sources. This has been the experience of most countries which have allowed FDI in retail. Although, our country had made a condition that they must source a minimum of 30% of their goods from Indian micro and small industries, we can’t stop them from purchasing goods from international markets as per WTO law. So after coming to India, they can reduce this 30% by litigating at the WTO.
  • My analysis :

At the first sight, we can see that benefits are more in numbers, but I think detriments are more serious.

  • In India, we have 11 shops per 1000 people.
  • India has 1.2 crore shops, which gives employment to about 4 crore people.

What about the problems which these 4 crore people will suffer?

As Indian government’s condition, companies will buy 30% from small industries of India, but what about the other 70%? Walmart and all these big giants import their majority goods from China. If we consider Walmart as a country then Walmart will be the one of the top-10 countries which is importing goods from china. These giants will dump goods from China. We can’t stop them for doing this.

Our PM is saying that allowing this major FDI will bring new technology to India and it will bring proper refrigeration technology so that wastage of food/grains can be stopped. But don’t you think India itself is capable for that? Why can’t our government build storages for refrigeration of food? Is it ok to open our country’s gates for foreign giants just because of this reason? Why we are not passing ‘Food Security Bill’, which is still in the parliament? If government is not capable of building a supply chain and infrastructure, we can open this field for Indian entrepreneurs.

Government is saying the cities which have a population of more than 1 million are open for these foreign companies. This is totally illogical. I bet, in the next 10 years they will open their stores in small cities, after opening their stores in metros first and so on.

Today, when the American President is requesting their citizens to buy goods from small retailers, we are inviting them to our country. These companies have ruined their own country and we are expecting that they will save our farmers and food. We are expecting that they will give new technology and will invest in India to help our poor fellas. This is bull. Argument that only foreign companies can create the supply chain for farm produce is totally illogical. International retail players have no role in building roads or generating power. They are only required to create storage facilities and cold chains. This could be done by government of India also. I think there is no need to allow 51% FDI in India at this point. No need to go so fast. We should discuss this point in parliament (peacefully!).

Words for Government:- Please don’t waste 21 days of precious time on adjourning the parliament on the FDI issue. There are many bills which need to be passed immediatelylike the Jan Lokpal Bill and the Food Security Bill.

in Legal argument Hits: 27429 24 Comments
(0.00 points earned)
Thegodfather has not set their biography yet
Awarded Medals: - empty -
Current ranking: No rank.

Comments

  • Guest
    kesav Thursday, 19 Jan 12

    very nice and logical analysis. i agree with you. FDI in retail means invitind devastation

  • Guest
    Anuraag Monday, 17 Sep 12

    Good from your perspective:
    My view towards this issue is :
    As customer - I can have large bargaining power, Long operating hours, Hygiene and convenience, Range and variety of goods, perfect billing and warranty.
    Monopoly is not possible in current global conditions, (Walmart,Pepsi Co,Microsoft, Mc D, KFC, non of them made monopoly market, Just give one monopoly brand of current days)
    Advantages: Huge Money will come in to the country , Building & maintenance, cold storage, cash registers & software, Technical stuff to be improved in India, Indian market will find global Integration and knowledge. Export of our goods to other countries increases.
    Prices don t rise up as there will be competition with other global markets.
    Trans piracy can be seen in business: no local kirana will pay genuine tax to govt. but govt with these Key players coming will give perfect receipts, guarantee and quality products...along with the tax they pay.(major revenue source in India).
    Farmers are welcoming these Players as hey are the one who are benefited, farmers will get only 10-25 % amount of what market actually sells the product, middleman will eat away all the money. Here Companies directly hire from farmers with loww margin but high volume, surely better the living slandered of farmers.

  • Guest
    amit raj Tuesday, 18 Sep 12

    no i am not aggree with fdi retail in india

  • Guest
    ashish Thursday, 20 Sep 12

    around 2000 crore loss on india bandh..will it help.they could have sortout this in parliment?
    Damn politics...

  • Guest
    Harry Indian Thursday, 20 Sep 12

    This analysis is incomplete. Please consider the following points

    1. The Kinara stores always charge for all packaged goods at MRP (Maximum retail price). This shows that that they have a mutual understanding among themselves. Otherwise competition among themselves should make them sell at lower prices. They have strong associations and political clout as can be seen by the reaction of political parties. They represent less than 5% of the population but enjoy disproportionate clout. The remaining more than 95 % of the population are forced to susidise this category who do not most certainly deserve it since they are not poor people.

    2. The experience in other countries shows that large multibrand retail shops cannot wipe out local shops for various reasons. In India some additional facilities are offered by by many kirana stores like credit to their regular customers, closeness to place of customers residence, home delivery etc. which will keep them in business even in the case of competition from big retail stores.

    3. It is criminal that in a country like India 30% of fresh produce like fruit and vegetables are allowed to rot because of shortage of cold storage facilities or alternative agri processing facilities. There are those that argue for the Government to invest in such facilities but that would mean more taxes to fund it. In any case the effectiveness of such a facility is questionable considering recent news reports of huge losses from rotting of foodgrains in Government godowns through improper storage.

