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51% FDI in retail exceeded Walmart's initial expectation

Walmart, world's largest retailer, had informed the industry ministry last year that it is comfortable with India allowing 49% FDI in multi-brand retail, in view of "political sensitivity" in the country. The Union Cabinet in its decision of November 24, which has since been put on hold, permitted 51% FDI in the multi-brand retail, well above expectations of the Walmart and its Indian joint venture partner - Bharti Group. In its response to the discussion paper by the Department of Industrial Policy and Promotion (DIPP), Walmart India President Raj Jain, also Managing Director of its joint venture with Bharti, said that the US giant would ideally like 100% FDI. However, for starters, it is comfortable with 49%, he added. "Bharti Walmart recognizes, however, the political sensitivity around the retail sector. Recognizing the government's stand to adopt a calibrated approach, we would endorse a position where as a first step, multi-brand retail is opened up at 49%," Jain said in the memorandum submitted to the DIPP on July 30, last year. Similar views were expressed the American Chamber of Commerce (Amcham) which has around 500 members, 95% of whom are the US firms with operations in India. "... given the government's desire to have a calibrated approach, Amcham recognizes the importance of a phased change of allowing the first step of 49% FDI," it said. However, French retailer Carrefour and the US-India Business Council pitched for 51% foreign stake in multi-brand retail right from the beginning. FDI in retailing was permitted in China in 1992. Foreign retailers were initially permitted to trade only in six Provinces and SEZs and foreign stake was initially restricted to 49%.

Should India Allow 51% FDI In Retail Sector?


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2. Indian economy & politics is at a crucial point in history. Government of India has agreed to allow 51% Foreign Direct Investment aka FDI in the retail sector. The opposition has made it clear that they're going to resist this decision by the Indian Government. Those who aren't aware; FDI brings in capacity of the foreign investor to gain control in management, JVs, transfer of technology (questionable) etc. FDI also ensures that the investor gains control of the assets, land and in few cases, mines as well. The Government claims that FDI will ensure a greater benefit to the farmers; which in my personal opinion is a big joke. In my opinion; Government is making a huge mistake (or is it deliberate?) by allowing FDI in retail. Instead of encouraging competition among Indian retailers; allowed FDI, in my opinion is suicide. I wish to know what CEans think about the whole burning issue of FDI. Voice your opinion.
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Guess what? I am supporting FDI (Provided FDI is limited to foreign countries!). According to me, India does not need foreign direct investment. What it really needs is proper nurturing by Government. For those who have seen news recently know what will be the bad impacts of FDI in India. Even China has placed stringent restriction on such type of Investment. Thailand has destroyed its retail market because it has allowed 100% FDI. Is it beneficial to Farmers? I don't think so. You see that if we Indians even after so many years have not been able to benefit our own farmers. Will the foreigners do it? I think that Farming is actually a very profitable business. People think that it is dependent on weather. It is not so. If farming has been a failed business, it is due to the unavailability of electricity, irrigation facilities, government's wrong minimum support prices etc. To tell you the truth, do you know how minimum support price is fixed? It is dependent on the cost incurred. And how is this cost incurred fixed? The labor done by farmer (who owns a farm) =INR 102.75 per day. Laborers employed by the farmer= INR.102.73 per day. So how wrong that a master earns just 3 paisa more than the laborer?(ridiculous) On what basis are you establishing these figures and

prices? (The figures are true as per my knowledge in markets around Nagpur) Only if we are able to fix our internal drawbacks, I don't think that we will ever require an FDI. Here is what we can do. 1. The government can invest in our own infrastructure. 2. Indian companies or Indian private players can come in farming sector and improve the farming infrastructure. Are these suggestions that hard to implement?

Issue said:

Guess what? I am supporting FDI (Provided FDI is limited to foreign countries!). According to me, India does not need foreign direct investment. What it really needs is proper nurturing by Government. ... ... Only if we are able to fix our internal drawbacks, I don't think that we will ever require an FDI.

