|
|
|
|
|
The entry of foreign players, and FDI, could galvanise the retail sector and provide employment to thousands. Left parties, however, feel it would push small domestic players out of jobs. What is the real picture? By Kushan Mitra In July, when Prime Minister Manmohan Singh travelled to Washington on a state visit, Wal-Mart CEO Lee Scott was one of the high-profile CEOs who made sure that he met the Prime Minister. This was certainly not just a courtesy visit by Scott, because Wal-Mart, the $285-billion behemoth of global retailing, is what some in the US would say, "peachy keen" to enter the Indian market. John Menzer, head of international operations, Wal-Mart, thinks that India is a $250-billion retail market waiting to explode and will provide 'great' organic growth opportunities for Wal-Mart. Wal-Mart already sources goods worth $1 billion from India and several companies are trying to grab a slice of that pie, but $1billion is a mere drop in the ocean compared to the close to $18 billion that Wal-Mart sources from China. But more importantly for Wal-Mart, China doesn't just provide cheap goods for Americans to buy; Wal-Mart sees China as a major source of future earnings. In the eight years that the American retailer has been in China, they have set up 44 stores and employed some 22,000 people directly in their stores. And retailers like Wal-Mart, Tesco and Metro all argue that if India was to open up to retail foreign direct investment (FDI), this story of thousands of jobs can be repeated in India as well. And it isn't just jobs; an expanded retail sector would also become the engine of the economy, driving prices lower for consumers and benefiting manufacturing companies through the creation of demand and, thus, scale at their plants. The problem in India, however, is the same that is holding up pension reforms and airport privatisation, among others, the Left parties. Stuck in socialist ideology from the 1950s, the communists believe that opening up the retail sector would involve the destruction of India's "vibrant" trading community. Sensing an opportunity, the BJP and its NDA allies have ironically also opposed retail FDI using the same arguments of the destruction of the trading community, among others. And the UPA government, trying to push through other reforms, has deliberately decided to go slow on retail FDI, but while making all the right noises about it. Commerce Minister Kamal Nath has never ruled out retail FDI outright, but sources close to the government has indicated that 'political compulsions' will mean that retail FDI is not immediately on the UPA government's radar. However, the success enjoyed by Indian retail players has displayed that retail is a sector that's waiting to explode, as Indian consumers are just waiting for the choice that was hitherto not offered to them. Shoppers' Stop, Tata Trent and Pantaloon are among the fastest growing companies in the country, and now even Reliance is entering the fray with a large-scale retail rollout. More competition in FDI would mean not just an economic boost through more jobs and FDI inflows, it would mean better prices for the consumer - aka the common man - the person the Left parties go hoarse trying to supposedly protect. Retail FDI would benefit the Indian economy and the Indian consumer, and a cloistered world-view will take the country nowhere. India would do well to open up its retail sector.
|
|
Issue Contents Write to us Subscription Syndication INDIA TODAY |
INDIA TODAY PLUS © Living Media India Ltd |
 |
