Indian Government announces FDI in many industries!!

[my2cents]

Do you know the Walmart model in China and the plans for India?

I only know how they procure produce and goods here in USA. Care to tell me what plans they have for India.

 

[my2cents]

I have my own reservations in multi brand retail like Walmart. They source small percent of their goods from local but the bulk of their good are from China and others. Nobody is mentioning how it will effect our already skewed trade balance with China. If these products are imported, how will they provide cheap prices considering transportation costs and duties.

Even assuming they source 30 percent of their goods from local producers and farmers, it is unlikely it will translate into lower prices.

Will it benefit local farmers??

If it is true that it will help farmers, then tell me.... why farming sector is highly subsidized in america??? If farmers are getting high profits for their produce then they don't need any subsidy from the govt. In fact most farmers are given subsidies and are on dole, just to keep them farming.


To a certain extent they may bring efficiency like buying in bulk. But the middle men who maintain quality assurances, provide transportation, oversee good working conditions and provide cold storage facilities kill what ever price advantage they have. In case of India, they may have to build cold storage infrastructure and transport which will increase their overheads tremendously.

Just look at single brand retail.... do you see any price reduction?? Most of these stores are over priced by 30 to 50 percent. In the name of quality and slick marketing these brands extract maximum advantage.

Just look at another statistic. Walmart has 400 billion dollars in world wide sales and only employ 2 million workers. In India, about 50 million are employed in 10 million mom and pop stores and does about same amount of sales ( about 400-500 billion). What will happen to these workers if these multi brand stores reach this scale in business??? In about 5 to 10 years it is very likely their scale will reach this level and you will see mass unemployment and closing of stores.

Don't get me wrong... I am for more choices and quality goods but at what cost to our nation and our pocketbooks.

 

[cloud_9]

I have my own reservations in multi brand retail like Walmart. They source small percent of their goods from local but the bulk of their good are from China and others. Nobody is mentioning how it will effect our already skewed trade balance with China. If these products are imported, how will they provide cheap prices considering transportation costs and duties.

Well most of the American stuff is Made in China while most of the Indian stuff is still Made in India.A cheap product in America is always a Made in China one while a cheap product in India can be a Made in India one or a Made in China one.Now translate that to the store shelves of Walmart or Target in India and USA.

 

[my2cents]

Well most of the American stuff is Made in China while most of the Indian stuff is still Made in India.A cheap product in America is always a Made in China one while a cheap product in India can be a Made in India one or a Made in China one.Now translate that to the store shelves of Walmart or Target in India and USA.

I am for multi brand stores if it will prop up our manufacturing sector. We need to scale up the local produce content to 50 percent gradually.

We need to put local content clause for these multinationals, which will force them to rope in local entrepreneurs to set up manufacturing shop here. This will mitigate the loss in employment because of closure of mom and pop stores.

 

[cloud_9]

I am for multi brand stores if it will prop up our manufacturing sector. We need to scale up the local produce content to 50 percent gradually.

We need to put local content clause for these multinationals, which will force them to rope in local entrepreneurs to set up manufacturing shop here. This will mitigate the loss in employment because of closure of mom and pop stores.

The shopping pattern of Indians will also play a important role in this......we pay an extra 20% on the MRP to get our hands on Verka desi ghee in Oz...while the local desi ghee is also available and a bit cheaper too.
Do you think Walmart will be successful by selling Indians Made in China products.Walmart and Bharti have stores know as Easy Day......even though they stock some Chinese electronic equipment but they also have the Indian one.Bought a Indian to HK conversion plug it was a Delhi made product....the first time I have seen a non-China made one


Reliance one....Big Bazaar(Indian Walmart) has more Chinese content.