Your response is very confusing. FDI - which we are talking about is inward FDI by *foreign* companies . Or are you referring to outward FDI? Are you supporting Indian government's decision or opposing it?

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oops sorry for confusion. I am trying to say FDI looks good outside India. We do not require it here. (In marathi- Durun Dongar Sazre!) To make it clear: I am opposing government's decision for 51% FDI in retail.

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I won't say a big no for allowing 51% FDI in retail sector. Too early to say no to the new changes. I do not want to sound like a pessimistic still, do you think that we are doing wonders with our current policies?? For me, for an example in farming sector, at-least FDI will stop the benefits of middleman who take unnecessary advantage and eat the margins from the poor farmers. After allowing FDI in retail sector farmers may tend to get higher prices for

their products by directly purchasing by these retailers. Since ages middlemen are keeping the prices given to farmers low. Big retail companies will find direct purchasing profitable thus farmers may get a better deal for their products. Consumers also stands to gain as prices may go down due to direct purchase and competition. Although one may say that I am trying to live in illusion world, but you never know. And look at the history FDI worked wonders for China, South Korea, Singapore and other countries. You never know if it will click for India as well. Also, its not something written on stone; if it won't work decision can always be reverted back ??? Your Thoughts Please. -CB

A Bharti Walmart spokesman says the cash-and-carry wholesaler sources about 90% of its products locally. Bharti Walmart has built a direct network of 400 SMEs in less than three years of entering the country. And more than 40% of its total products are supplied by small and micro enterprises. Future Group, the country's largest retailer, has more than 4,000 SMEs supplying more than 35% of its total requirements. "They have become our partners for a decade now and understand the business well to service us accordingly," says Future Group Chairman Kishore Biyani. He says it is important to source from smaller business because the retail business is highly localised.
source: Economic Times

While potatoes sell at an average of Rs 10 to 12 per kg in the market, farmers get less than a rupee per kg and profits are pocketed by middlemen its the same with major fruits and vegetables In a report submitted to Prime Minister Manmohan Singh in March, the committee of a group of chief ministers chaired by Gujarat CM Narendra Modi.prioritized reducing farm gate to retail costs, saying, "To some extent, farmers will benefit from promotion of organized retail/contract farming as it will have stakes in increased farm production." Hence I would support FDI in retail and it would bring a new group of

organized retail in India and large opportunities for sme's as well as farmers. We need thinnk about 70% of people who live in villages rather than think of only those in cities.

It is true that farmers get less than a Rupee for the their potatoes. It is of course pocketed by midle men. But why can't we invest our own money? Why do we need foreign direct investment? We can have more food chains like Haldiram and Narula. Depending on others will not solve our purpose. To me, investment is necessary but it should not be foreign killing our businesses. One more fact- It is true that around 10 million jobs will be created. I agree. But it will be on the cost of 50 million self employed people in retail sector. Walmart and other food chains have been notorious even in their home countries America! Investment by our companies in farmer's interest will be more beneficial. It will take time it will be a sure shot option of removing most of the drawbacks in our Public distribution system. Do u think Haldirams is not selling for very high margins?? Yes it is also doing the same thing Its MRP's are more twice the selling price to wholesalers @Issue : It would have an Indian partner even if it is allowed 51% in company Dont you go for ICICI Lombard , Bharti AXA, Vodafone Essar , Bajaj allianz, Tata Docomo Aren't Lombard , AXA, Vodafone , Allianz foreign companies. Have destroyed the indian insurance or communication sector In Fact NTT Docomo in India has revolutionized the pricing with paisa billing the same will become with retail sector

Gandalf said:

Do u think Haldirams is not selling for very high margins?? Yes it is also doing the same thing Its MRP's are more twice the selling price to wholesalers

See in a similar way, foreign retail brands will also charge high just like HaldiRam. You just said it!

