|
New Delhi: A fierce
debate is raging in cyberspace over the cost and benefit of
foreign direct investment (FDI) in multi-brand retail as the
Indian government has once again begun working for its rollout as
a 'must do' economic reform. And most say there is enough room for
global giants like Walmart and the unorganised small retailers to
co-exist.
"I think there is ample room for organised large-scale retailers
such as Walmart, as well as the mom & pop round the corner
stores," said Sudhir Gupta, managing director at Jaipur-based
Enterprise Development Associates.
"Walmart does not give credits and they do not deliver small
orders to your doorstep... the mom & pop store will go miles to
deliver a small order; both have their advantages and both are
necessary for a large economy," Gupta said.
In November last year, the union cabinet decided to allow up to 51
percent foreign direct investment in multi-brand retail. But the
move was kept in abeyance following protests from opposition as
well as some of the allies of the ruling United Progressive
Alliance (UPA), especially the Mamata Banerjee-led Trinamool
Congress.
Sumit Majumdar, professor of technology strategy, University of
Texas, Dallas, says superior technology and knowhow would come
along with the FDI which will benefit the Indian economy.
"Indian industry has a bi-polar structure, with room for the
large/very large firms, possibly all foreign, and small/tiny
firms. In retail, the evolution of a similar structure can be very
good for consumer welfare, assuming real prices at the check out
actually drop because of presumed capabilities and productivity,"
Majumdar said.
Majumdar, author of "India's Late, Late Industrial Revolution:
Democratising Entrepreneurship", said greater competition
resulting from the FDI in the retail sector would lead to lower
prices, which will ultimately benefit the consumers and common
people.
"In retail trade, if because of FDI highly productive and
innovative firms come in, and lead to a drop in prices, it is of
positive value for consumer welfare," Majumdar said.
R. Vaidyanathan, professor of finance at the Indian Institute of
Management (IIM), Bangalore, however said small kirana stores were
quite efficient and the notion of high wastage of food products
because of unorganised retail was not correct.
"My neighborhood kirana person starts shop at 6 am and closes at
10 pm, remembers each customer requirements, gives credit if
needed, delivers home any time; he is called unorganised since he
is not a big company ready to disappoint the shareholders or
banks," Vaidyanathan said in an online debate at live.in.
Vaidyanathan said small business units and non-corporates utilise
capital "very efficiently" while big business wastes it since
"both bank loans and shareholders' money can be written off."
A Jaipur-based businessman Girdhar Bajoria said the neighbourhood
kirana stores were more efficient than the supermarket chains.
"FDI or no FDI, with the existing supply chain being what it is,
the so-called 'unorganised sector' is far more efficient! They can
give a run for their money to the 'organised sector' any day,"
Bajoria said.
Hemant K Batra, secretary general, South Asian Association for
Regional Cooperation (SAARC) in Law, emphasised the need for
allowing FDI in retail as early as possible, saying some political
parties, driven by political considerations, were opposing the
move with a "short-sighted approach".
"For consumer it's always the more the merrier, the greater the
competition, better it is for the consumers," Batra said.
Kishore Khaitan, chairman of the Rajasthan unit of the
Confederation of Indian Industry (CII), said considering the
infrastructure bottlenecks and uncompetitive manufacturing sector,
India was not yet ready to foreign competition in the retail
sector.
"There is a real danger of a surge of Chinese imports as India is
not equipped to compete with China on cost, in spite of the
increasing wages in China," Khaitan said.
Pradeep S Mehta, secretary general of the Jaipur-based Consumer
Unity & Trust Society (CUTS International), said FDI was good for
the economy and opposition to the move was based on various myths.
(Gyanendra Kumar Keshri can be contacted at gyanendra.k@ians.in)
|
Comments
|
Quick links