 

[imperialmen]

Made in India is not so wide-spread in India. For example, am sitting at my desktop, and will tell you what I see - my Casio calci, my Samsung Galaxy phone, my Logitech mouse and keyboard, my HP printer, electronic components inside the CPU -- all Made in China

Only my LG flatscreen, modem, Sony pen drive and a couple of engineering textbooks Made in India

 

[ajtr]

‘FDI in multi-brand retail will destroy Indian manufacturing, agriculture’

The United States of America and the European Union have been seeking that India permit Foreign Direct Investment in its retail trade. India has obviously resisted the demand till date. Their object is that large international chain must control the food supply chain and the distribution of other items of daily utility in one of the world’s largest markets, which accounts for over one-sixth of world’s population.

In any trade negotiations, you seek counter-concession for concessions you grant. Increasingly, both the USA and the European Union have become more protectionists. Without extracting any concession back, we have taken a unilateral decision, gifting to their retailers the right to control the distribution network in India.

It is good to be a reformist. Traditionally, a lot of us find ourselves on the side of reforms but every change is not a reform. Changes which may end up hurting domestic interests are really counter-reforms. The time for allowing FDI in retail sector in India has still not come.

In recent years, both small and organised retails have grown. A significant investment is being made year after year. The pace at which domestic retail is growing is modest and it is able to co-exist with small retail. However, at this stage, if international retail majors are permitted the consequences will be adverse.`

The first consequence will be an adverse impact on domestic manufacturing. Domestic retailers source domestically. International retailers operate on the principle of buying internationally at the cheapest cost. Majority items to be sold by international retailers are going to be sourced from cheaper manufacturing economies like China. Clothes, shoes, toiletries and other items of daily use are not likely to bear the Indian signature. The fall in manufacturing sector jobs is likely.

India needs manufacturing sector reforms in the first instance, so as to enable us develop into low cost manufacturing economy. For this, we need to improve infrastructure, low cost utilities, competitive interest rates and trade facilitation. Once these reforms bring down the cost of our manufacturing goods, we can expect international retailers to source domestically. In the absence of these reforms, international retailers will be selling the products of low-cost economies, leading to an adverse setback to our already challenged manufacturing sector.

The character of the Indian economy is service-sector oriented. In recent times a survey by NSSO shows a loss in employment. Self-employment continues to be the largest single source of bread earning. Agriculture and retail are the largest job providers in India. Is international retail going to give additional jobs, or is it only going to displace existing jobs? If purchasing power increases with the expansion of Indian economy, it will reflect in the co-existence of structured organized domestic retail and small retail. International retailers with deeper pockets will displace existing jobs in the retail sector, rather than creating additional jobs.

A fragmented market is always in consumer interest. A consolidated market restricts the consumer choices. Thus, if the number of establishments is reduced and consumer options are eliminated, structured retail is hardly likely to serve consumer interests. It can even lead to international retailers with deeper pockets to first sell at low prices, eliminate competition and then exploit the consumers. The consequences of predatory pricing can always be felt.

The Chinese example is thoroughly misconceived. The international retailers like Walmart source their products from China, which they also sell in China and a large number of other countries. China gains hugely because its products are sold all over the world. It can hardly argue that you must source the products from China but not sell in China.

Much is being made out of the backend infrastructure like cold chains will develop only when international retailers enter India. Cold Chain is neither a rocket science nor a proprietary technology. It seems bizarre that in order to set up a chain of cold storages it can be suggested that food distribution chain of India be handed over to corporations controlled by foreign entities. The farm-gate to the factory-gate argument is based on the logic that once middlemen are eliminated, the farmer will get more and the products will become cheaper.

The only agricultural product in the domestic market, which currently follows the farm-gate to factory-gate principle, is sugarcane. If only the market forces operate without the help of a state-advised price, the cane growers would have been put to starvation. If the farmer does prosper on account of international retailers then why it is that the farmers in the USA and the EU have to be subsidized to an extent of $1 billion each day.

Foreign Direct Investment in retail cannot be introduced merely as a knee-jerk response because the government is suspected to have abandoned Economic reforms. We are not opposed either to the concept of FDI or giving an additional thrust to the reform programme. Changes which hurt the Indian economy can hardly be termed as reforms.

