51% FDI in Retail India and what it means to us !

51 % FDI in Retail spells doom to mom and pop shops across India – This is going to cause massive unemployment in this sector – India is going to become a dumping ground for substandard global products – Rural India is going to suffer because of this – Once again another East India Company …..the list of false perceptions is just endless..

Pls dont get misled ! All these statements are totally wrong and misplaced. I will counter these claims with my understanding on things as it is and do a narrative of events in the past …

I live in Chennai which happens to be the the automotive hub of the East. We are home to more than 6 global auto majors. Ford, Nissan, Hyundai, Peugeot, TVS and Renault have established their operations out here giving employment to innumerable engineers, graduates and ITI diploma holders. These companies not only produce for the domestic market but also export a major chunk to other third world countries from here. The city itself has expanded upto chengalpet on one end, Oragaddam on other and Sriperumbuddur on another side. The key drivers of all this expansion is the exponential growth of Automotive Industry. Lets rollback 3 decades and examine this industry. Indian consumer had 4 choices of cars the infamous HM Ambassador, Fiat’s Premier Padmini,  Contessa and Standard2000 and it was a sellers market where you as a buyer had to wait for months to take delivery of a car. Notwithstanding you need to have a recommendation letter to get a car. Today its a buyer’s market where the consumer is the king and so many choices and we produce for the world. FDI investments !

Look at Telecom Industry …2 decades back landline was a luxury and the first mobile phones where an outgoing call costs Rs 16. Today an outgoing call is Rs. 0.50 and the choices. The industry itself has grown so huge that there is a mobile phone for your milkman, servant maid, laundry guy, grocerer so on..Connectivity at its best. Quarter to quarter growth of new mobile connection happens today largely in rural India. So many supplementary sectors have grown bcos of this . India is a call center hub for the world. FDI Investments !

Infrastructure Industries are growing at such enormous pace. Our people are building airports in turkey, bridges in Africa, and such magnificent growth transformation in India itself. The Golden quadrilateral is a PPP model where FDI is major. We have some great airports getting built in our metros. Today civil engineers are a big demand in the market whereas a few decades back they were a plenty. Thanx FDI

We have so many reference points in the past , when it comes to FDI in Retail why think otherwise. Since Independence India has been primed as a Agricultural nation ! Largest chunk of our contribution to GDP is from Agriculture, from 65 % it has come down to 36%.  India’s green revolutions, ambitious five year plan have all been impetus to agricultural growth.But slowly it has been dwindling due to urbanisation , growth of service industries and all that. There is a growing divide between the aspirations of rural and urban India.

Investments in retail will empower rural India in a great way, earning potential will increase, larger employment opportunities, better access roads to markets, establishing better logistical modes to market, cold storage facilities, contract farming possibilities, new technologies to improve productivity all that is possible.  Today the farmer is not getting what he is due bcos of the middle man. FDI in retail will empower rural india indirectly, increase aspirational levels too.

Gone are the days when Indians were ignorant and uneducated to fall prey to plunder of large organizations. We are no sitting ducks ! And the govt is proposing right measures of systemic expansion so on.

And as told by one of my friends India is a market on its own and it takes time to understand the factors, demographics of Indian retail market. We are not new to retail experience … today we go to the Spencers, the More’s and Big Bazaars to do large purchases. Tomorro we will substitute them with the Walmarts, Carrefours of the world. Still we will continue to buy those small, immediate things from the kirana store near our home.

People who are raising voices today did so a few years back too when KFC’s and Mac Donald’s forayed into the Food Industry. They said that all the dhaba’s and the hotels will be taken over by these chains. Nothing like that happened … in fact it gave Indian consumer greater choices in the table. And the Industry has grown . Thanx FDI !

 

(The author of this post also has a Degree in Supply Chain Management from MMA (Madras Management Academy) and Anna University . All views expressed here are based on sensible learning of the business ecosystem and realisation of the power of Vitamin M to an emerging Industry.)

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2 thoughts on “51% FDI in Retail India and what it means to us !

  1. All these are fine. should we really allow 51%. why not a JV at 49% instead ? The first scenario that was compared pertains to the Manufacturing Industry. Manufacturing does create jobs and infrastructure and in the process helps supporting industries. This is retail and down the line after 10 years or so, our people would really get used to products available from these outlets and ignore local products. Personally, I feel 49% FDI is a better deal as at this point of time, I do not have complete information on the pros and cons.

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