See, initially the foreign retail chains will be giving out products at lower prices. Once the local unorganized retailers are finished, they will be selling things at exhorbitant rates. They will be just trying to get monopoly.
Gandalf said:

@Issue : It would have an Indian partner even if it is allowed 51% in company Dont you go for ICICI Lombard , Bharti AXA, Vodafone Essar , Bajaj allianz, Tata Docomo Aren't Lombard , AXA, Vodafone , Allianz foreign companies. Have destroyed the indian insurance or communication sector In Fact NTT Docomo in India has revolutionized the pricing with paisa billing the same will become with retail sector

Yes, there will be good effects as well but it will be limited to those 10 million jobs. Just think of it, the market comprises of 50 million people today! Will it be good to have 10 million salaried people and lose 50 million self-employed people? By the way, telecom revolution was also contributed by many Indian companies including Dhirubhai Ambani's Reliance etc. I agree with what all of you have said, but there still are things one must consider here. While some of you are of the opinion that instead of allowing foreign players make out a business here, we should let the Indian players do the same. Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation. It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. All of a sudden when they noticed the north Indians coming in numbers and driving taxis and opening up street side stalls selling fruits and veggies and other stuffs, they felt endangered and started beating them up and protesting against them asking them to go back and not take away those work opportunities from the local marathi manoos. I dont understand where did the taxis and the roads go when the north Indians were missing until a few years ago. Could the same marathi manoos take up those work and feed their families then? They did not care and not that someone else is doing it, they dont want them to do it to. A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do? We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the

prices to their advantage. Though, like CB mentioned, there is a possibility that allowing FDI may erode away the middleman business. But on practical grounds this really wont be possible again. What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets. Remember, these foreigners are coming here to do business, and not to show mercy on our poor farmers! But all in all, I support allowing more FDI into our retail market. The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others. A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period. I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best
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2. I agree with what all of you have said, but there still are things one must consider here. While some of you are of the opinion that instead of allowing foreign players make out a business here, we should let the Indian players do the same. Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation. It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. All of a sudden when they noticed the north Indians coming in numbers and driving taxis and opening up street side stalls selling fruits and veggies and other stuffs, they felt endangered and started beating them up and protesting against them asking them to go back and not take away those work opportunities from the local marathi manoos. I dont understand where did the taxis and the roads go when the north Indians were missing until a few years ago. Could the same marathi manoos take up those work and feed their families then? They did not care and not that someone else is doing it, they dont want them to do it to. A similar situation with the retail market. The retail market has been there for the Indian businesses

to take advantage off. But what happened? Did the farmers gain anything? or did the customers do? We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the prices to their advantage. Though, like CB mentioned, there is a possibility that allowing FDI may erode away the middleman business. But on practical grounds this really wont be possible again. What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets. Remember, these foreigners are coming here to do business, and not to show mercy on our poor farmers! But all in all, I support allowing more FDI into our retail market. The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others. A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period. I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best

A great diplomat. Think of taking up Politics as a profession


optimystix said:

Why dont you see that the Indian markets were open to these 'Indian' players for decades now! We had the money and time but not the interest to do something on it. Its only when the foreigners are showing interest here, that we suddenly feel endangered about the entire situation.

I disagree. The first question that needs to be asked is; do we really need malls? Do we *really* need imported products? Do imported products imply quality? Or are we seeking comfort in believing the advertisements that are false, misleading and deceptive? Buying fresh vegetables from the hawker who brings them at your doorstep every morning is more luxury than wandering kilometers inside a mall while pushing the shopping cart and even saner than spending 1.5x the money on the same goods. Think about it.
optimystix said:

It is highly analogous to what the political party MNS was doing to the north Indians in Mumbai. ................They did not care and not that someone else is doing it, they dont want them to do it to.

I think this is off-topic. Can't find an analogy. Even if it is; it's a separate issue.

optimystix said:

A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do?