(The writer, a senior BJP Member of Parliament, is Leader of Opposition in the Rajya Sabha. This article was originally written on November 30, 2011, when Prime Minister Manmohan Singh tried to push through FDI in multi-brand retail but had to backtrack in the face of fierce opposition.)

 

[ajtr]

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FDI in multi-brand retail is good for the economy


The matter of FDI (foreign direct investment) in retail is best understood in terms of economics, although the FDI policy is a matter of politics. When one is talking about anything that has to do with economics, it is helpful to use a bit of common sense and to stick to the basics, as we will now proceed to do.

FDI in multi-brand retail is being opposed by some, including the BJP. The question of whether FDI in retail is good or not is being hotly debated. To the extent that the debate is related to the economics of organised retail and foreign investment in it, the debate is pointless because it takes only a few minutes to get to the heart of the matter.

Consider these fun facts.

Retailing is an essential service in any large modern economy (or any economy that has hopes of being modern). Organised retail is a necessity only for developed economies because it is the bridge between the production of a large number of goods and a large number of people with specific preferences and varied choices. For poor underdeveloped economies, informal retail suffices given that very few goods are produced and people have little choice.
Organised retail is a good thing in any sufficiently large economy. It increases distribution efficiency, and increases production through increased efficiency in resource allocation. In the absence of organised retail, a good deal of labour is involved in low productivity retailing of small amounts of goods.
Organised retail requires investment, in terms of capital and human resources. This is an obvious fact but is often overlooked. Even if desired, organised retail will not happen if required human resources are missing.
Foreign investment augments domestic investments and is good for the economy. If domestic investable resources fall short of what’s necessary, it is a good idea to attract foreign investment. One large poor economy (which we need not name) did very well over the last few decades by attracting hundreds of billions of dollars in foreign investment.
India needs an efficient retail sector — again an obvious fact that is overlooked by some, perhaps because it is not in their interest to recognise this fact.
India’s domestic resources are insufficient for creating an efficient retail sector.
Therefore inflow of foreign investments in retail is good for India.

But what about the millions of small kirana store keepers? Some of those stores will no longer be viable. Some — not all. Some of the people currently in the unorganised retail sector will find employment in the organised retail sector. Consequently, fewer people will be needed for the same volume of retail — which is another way of saying that there will be labour efficiency gains. Increased efficiency also means higher wages in the retail sector. That is good news. But wait, there’s more.

A growing economy implies that the retail sector will also grow. Given sufficient growth in the economy — which follows naturally under easily obtainable conditions – employment in retailing will grow even with increased efficiency in retail.

It is a mistake to consider the economy a static game. Economies are dynamic structures and it is possible to have changes that benefit some without hurting others. In other words, Pareto improvements are possible. (A Pareto improvement is one by which at least someone becomes better off without making anyone else worse off.)

An example of the dynamic nature of the economy is the telecom sector. At one time, it was feared by some that increasing the efficiency of the sector will lead to unemployment among the telecom labour force. As it turned out, those fears were unfounded since the growth in the economy, and therefore growth of the sector, saw an increase in employment together with higher wages. Not just that, it also led to cost decreases which are reflected in the low prices of telecom services we all enjoy.

The cost of retail is a wedge between the consumer and producer prices. Reducing the size of the wedge is good for everyone with the possible exception of those who gain from the inefficiencies of the current system. The losers will have to find alternative ways of making a living. But that is another story.

 

[Abingdonboy]

Am I the only one who thinks this Mamata b**ch is a peice of s**t who needs to STFU??! Does she want economic growth or not? Also the politicans of India are too selfish and egotisitic to look beyond their own noses and see the bigger picture. If the BJP is so "pro-Buisnees" wtf is it opposing this? Once again oppostion just for the sake of oppostion.

 

[Jade]

These are small steps, nevertheless good steps. It has to be seen how resolved is the government in implementing them. Political risks are often high in India. Reforms are continuous process. We cannot announce some big reforms and wait for another ten years to announce another set.

