Foreign Direct Investment (FDI) in Indian retail sector


Foreign Direct Investment (FDI) , unofficially referred as  “ Firangiyon  ki Diwali “  in my social circle , for reasons unknown. FDI is not new to INDIA since 1991, when the government started a slew of economical and financial reforms .Now, the latest hot topic of discussion is FDI in retail Indian market. While reading the recent developments of the process in newspapers , I went back in time to my childhood .The wholesale markets were situated somewhere around at one place in my city , my parents used to visit these markets around first week of every month and bulk order the necessary commodities required to pull on the whole month . Naturally being curious like all children I asked my parents what was that outing all about, my father being a modest middle –class financier replied me that the wholesaler sells the products less than the given M.R.P. I didn’t grasp the real meaning of what he said then, but we used to enjoy a lot with the owner and the sales persons as they gave us small incentives like toffees wrapped in gold colored covers. After a gap of nearly 10 years when I was called for an interview by a major public sector giant, unable to refuse the call letter my father took me to New Delhi for the first time. I was my usual self being inquisitive and curious about each and every thing, I noticed a big shopping complex Wal-Mart while roaming around with my father. I was at awe to see the large displays, beautiful welcome boards.In spite of my father’s pressure I went inside to see what exactly is it selling. The products were entirely new to a small town girl like me. At first I wondered, then surprised as to how these products fit into the Indian culture. After a period of another three years a big show room of Wal-Mart cropped up in my own town a couple of streets away from my home. At first the showroom was filled in with huge crowds, we used to sit on the top of our terrace just to watch the hustle bustle. At present very few people that too on holidays/weekends visit the showroom as if it is a picnic spot.

My first visit to Wal-Mart was very cold .The announcers were announcing something which I was unable to grasp, all the sales persons were dressed in uniforms. There was little or no informal communication between customers and the sales persons. I badly missed my childhood shopping spree. In my opinion Indian’s are accustomed to relationship based networks. We may be compared to China in each and every aspect of development, but according to Jamshetji Tata “In a free enterprise, the community is not just another stakeholder in business, but is in fact the very purpose of its existence”. Unless until the feelings of the community or is not respected any business or venture will not be successful.  This doesn’t mean that we are not in favor of development. China has also introduced FDI in it’s retail markets but it has given the retailers much more ample space and has introduced the changes in a time period of around 10-15 years. Lack of planning and administration will surely invite accusations and opposition from all sections of the society. Change is surely inevitable but the process of change has to be planned in a disciplined way. The retailers whose basic living is sustained by selling the grocery, necessary commodities like cereals, pulses, soaps, detergents etc.  is surely going to face whole lot of change by the introduction of FDI in retail market. The big question which lies in front of our administration is “Are we making sure to sustain the life pulse of the small retailers?”. The second rung cities are surely not comfortable with the big markets selling Food/grocery, jewellery or apparels in wide paned glass show rooms.

They believe the vegetables are cold storage products lack the freshness of the sabzi mandi  , Jewellery designs lack variety which are available in so & so chand and sons  ltd ,,,,, above all apparels are all too much costly or readymade and don’t suit the actual measurements . Therefore to retain the market value and to increase the confidence of not too urban or not too rural areas , the big giants should consider confidence building measures .

A decade before the introduction of self service in shopping markets , there used to be  long lines or crowd in front of a small wholesaler either at month end or in the first week of the month . Slowly and steadily people are getting used to the benefits of self service and window shopping. In a similar manner some precautions and necessary steps should be taken to build consumer friendly atmosphere and also sustain the income of small scale unorganized retailers. Above all it should not be considered as Diwali for some section and Barbaadi for another.

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One thought on “Foreign Direct Investment (FDI) in Indian retail sector

  1. I do support FDI, but in retail sector it will result in branding game of foreign bigwigs and ultimately snatch away the money of common people which itself could be used for building infrastructure. Specially for food items repercussions on subsidised grain being distributed to poor public may be opposite. How will govt. manage to get that wheat & paddy. Govt. argues that this will help building infrastucture for storing grain. But do you think any company whose sole aim is to earn profit will work for well being of millions of people. Can we afford to get our grain bieng rotten & expect others to make space for its safe storage? India is supposed to be agricultural country while western economy is industy based. I am afraid it may result in grain drain by illegal means. However in other commodities we may go open to all.

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