25-07-2012, 02:26 PM
IMPACT OF FOREIGN DIRECT INVESTMENT IN RETAIL IN INDIA
IMPACT OF FOREIGN DIRECT INVESTMENT IN RETAIL IN INDIA.ppt (Size: 585.5 KB / Downloads: 91)
THINGS TO REMEMBER
Before we go ahead, we should keep certain basic facts in our mind.
We are a country with huge population out of which majority are unprivileged and Below Poverty line.
We are people with tradition, culture and ethics.
In our country it is very difficult to get alternate employment.
Our survival is because of our collective strength.
The Govt. policies have been anti growth oriented for traders.
The traders voice is not heard by decision makers.
In fact traders have no representation in Govt.
The decision makers do not ever hear him on policy matters affecting his trade.
FOREIGNERS ARE MORE DEARER THAN INDIANS
Indian traders, Businessman and Industrialists have established their leadership across the world.
India is emerging as a big economic power.
Our country is progressing in all economic fields.
We have lagged behind in infrastructure, irrigation power etc. i.e. such sectors which were under control / monopoly of Govt. We could not grow to full potential in such sectors.
These infrastructure sectors require huge investment with larger gestation period. Hence special emphasis has to be given to these section.
It is unfortunate that instead of focusing development of such core areas the govt. want to hand over our established retail trade to foreigners.
It is surprising that suddenly govt. feels that our traders are incompetent to serve the people or handle retail shops OR in disguise of Foreign Direct Investment our retail trade is being sold to foreigners.
WHAT WAS THE CRITERIA FOR FDI
Some time in 1991-92, the then Finance Minister and present Prime Minister Dr. Manmohan Singhji referred to certain criteria for allowing Foreign Direct Investment. These were :
Establishment of basic industries requiring huge capital and advanced sophisticated technology.
Infrastructure projects like electricity generation road building etc.
Projects which would generate employment
WILL THIS HAPPEN WITH FDI IN RETAIL TRADE
Throughout the world it is known fact that huge investment is not required to open a retail shop.
Investment is required to build infrastructure for shop, sophisticated technology is not required in retail trade.
Small Retail shops provide more employment then large chain of Retail stores.
There is no gestation period. Hence business starts from day one.
Instead of developing under developed areas these stores capture prime commercial property in cities.
WHAT DO FOREIGN / MULTINATIONAL COMPANIES DO
In 60s Big foreign houses entered in retail trade in other parts of world.
This is against our culture of “One family One shop”.
These big companies, in order to crush competitors sell goods cheap. Later on effective prices of goods are increased.
These companies buy material from International market. Hence local producers are put to loss
These companies buy in bulk quantities directly from manufacturers. The intermediaries loose business.
After conquering the markets of Europe and America, these companies have now entered Asian markets.
After establishing their footings in Thailand, Indonesia, China, Japan, Philippines, etc in Asia, these companies are now targeting India.
WHAT WILL HAPPEN TO RETAIL TRADE
These companies open chain of shops. With a shop in each area the retail small shopkeepers will be put to heavy loss
Slowly the local shops will start closing down.
These shops will capture the trade.
In countries where they have established their market share is
Name of Country % of Market Share
America 80%
England 80%
Western Europe 70%
Brazil 40%
Thailand 40%
Korea 35%
China 20%
Malaysia 20%
India 3%
Remember example of ‘BATA’ in shoe business.
Imagine Roadside DHABA’s after RELIANCE FOOD CHAIN Starts working.
Cold drink business in India.
WHAT WILL HAPPEN TO LOCAL RETAIL TRADE
No of Retail outlets Between 1981-99 in United Kingdom came down from 56862 to 25800.
Between 1970-80 in Europe about 4 lakhs Retail shops were closed.
Competition shall be limited to Big Retail Houses
In the year 2000 Five Big Fast food companies captured following percent market share :
Country % Share
Norway 99
Swezerland 88
Sweden 94
UK 64
Portugal 57
WHAT HAPPENED IN CHINA
There is a race to capture more & more space for retail trade.
There is allegation of flouting the norms on these stores.
There is anger against these companies amongst general public.
Media is also reporting how traditional shops have been thrown out.
The suppliers and manufactures are also facing problem. These are closing down.
NOW ITS TURN OF INDIA
The tough stand taken till recently by Central Govt., Foreign Retail Traders could not enter India.
It is unfortunate that Central Cabinet has given approval to FDI in Retail Trade.
Shift of Major retail trade to these big companies will render small traders & their employees unemployed.
Many companies with the help of contract farming will sell goods produced in farms directly from their chain of stores.
After establishing control over purchases & sale these companies will start dictating.
These companies will keep only graduates and above in their employment. There will be no scope for employment to under graduate and others.
In the event of non receipt of payment of supplies, it becomes impossible to reach owners.
REQUEST STOP FDI IN RETAIL TRADE
If Domestic Retail Trade is allowed by Big MNC’s etc., there will be Large Scale Unemployment.
A new class of unemployed called “Unemployed Traders” will join the existing force of unemployed persons.
These companies will sell internationally procured products. Domestic Industry will suffer.
Everybody knows how Big Fish eats away small fishes.
Keeping the experience of other countries in mind, Govt. should not take any such decision for which the whole country and coming generation will have to suffer.
SELF EMPLOYMENT IN INDIA
India has huge force of unemployed persons.
Govt. has failed to generate need based employment..
Majority of people in India are self employed.
The Major area of self employment is Agriculture and Retail Trade .
The farmers problems were not addressed timely. They are committing suicide.
WHAT is the future of Indian Traders in India?
WILL next generation pardon us?
WHAT SHOULD GOVT. DO
Govt. should identify the weakness of present retail trade.
Govt. should specify the areas where customers are not being served properly.
Govt. should specify what it expects from retail trade that is not being met presently.
Govt. should publicise the sector / persons who have demanded FDI in Retail Trade.
Govt. should come out with white paper on FDI in Retail Trade specifying the picture after 25 years and 50 years.