 

[ajtr]

Made in the United States

India has buckled to outside pressure by allowing in the multinational retailer — the only beneficiary of this move

For U.S. President Barack Obama there could be nothing more cheering. The ‘underachiever’ now goes to the presidential polls with a lot of confidence — India’s decision to open up FDI in multi-brand retail comes as a shot in the arm for the beleaguered American economy and will obviously boost his poll prospects.

Mr. Obama certainly knows what is good for the U.S. economy; Prime Minister Manmohan Singh also knows what is in America’s interest. Mr. Obama, for instance, wanted to stop outsourcing to protect U.S. jobs. No amount of persuasion from India changed his mind. Similarly, knowing how important FDI in retail is for him, he had pitched for a new wave of economic reforms. It was surprising to see Mr. Obama telling India what is good for us.

Aided and abetted by TIME magazine and credit rating agencies like Standard&Poor’s, Fitch and Moody’s, India finally buckled under global pressure. What is little known is that India was also under a G-20 obligation to remove all hurdles to the growth of multi-brand retail.

But is FDI in retail really good for India? Will it improve rural infrastructure, reduce wastage of agricultural produce, and enable farmers to get a better price for their crops? While a lot has been said and written about the virtues of big retail, let me make an attempt to answer some of the big claims.

Agriculture: The Prime Minister has repeatedly projected FDI in retail as a boon for agriculture. Unfortunately, this is not true. Even in the U.S., big retail has not helped farmers — it is federal support that makes agriculture profitable. In its last Farm Bill in 2008, the U.S. made a provision of $307 billion for agriculture for the next five years. .

Where is the justification for such massive support if big retail was providing farmers better prices? And let us not forget, despite these subsidies studies have shown that one farmer in Europe quits agriculture every minute.

The second argument is that big retail will squeeze out middleman and therefore provide a better price to farmers. This is again not borne by facts. In the U.S., some studies have shown that the net income of farmers has come down from 70 per cent in the early 20th century to less than four per cent in 2005.

This is because big retail actually brings in a new battery of middlemen — quality controller, standardiser, certification agency, processor, packaging consultants etc. It is these middlemen who walk away with the profits and the farmer is left to survive on the subsidy dole.

Monopolistic power enables these companies to go in for predatory pricing. Empirical studies have shown that consumer prices in supermarkets in Latin America, Africa and Asia have remained higher than the open market by 20 to 30 per cent.

And finally, the argument that multi-brand retail will provide adequate scientific storage and thereby save millions of tonnes of food grains from rotting. I don’t know where in the world big retail has provided backend grain storage facilities?

FDI is already allowed in storage, and no investment has come in. Let it also be known that even the 30-per-cent local sourcing clause for single-brand retail has already been challenged and quietly put in cold storage by the Ministry of Commerce.

Employment: The Indian retail market is estimated to be around $400 billion with more than 12 million retailers employing 40 million people. Ironically, Wal-Mart’s turnover is also around $420 billion, but it employs only 2.1 million people. If Wal-Mart can achieve the same turnover with hardly a fraction of the workforce employed by the Indian retail sector, how do we expect big retail to create jobs? It is the Indian retail sector which is a much bigger employer, and big retail will only destroy millions of livelihoods.

State government’s prerogative: Very cleverly, the Central government has allowed the State governments the final say in allowing FDI in retail. This may to some extent pacify those State governments opposed to big retail. However, the industry is upbeat and knows well that as per international trade norms, member countries have to provide national treatment. Being a signatory to Bilateral Investment promotion and Protection Agreements (BIPAs), India has to provide national treatment to the investors. Agreements with more than 70 countries have already been signed. State governments will, therefore, have to open up for big retail. Industries will use the legal option to force the States to comply.

And more importantly, let us look at how the virus of big retail spreads, even if the promise is to keep it confined to major cities. Recently, a New York Times expose showed how Wal-Mart had captured nearly 50 per cent of Mexico’s retail market in 10 years. What is important here is that as per the NYT disclosure “the Mexican subsidiary of Wal-Mart, which opened 431 stores in 2011, had paid bribes and an internal enquiry into the matter has been suppressed at corporate headquarters in Arkansas”.

