With the hue and cry surrounding FDI in retail, questions arise on its benefits. Is it good or bad for the country? India is a preferred destination for FDI but do we really need it? Aren’t we being conned into believing what is not true? Indian demographics and history of FDI in countries show that it is a bad path to tread. Let’s find out why!
10. Loss of jobs in manufacturing sector:
If the belief is that foreign retailers would purchase products from India; it must be changed for that isn’t going to happen. Most retailers like Wal-Mart look towards China for products. This will directly result in loss of jobs in the manufacturing sector and this has been proved over and over again in countries with FDI in retail. Yes, the government would mandate 30% purchase from Indian industries but that is a very low number considering our country. Unlike domestic retail, international retail would source internationally.
9. Rural India’s progress out of picture:
Those living in cities and urban areas have easy access to food and any other items that a foreign retailer would bring to market. So in this entire hullabaloo about FDI Retail benefiting the poor or the farmers or those in the rural areas is nothing but a bluff! By harping on the tunes of FDI in a sector which really is far behind in the list of areas that need immediate attention; the policy makers only reveal their apathy. Point to contemplate on is how the opening of more retail outlets in the urban areas can ever be beneficial to the underprivileged!
8. No scope for the huge uneducated workforce:
A lot of people who work in the retail industry in India, from production to the retail outlets are semi educated or even unschooled. But this industry has so far helped in running the houses of many such people; whose numbers run up to millions. Poverty would surge considerably if the foreign retail marts decide to employ only educated people.
7. Wrong sector for FDI:
FDI in Education could perhaps have been a better pill to swallow. FDI in Retail sector concentrating on urban areas in not going to revolutionize agriculture or the plight of rural India. There are sectors which are in terminal conditions but the Government chooses Retail which doesn’t solve even half the problems of our nation.
6. Merely a ploy to appease the West:
Government wants us to believe that FDI in Retail would benefit consumers who would then have more choice and bargaining power. But which consumer is the Government talking about; the urban population which is already spoilt for choice? This policy seems more like a concession for the West. But do we really need to do that? If the Government wants Foreign Direct Investment, then there are seriously ailing sectors that could very well use it but certainly not Retail.
5. Would lead to real estate inflation:
The big Foreign Retail Marts need Real Estate Space to open their chains in India. Their stores would need infrastructure which in turn would result in hikes in property prices. If the already inflated and ludicrously expensive real estate industry gets to further bloat their prices on the pretext of these marts; then it is the common man who would be at the receiving end.
4. Farm to Store supply a myth:
Anybody who knows the basics of distribution would be well aware that removing the middle man in a distribution chain is impossible. The produce from the farms cannot even in the idle situations end up directly at the retailers door step. There was always a middleman and there will always be. The only thing that could change if and when these foreign retailers enter the market would be that the middlemen would become more well-off and strong in the chain.
3. Would benefit China more than India:
Take for example the case of Wal-Mart, it is widely known that it imports vast majority of its goods from China. If they enter the Indian market then yes a certain percentage of goods would be sought locally at cheap prices. But the rest would be sourced from China and the gain which we are being promised would be diverted to our not so friendly neighbor.
2. No benefits to farmers:
The pro FDI in Retail Lobbyists are of the opinion that FDI in Retail is going to be the emancipator for the poor Indian farmer. Well, that is anything but true for market does not run on philanthropy or selflessness. Even today a small farmer is like the sole David faced with multiple Goliaths; and if foreign retailers too come in play his plight wouldn’t really change. The foreign retailers wouldn’t pay more to a small time farmer out of charity! So where are the benefits for farmers then?
1. Bane to the small retailers:
In the present context, people prefer shopping from the Big Bazaars in bulk perhaps once a week. The kirana shops that thrived on the sale of items of daily need thus lost a significant percentage of their customer base in urban areas. In this scenario if a large foreign retailer enters the markets with attractive pricing, the purchasing habits of consumers will further alter and gradually the small retailers and kirana shops would cease to exist.