What do farmers have to do with the FDI? The issue of farmer suicide is *not* a money problem; it's an administration problem. The government is clearly misleading people by saying FDI will help the farmers.
optimystix said:

We still pay the same prices for goods (inflation adjusted) and the farmers get the same rates too. Its the middlemen who have always benefited and manipulated the prices to their advantage.

Companies like Walmart, which are likely to enter Indian markets through FDI won't have a magic wand to eliminate the middle-man. The worst: Walmart will directly sell the products imported from other countries. The company would take huge amounts of profits from India and the process would even kill more farmers. Of course, the middle-men would die too. I clearly see that the problem of middlemen or farmers not getting the benefits is a problem that should be associated with administration. If the government is failing in administration; it should resign, instead of letting someone else do the damage.
optimystix said:

What will instead happen is- the farmers getting the same rates, the cusumers paying the same prices and all the money that used to go to the middlemen earlier would go to the foreigner's pockets.

Why is this good?


optimystix said:

The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.

Nothing hurts me more than the above lines. Are you thankful to the British for that? Why can't Indians build their own infrastructure? Because, we don't have the money? Sick! Get those billions of trillions of dollars from Government treasury and Swiss Banks then. *THAT* is the real fix to the problem.
optimystix said:

A similar kind of a situation took place when we were trying to open our markets to the foreigners in other cases such as the stock markets, retail, telecom, automobile etc. Today, the influx of foreign players in automobile market has been a boon to our economy. We have better quality, low cost cars than in most parts of the world and our homegrown companies such as Tata's and Mahindra's got into the competition groove and have become international players in a relatively short period.

Your words assume that Indians themselves are good for nothing. Had there not been foreign hand; Indians would have died of poverty. I object.
optimystix said:

I think, we should take our chances with FDI. Atleast, they will bring in order and discipline in this segment if not help us benefit financially. Higher 'chances' are that our local producers will get 'better' price for their products. Some of them surely will, if not all. Let's hope for the best

It's already too late. Ever since Independence, the ruling parties have done damage after damage. First they borrowed money from the world banks and deposited in their pockets. Then declared that India can't repay - so they opened Indian markets for the GRAND LOOT - called 'Globalization'. Sick - we're 'proud' of it!
The_Big_K, Dec 6, 2011 #13

optimystix said: A similar situation with the retail market. The retail market has been there for the Indian businesses to take advantage off. But what happened? Did the farmers gain anything? or did the customers do?

The_Big_K said:

What do farmers have to do with the FDI? The issue of farmer suicide is *not* a money problem; it's an administration problem. The government is clearly misleading people by saying FDI will help the farmers.

One of the Ways in which it would help farmers


Regardless of the merits and demerits of foreign direct investment (FDI) in retail, the fact is that a tie-up between organised retailers and farmers benefits both, as also consumers of farm goods.

Retail chains, irrespective of whether they are owned by foreign or local companies, usually find it advantageous to source their supplies of fresh agricultural produce locally, preferably from the growers themselves. For this, they do not grudge investing in cold stores, refrigerated transportation and other necessary infrastructure. It is also in their interest to introduce improved technology for production and post-harvest treatment of farm products to enable farmers to produce goods of the desired quality. Viewed from this angle, the governments decision to permit FDI in retail with the insistence on a 50 per cent investment in

back-end infrastructure and at least 30 per cent procurement from small processors and manufacturers seems a welcome move. However, farmers could have gained more without the rider of confining the foreign-funded retail industry to big towns with a population of above one million. In fact, it would have been better to incentivise organised retail chains to spread out to relatively smaller towns to bring them closer to farmers. That will facilitate better integration of the rural economy and urban markets through easier backward and forward linkages. It is indeed noteworthy that despite adverse reactions from several quarters, rural-based political parties like Punjabs Shiromani Akali Dal and governments of agriculturally advanced states like Punjab, Haryana, Rajasthan, Maharashtra and Orissa, among others, have hailed the Centres move to open up the retail sector. The Confederation of Indian Farmers Associations (CIFA), in any case, has been demanding greater investment, including foreign investment, in rural infrastructure and retailing. The federation, which spearheaded the crop-holiday movement in Andhra Pradesh, has even sought a special session of Parliament to consider farmers demands that include FDI in retailing.