In India, we are aware that Wal-Mart alone had spent Rs.52 crore in two years to lobby, as per a disclosure statement made in the U.S. It has certainly paid off.

 

[ajtr]

Am I supposed to be a mute spectator, asks Mamata

West Bengal Chief Minister Mamata Banerjee and Trinamool Congress supporters hold a rally in Kolkata on Saturday to protest against diesel and LPG price hike. Photo: Sushanta Patronobish

West Bengal Chief Minister Mamata Banerjee has said her party may have to take some hard decisions at its meeting on Tuesday if there is no rollback of the measures announced by the Centre in the last few days — hike in diesel price, a cap on supply of domestic LPG cylinders and the decision to allow FDI in multibrand retail.

“The battle will go on as we are committed to the people,” the Trinamool Congress leader said.

In a democratic set-up, reforms must reach the poor and the common people. Reforms did not mean selling out everything to satisfy some sections, she said on Saturday, reaching out to people through the social networking platform and also by hitting the streets — for the second time this year against the Centre’s decisions.

Addressing a gathering after a two-km protest march here, Ms. Banerjee said she believed in the stability of government (at the Centre) and had put up with decisions imposed on her party. “They do as they please ... Am I supposed to be a mute spectator?” she asked, adding the Centre had to share the concerns of allies.

“We don’t want government to fall, so we tolerate a lot of things,” she said, adding the decisions made since Thursday dealt a huge blow to the people in one fell swoop.

Dismissing the option given by the Centre on FDI in multibrand retail — it is for the State governments to decide whether or not to allow FDI funded stores — Ms. Banerjee said no one was fool enough to believe that there could be alternative approaches to a single policy.

Demanding that people be given at least 24 subsided LPG cylinders (against the cap of six announced by the Centre) Ms. Banerjee said the States, and not the Centre, generated the revenues for funding subsidies.

Earlier, at the Secretariat, she responded to reporters’ queries saying, “They [the Centre, with the LPG policy] have set kitchens on fire.”


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First time i'm seeing a CM leading the protest march in .........its basically the job of opposition.

 

[imperialmen]

Yes Mamata! Please STFU and be a mute spectator! Please! We all frikking hate you!!

 

[Marxist]

Goods will come from China, ownership will go to US & Eu &,India will become a nation of sales boys & girls - Arun Jaitley

well said

 

[ajtr]

Farmers hail FDI in retail as politicians continue to fight

Hapur: The SMS from Sunhara Walmart is the gateway for modern retail and better prices for 54-year-old Santosh Lata and 150 other farmers of Hapur on the suburbs of Delhi. Santosh and many other women like her get on to harvesting vegetables from their farm, load them in bullock-cart and bring to a collection centre. The project is funded by the Walmart Foundation.
Santosh says, "Earlier we used to send the vegetables to mandi. It wasn't good. Sometimes we would get Rs 50, sometimes Rs 100. We would not earn any profit. Bharti Walmart has helped us earn profit and we are very happy with it."
In just a matter of six months, the project has brought 800 such women farmers from eight villages in Uttar Pradesh under this programme.
When MNC retail chains buy directly from farmers, something that Bharti Walmart is doing here in Hapur, then the need of middlemen or the commission agent gets eliminated which saves these farmers from lot of botheration and wastage of their product.
In a usual supply chain, the farmer who does the maximum investment and puts in all the hard work gets just about 20 per cent of the whole price and the commission agent takes about 45 per cent of the share.
Santosh is getting paid Rs 3300 for 4 days' supply. In mandi she would have earned not even half of this amount
End users also have an advantage as quality is strictly taken care of.
Laxmi Jan Seva Sansthan secretary Neelam Tyagi says, "Earlier the farmers were growing vegetables at their level. But ever since ASI, Bharti Walmart have come, the quality of the produce is being taken care of. Harmful chemicals are not used. The quality of the vegetables here is differnt."
As the government puts FDI in retail on hold, there are some who are seeing value and freedom from middlemen in modern retail.