I am yet to understand why some people are opposed to FDI in retail. Are they so blinded by vested interests that they don’t see that this move will prove beneficial for the country?
The government has specified that 50 per cent of the FDI investment in the country should go towards creating rural infrastructure, thus paving the way for a revolutionary change in the face of villages. Of the total fruits and vegetables produced currently, about 40 per cent either goes waste or becomes rotten due to inadequate cold storage facility. Our post-harvest losses remain unacceptably high. A complex chain of middlemen has a cascading impact on supply inefficiencies and prices as well. As a result, on the one hand farmers are unable to secure remunerative price for their produce, while consumer ends up paying more than 5 times the price secured by the farmers. But all this will become a thing of the past once the effect of the new policy starts showing.
FDI will not only bring down prices for consumers, but also provide increased income to millions of farmers in the country. The successful deployment of 100% FDI in China is an example in point. The Chinese retail market was fully opened to retail FDI in 2004, resulting in the sector’s rapid growth. Today, its retail sector is the second largest (in value) in the world.
Multi-brand retail will transform India’s retail landscape in a significant way. Organised players will bring in investment that would spur further growth of the sector. India has also been crippled by rising inflation rates that refuse to come down to accepted levels. A key reason for this has been attributed to the supply chain costs in the Indian food and grocery sales which have been estimated to be a whopping US$ 24 Bn. The infrastructure support of organised retail will improve the backend processes of the supply chain and eliminate such wastages.
FDI in multi-brand retail would also lead to the creation of millions of jobs as massive infrastructure capabilities would be needed to cater to changing lifestyle needs of the urban Indian, who will be quite at ease shopping at supermarkets as well as the friendly, neighborhood kirana store. These stores would be able to retain their importance owing to their unique characteristics of convenience and proximity. Also, organised supermarkets would find it harder to get a footing in Tier-II and Tier-III cities where kirana shops will continue to rule. Take the case of China. Walmart entered that country some two decades ago and has opened over 300 stores till date. Yet it just has only 5 per cent of the market share in China. Local Chinese retail companies are all bigger than Walmart in China.
FDI in multi-brand retail is, therefore, a necessary step that needs to be taken to propel further growth in the sector. This would not only prove to be fruitful for the economy as a whole but also integrate the Indian retail sector with the global retail market.
The government has specified that 50 per cent of the FDI investment in the country should go towards creating rural infrastructure, thus paving the way for a revolutionary change in the face of villages. Of the total fruits and vegetables produced currently, about 40 per cent either goes waste or becomes rotten due to inadequate cold storage facility. Our post-harvest losses remain unacceptably high. A complex chain of middlemen has a cascading impact on supply inefficiencies and prices as well. As a result, on the one hand farmers are unable to secure remunerative price for their produce, while consumer ends up paying more than 5 times the price secured by the farmers. But all this will become a thing of the past once the effect of the new policy starts showing.
FDI will not only bring down prices for consumers, but also provide increased income to millions of farmers in the country. The successful deployment of 100% FDI in China is an example in point. The Chinese retail market was fully opened to retail FDI in 2004, resulting in the sector’s rapid growth. Today, its retail sector is the second largest (in value) in the world.
Multi-brand retail will transform India’s retail landscape in a significant way. Organised players will bring in investment that would spur further growth of the sector. India has also been crippled by rising inflation rates that refuse to come down to accepted levels. A key reason for this has been attributed to the supply chain costs in the Indian food and grocery sales which have been estimated to be a whopping US$ 24 Bn. The infrastructure support of organised retail will improve the backend processes of the supply chain and eliminate such wastages.
FDI in multi-brand retail would also lead to the creation of millions of jobs as massive infrastructure capabilities would be needed to cater to changing lifestyle needs of the urban Indian, who will be quite at ease shopping at supermarkets as well as the friendly, neighborhood kirana store. These stores would be able to retain their importance owing to their unique characteristics of convenience and proximity. Also, organised supermarkets would find it harder to get a footing in Tier-II and Tier-III cities where kirana shops will continue to rule. Take the case of China. Walmart entered that country some two decades ago and has opened over 300 stores till date. Yet it just has only 5 per cent of the market share in China. Local Chinese retail companies are all bigger than Walmart in China.
FDI in multi-brand retail is, therefore, a necessary step that needs to be taken to propel further growth in the sector. This would not only prove to be fruitful for the economy as a whole but also integrate the Indian retail sector with the global retail market.
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