Lack of access to efficient and competitive markets and a paucity of modern facilities for post-harvest management, especially perishable items, are among the significant constraints that farmers face in raising their incomes. A sizable part of the total farm output, 30 to 40 per cent, is spoilt even before it reaches markets. Unfortunately, much of this loss goes to the farmers account. The agricultural marketing network and laws governing it are inadequate and outmoded. Recent official estimates show that there is, on average, only one proper agricultural market in an area as large as 435 sq kms. Even in an agriculturally-advanced state like Punjab, which produces large volumes of marketable farm produce, each regular mandi caters to around 114 sq kms. Growers, therefore, have to either travel long distances or dispose of their produce in local informal markets, like rural haats, at whatever prices offered. Retail trades back-end linkages can change this situation by bringing the market to farmers doorsteps. This apart, the involvement of numerous intermediaries between farms and folks adds to marketing costs, escalating prices for consumers even

while denying reasonable returns to growers. The producers share in the final price paid by consumers is often meagre, less than 30 per cent for perishable items like vegetables and fruit. That is why the present spell of high food inflation has not benefited farmers. Nor has it induced production to respond to demand and high prices the way it logically ought to have. This anomaly can be rectified to a considerable extent through direct linkages between growers and retailers, minimising the intermediaries. This aside, the presence of organised retail outlets nearer villages can encourage these to evolve demand-driven business models that involve the provisions of goods and services needed by farmers. These can include farm inputs as well as supportive services like agricultural extension and bank counters or ATMs to meet most needs of farmers at one place. Some of the indigenous retail chains have already developed and successfully tried such models. Others would surely stand to gain by emulating them.
source : Opinion Articles on Business Standard I am still skeptical about FDI in INDIA but I am changing my opinions lately. I was not too 'for' for FDI, but then what better way than push someone to the wall to get benefits for the common man? We did not have 51% FDI in INDIA in last 60+ yrs, what major changes have been noticed? Are we happy with the 'healthy' competition ? all we see is huge rise in inflation.We see food grains stored in tones and going waste in go-downs .We see onions and tomatoes rotting and waiting for a price hike to be released in the market.One major point being put forth for implementing FDI is improvement of supply chain. I believe that is true.The amount of food wastage would be reduced due to stringent profit making policies. The need of middlemen would also be reduced. When people start getting better and fresh food from foreign investors, internal players too will UP their game. I some how believe the infrastructure would as well improve to accommodate these changes. As well, WALMART,Wollies wont be putting a threat to mom-and -pop stores(kirana stores) in INDIA. Obviously at 7 am you would not wait till it strikes 10 am to go to WALMART, don't forget that WALMART and similar stores need huge floor area and obvious choice to establish such stores would be far from city and no one would travel that far to buy stuff like toys/furniture or toothbrush or for that sake fruits and veggies. Only people who love to say -" we went to Wollies last nite" might Recently a famous who-doesnt-deserve to be named, said she would set ablaze any WALMART that would open up. I don't feel the threat is from WALMART, there is rather a treat from 7-eleven stores to the local kiranas. I agree to someone mentioning about foreign good entering the market. I think some part of solution would be emphasizing on INDIAN manufactured products, at a reasonable price and not stock some cheap products at lower prices. There are many nations which don't have FDI , but still their markets are flooded with Chines products . That's the the point to make here I guess. Foreign products