    4. Cheap imports from China is not connected to retail FDI. Such imports are already taking place by smaller traders in India. Please go into the market and see for yourself. Toys, LED decorative lights, electrical goods to name just a few.
    Why blame retail FDI if they do the same. In any case imports can be controlled by higher import duties in case they are harmful to domestic producers.

  • Guest
    ashis Thursday, 20 Sep 12

    After reading your comments on FDI in retail,I think Mamata Banerjee has done a great job.I also heard before that these big retailers have ruined many countries.And it is so easy to ruin India because here governments do not bother.

  • Guest
    shalini srivastava Friday, 21 Sep 12

    FDI is as appeaing as EAST INDIA COMPANY..i agree with u .Food security bill n Jan lokpal must be pass immediatly.

  • Guest
    suridner kumar Sunday, 23 Sep 12

    sir
    In Britain no FDI allow in retail sector because he save the local retailer and lobes. I am against the FDI in India but I favor the technology which they use to store and carry the items means the backend support. In India lost of items are wasted in carry and in store. I am favor to get that technology which they use

  • Guest
    balu Monday, 24 Sep 12

    i too agree with you. Why govt is turned deaf ear towards peoples opinion and givng importance to mncs

  • Guest
    paritosh chauhan Wednesday, 3 Oct 12

    you are thinking about 4 crore small retailers but what about the farmers which forms the 70% population in our country.

  • Guest
    smart boy anjan Wednesday, 3 Oct 12

    F D I Is a good things also but as well as it is bad so we cant say any ting beyond it

  • Guest
    rakesh Wednesday, 3 Oct 12

    this is absolutely right .why our government not trying to improve the storage facilities ?

  • Guest
    A.K.Chaudhuri Thursday, 4 Oct 12

    1.Supermarkets like Spencers Fresh,Big Bazar etc. are already operating in India.They have not displaced small retailers.
    2.The overall discount passed on to customers by big malls is negligible.It is more convenient for customers to buy goods from their local small retailers rather than going to big malls far away.Most of the small retailers sell goods at MRP and keep a large profit.Small retailers can attract more customers by giving better price and service like free delivery etc.
    3.Indians will get an opportunity to enjoy world class products and services legally from international markets.At the moment this demand is met by illegal smuggling.
    4.As per you countries like China,Indonesia,Thailand have experienced tremendous growth in the agro processing industry,refrigeration technology and infrastructure.
    Why are you assuming that it will be a failure in India without trying it out.

  • Guest
    M S SUNIL Thursday, 4 Oct 12

    1) china are having more population than india. China is having 100 % FDI in retail industry.
    2) our population is less than china (may be). govt is experimenting by 49% FDI in retail. How negative effect will come, if china performs smoothly?

  • Guest
    Dr Anil k kothari Saturday, 6 Oct 12

    I agree with the analysis. The import content every year will negate the benifit of one time inflow. I am sure that Govt has some other motive behind opening up of FDI . ONe line is sufficient Opening of FDI in retail will lead to unemployment in india, support manufacturing in china and will benifit America with the huge profit. Already we can see the value addition 10 Ruppee a mkg tamota 100 rs akg sauce, 20Rs Kg potato Rs 400per Kg wafers Rs 20 per KG Maize Rs 500 per Kg Kellog corn flakes what type of profiting is this? PM have u any answer?

  • Guest
    radha Sunday, 7 Oct 12

    very sensible

  • Guest
    Maheshraja Sunday, 7 Oct 12

    i ve lived in the uk for 5 yrs now.. and seeing ur arguement on kirana shops losing out to retail gaints is not completely true.. i live in coventry and in my neighbourhood..we have small time shops, local super markets and govt allocated market for small vendors .
    The consumers here are left the option to chose wht they want from whr they want.. i get most of my stuff from those shop vendors and some other stuffs from sainsbury or tesco etc., as far as i know..these two extremes have successfully co-existed and have benefited cuz of wht they are..

    ppl wont just throw their long term loyalties for those shops to super markets over ngt..they ll get to choose from wider window of choice, its as simple as that.. its utter nonsense to brand everything wrong without seeing them first hand..FYI..CONSUMERS AINT NO STUPID TO JUST RUN BEHIND RETAIL GIANTS..THEY WILL BUY WHR THEY WANT TO BUY..THIS FDI IN RETAIL GIVES THEM MORE CHOICE AND ITS UP TO THEIR WISH TO BUY THERE OR NOT..

  • Guest
    ritu Monday, 8 Oct 12

    i agree with this analysis and the fdi topic should discuss latter not now

  • Guest
    Shubham Saturday, 13 Oct 12

    i m agree with above discussion made ......
    we have to balance this conditions, as our leaders are are in vry hansome sleep.......

  • Guest
    Shubham Saturday, 13 Oct 12

    i m agree with above discussion made ......
    we have to balance this conditions, as our leaders are are in vry hansome sleep.......

Leave your comment

Guest Sunday, 26 Oct 14
x

Sign-up for the NUJS Business Law Diploma

Mooting Premier League 5

Latest comments