FDI has been allowed in retail, aviation and so many sectors. In today's globalized economic scenario, it is impossible to remain unaffected by the market forces. We as a nation also look outwardly to other economies for business and job opportunities. A large section of our young intellectual power is working for other countries. So, it is justifiable that others will also come to India for business.
As regards the FDI in retail sector, the government may defend its decision. However, important question is whether we need FDI in retail sector? Do we, really? Shopping malls may provide a glamorous location for shopping but they are not a necessity for retail for a common man? The majority of customer comes from middle class who has limited money and many social responsibilities to fulfill. FDI is definitely not a requirement or solution for this.
Another important aspect is the impact on social fabric. The multilevel marketing industry (Amway and alikes) has already made a hole in this fabric. Their strategy is to make money out of your personal relations. This is not an ethical approach to my view. Coming in of FDI in retail will make another blow in this. In India its not just shopkeeper and customer relationship. It is way beyond that. The shopkeeper (grocer/retailer) is a part of social life, sorrows and joys, equally. In marriages and other occasions, you may get things from him on credit. If its a matter of social or religious cause, he will give you discount much more than expected. This is his indirect contribution to your social or religious cause. Also, the quantity is never a binding factor whether you want to buy some for one rupee or thousands of rupee, it is available. You can not expect FDI's doing this.
One may argue that the foreign companies coming in India are aware of the social concerns and will take care of this. I find it difficult to buy this argument. The retail FDIs can offer things at fantastically alluring prices, may be even for 5 years, initially to catch the market. Once they grab the market, the small retailers would not be there and then monopolistic activities may start.
Economics is a service tool for social development, not the master. The out come change in business environment is very drastic and deeply impacting. For instance, in late 90's AKAI came in a big way with colour TVs at very-very affordable prices in India. The kits were imported from China/Taiwan that gave the company economies of scale and it became a household name everywhere. The company offered a smaller TV free with a larger size TV at very 'reasonable' price. As a result of this, the black and white TV industry was badly and negatively affected. In those days, no one would be interested to buy a black and white TV, not even in slum areas of metro cities, simply because colour TV was available a very 'close' price. Who was bothered about quality? As a result black and white TV industry came to a halt rendering many jobless including those working in ancillary industries. Though, at that time AKAI was owned/represented by an Indian, which later got transferred to another Indian company, the loss was already done. Similar logical apprehension is with FDI in retail.
FDI should be welcomed on the areas where we do not have technology or resources and must not allowed where we do not really need this.
As regards the FDI in retail sector, the government may defend its decision. However, important question is whether we need FDI in retail sector? Do we, really? Shopping malls may provide a glamorous location for shopping but they are not a necessity for retail for a common man? The majority of customer comes from middle class who has limited money and many social responsibilities to fulfill. FDI is definitely not a requirement or solution for this.
Another important aspect is the impact on social fabric. The multilevel marketing industry (Amway and alikes) has already made a hole in this fabric. Their strategy is to make money out of your personal relations. This is not an ethical approach to my view. Coming in of FDI in retail will make another blow in this. In India its not just shopkeeper and customer relationship. It is way beyond that. The shopkeeper (grocer/retailer) is a part of social life, sorrows and joys, equally. In marriages and other occasions, you may get things from him on credit. If its a matter of social or religious cause, he will give you discount much more than expected. This is his indirect contribution to your social or religious cause. Also, the quantity is never a binding factor whether you want to buy some for one rupee or thousands of rupee, it is available. You can not expect FDI's doing this.
One may argue that the foreign companies coming in India are aware of the social concerns and will take care of this. I find it difficult to buy this argument. The retail FDIs can offer things at fantastically alluring prices, may be even for 5 years, initially to catch the market. Once they grab the market, the small retailers would not be there and then monopolistic activities may start.
Economics is a service tool for social development, not the master. The out come change in business environment is very drastic and deeply impacting. For instance, in late 90's AKAI came in a big way with colour TVs at very-very affordable prices in India. The kits were imported from China/Taiwan that gave the company economies of scale and it became a household name everywhere. The company offered a smaller TV free with a larger size TV at very 'reasonable' price. As a result of this, the black and white TV industry was badly and negatively affected. In those days, no one would be interested to buy a black and white TV, not even in slum areas of metro cities, simply because colour TV was available a very 'close' price. Who was bothered about quality? As a result black and white TV industry came to a halt rendering many jobless including those working in ancillary industries. Though, at that time AKAI was owned/represented by an Indian, which later got transferred to another Indian company, the loss was already done. Similar logical apprehension is with FDI in retail.
FDI should be welcomed on the areas where we do not have technology or resources and must not allowed where we do not really need this.
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