Saturday 6 October 2012

Uttarakhand to allow FDI in Retail | Should You be worried?

Written by Anil Singh

Uttarakhand to allow FDI in Retail.

Uttarakhand Chief Minister Vijay Bahuguna has said that his government would impose Foreign Direct Investment(FDI) in the state to help the farmers.

Going by the FDI Retail policy guidelines, three cities in Uttarakhand -- Dehradun, Haldwani and Haridwar can have Walmart type Shopping malls.

That said. Whether the FDI in Retail will ruin the local retailers in these cities is a difficult question to Answer; when one puts into perspective the Indian Retail giants, like Spencer, Reliance, Big Bazaar, Bharti etc. who since their foundation are making 14-15 percent loss every year.

Whether the FDI Retail will be good for farmers, is a question whose answer doesn't matter. The reason for it is:  Even in the absence of FDI, i.e. now (pre-FDI days), the Indian farmer is not getting the dignified price for its produce; so what worst the farmer can see in coming years. To thrust the point, consider this fact: The potato which is sold Rs 40 per kg in the markets, is procured from the farmer at Rs 1.5 per Kg (The Rs. 38.5 in between go mainly to Indian retailers -- Stockists, Wholesalers  and retailers).

That apart, there's always a possibility of some among you (Youth) will become Organic Farming Entrepreneurs, growing vegetables.

Is there anything good for Customers: That's people like you and I. Yes it has.

The customer will have to pay less for the purchase. If a customer, doesn't get entrapped into 'Buy 2, and Get one Free' sales ploy; he/she will save money (After all if you need One tomato ketchup bottle every month; what will you do with 3 bottles, even if you are not paying for the third one).

The biggest benefit I see of FDI in retail is for Youth. When they work in a Retail Chain owned by a company, they will be considered an employee; and will get organised sector benefits. Benefits which can help them plan their future better (marriage, kids, retirement).

This is entirely different from working at a Local retailer, who treats the employee as a servant, and cuts the salary for the day the person unavoidably skips work.

Here, I want to share with you a real incident. A boy started working at a Provision store (Lala ji ki dukan), when he was just twelve. Last year, his mother was detected cancer. He went to the owner of the provision store for help. The owner told the boy, his inability to help. Acutely distressed, the boy has to wander in the market and plead several people for help. Surprisingly, when he asked his master for help, his age was 28. That is he can't get a couple of thousands from his master, even after  serving him for 16 years.

If, a job can't give a person future security, can it be called employment?

That said, FDI in Retail is not a monster. Even BJP planned to bring 100 percent FDI in Retail in 2004 (the current Government in contrast, is bringing 51 percent).

If some jobs will be lost, new ones will be created. Farmers will get higher price for their produce.

This FDI thing should be seen from the perspective that: Africa is turning out to be a new market for Indian companies. If farmers get first hand experience, on how to negotiate prices with Retail companies, they will be better equipped to export their produce to new destinations, who knows may be Africa. In short, when India is opening itself to world, world is opening up to India (30 percent of Infosys Revenue comes from US and Europe. Airtel is running mobile services in Sudan).

One of the biggest benefits of FDI in retail will be for Indian agriculture. At present, increasing number of farmers are selling their lands to builders, as there is huge money to be received. But if they keep selling their lands, then from where Food will come?

FDI in retail, has both pros and cons; but to see them, the policy needs to be implemented. To me, FDI in retail looks a positive development.

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