would be a threat any how. The other day I say KITES which were made in china. Then FDI was not around. So those products were and are still a theat to our manufacturing units. I am still getting to know the pros and cons of FDI , so can't say at the moment. here is a good post --> http://www.globalpost.com/dispatche...e-bowl/indiashould-fear-7-eleven-not-walmart There were some good points by Durga. Not quoting her as you can read her reply above. You see, computer industry was there since 1960's in USA and started blossoming there. But when are we getting into computer business? It is actually in 1990s. So we are lagging. Sam Pitroda, Narayana Murthy etc are responsible for making our country technofreak. There has to be some pioneer for any industry and others then follow suit. For 60 odd years there was no pioneer in Agricultural sector. So that industry was lagging. This is actually Government's job to nurture entrepreneurship among people so that people get more ideas for developing infrastructure and boosting country. Now Optimystix: It is true that I liked your post but it is for the poitive points about FDI that I found interesting. Regarding looting our country, Do we want that our country should be looted turn wise once by Foreigners then by Politicians then by foreigners and again politicians? I only know one thing that 50 millions jobs should not get compromised for a short term vision of creating 10 million jobs. Try to make infrastructure strong on our own guts. Why to use foreign crutches? The best way to stop this argument is to start our own businesses rather than going for salaried jobs, earn money and develop our country. Always remember India is not an investment option. It is our country for heaven's sake and it is more than any anything for us. @Gandalf: The point is Walmart won't just sell fresh vegetables. Their main business will be to stuff the stores with foreign, non-agri products. The mental slaves people have become that they think anything in a shiny package is 'good for health'. I belong to the world of advertising and know how easy it is to fool common people with repeated lies. Just an example: Fair & Lovely (and now, Fair & Handsome) show a blatant lie on TV that they make you fair. Show me *ONE* example where a dark person has turned fair. The bad part is; each of their advertisement makes people believe

dark-skin is actually a bad thing and hinders your chances of success in life. People usually don't have time to 'use' their brain. They'd readily believe any actor posing as a 'doctor' by wearing a white apron.
The_Big_K said:

@Gandalf: The point is Walmart won't just sell fresh vegetables. Their main business will be to stuff the stores with foreign, non-agri products. The mental slaves people have become that they think anything in a shiny package is 'good for health'. I belong to the world of advertising and know how easy it is to fool common people with repeated lies. Just an example: Fair & Lovely (and now, Fair & Handsome) show a blatant lie on TV that they make you fair. Show me *ONE* example where a dark person has turned fair. The bad part is; each of their advertisement makes people believe dark-skin is actually a bad thing and hinders your chances of success in life. People usually don't have time to 'use' their brain. They'd readily believe any actor posing as a 'doctor' by wearing a white apron.

Hence, there comes the real need for education Though i think even if they stock up piles of foreign brands but taken the cost into consideration it would be bought only by upper middle class and the richer classes who any way prefer foreign brands quality over indian Take a car as an example, richer class would still prefer a BMW , Mercedes over a Indian Car like Tata or a Maruti India's Middle class is estimated at 150 million whereas the total population is 1.21 billion 22% of population lives below poverty line Shouldn't we worry about eradicating poverty and illiteracy Creation of job opportunities would give a boost to both literacy rates since it will lower unemployment rate It is presently estimated at 9.4 % i.e 94 persons per thousand are unemployed Advertising has been a field to fool people Coke, pepsi and other carbonated drinks are manufactured for less than 5rs/Litre and sold at around Rs 33/litre Some positives that i feel would boost india's growth story with FDI 1. Increase in Knowledge of retail industry in India to rural areas means Larger Exposure 2. Farmers will be able to know the different new technologies available 3. Our Villages would be able to prevent loss of crops and wastage because he could not sell it and it is perishable Won't The companies bring their profitable technologies and would implement it in

Indian Farms and decrease the food wastage Rabo India's Report to Ministry Of food processing estimates food wastes worth at a whooping 58000 cr every year I see no problem if they are getting utilized Think of the overall population rather than a 12% middle class or a 10 % of upper class Think of a wider population of around 75% This was the point i intended to make by the post of article from business standard
optimystix said:

The British, when they came to India, looted us badly before giving us independence but in return built roads, bridges and buildings of unparalleled quality. In today's case, we are being looted by our own countrymen and the politicians in general. So this wont change. Let the foreigners loot us instead (enough with these politicians) and build us good retail infrastructure-better supply chains, cold storages (which are very badly needed) among others.
The_Big_K said:

Nothing hurts me more than the above lines. Are you thankful to the British for that? Why can't Indians build their own infrastructure? Because, we don't have the money? Sick! Get those billions of trillions of dollars from Government treasury and Swiss Banks then. *THAT* is the real fix to the problem.

But i am afraid biggie that our current political is lacking the will to do so. Our current political is disposing it off away from Swiss Bank and getting some alternative to it Remember Hasan Ali alleged of holding black money of various politicians and we openly noticed how $8 bn was transferred away India has been one of the richest and self sufficient country since ages Hence , Proud to be an Indian In Todays scenario Optimystix seems to be right we haven't changed 1. May it be the MullaPeriyar dam 2. Water Supply Network of Various Cities including Mumbai and various Infrastructure issues lead us to exploring new horizons

CE Mod Squad

@Gandalf: I know politicians are the big part of the problem. But FDI isn't a solution; as it's being perceived. It's just like saying we prefer being robbed by outsiders than insiders. Going by the logic that "they at least built roads and buildings"; I can say that Indian government has 'at least' given us whatever little development (?) we have. Administration is the main issue. Someone will have to accept it sooner or later.
The UPA government is keen to open up the Indian market for foreign investments despite opposition from other parties in Parliament. According to the government,the 51% foreign direct investment will benefit consumers and farmers, and will also aim at bringing down inflation, along with protecting the interests of small traders. DNA Speak Up explores 51% FDI will accelerate retail market growth, providing more employment opportunities It is a basic principle that creating competition in general is good for the market. But I have a doubt that since proper procurement and distribution system is not yet fixed, how will the rest fall in place when the giant retailers enter our market. Back-end procurement will still remain a big problem. The 51% foreign direct investment (FDI) will obviously have a negative impact on small retailers, but it will benefit the consumers as they will have wider choices at competitive prices. It will accelerate the retail market growth and provide more employment opportunities. The debate that by introducing 51% FDI, a lot of money will flow out of the country is an old school of thought. Lot of our Indian companies are operating abroad and have successfully contributed to our economy. The bigger issue is that with benefits we might end up paying a price hence we must work on a reasonable solution. Sumita Kale, economist Farmers will benefit from FDI as they will be able to get better prices for their produce The FDI Bill will definitely have a positive impact on the retail industry and the country by attracting more foreign investments. With big retail giants coming to India, it will surely improve our back-end storage and procurement process. Once these multi-chain retailers establish themselves, they will create infrastructure facilities, which will also propel the existing infrastructure. The farmers will benefit from FDI as they will be able to get better prices for their produce. The elimination of the intermediate channels in the procurement process will lead to reduction of prices for consumers. The regulation in the FDI Bill that 30% of the total procurement has to come from small and medium enterprises will benefit the domestic businesses. Off course a policy is needed to protect the small and medium market channels from Chinese invasion. The fear that FDI will have a negative impact on the small retailers is completely wrong. It is not that everyone will run to these giant retail stores. Anant Sardeshmukh, executive director general, MCCIA Foreign brands will promote healthy competition in market Every time the government brings up the subject of FDI, the domestic retailers with the support of some politicians jump to lobby against the bill. As we are initiating the FDI, there is bound to be some problems, which can definitely be resolved. The government in near future can appoint a regulating body to monitor the retail sector just like other sectors. By allowing 51% foreign investments in the Indian market, it will teach the local retailers about real competition and help in insuring that they give better service to Indian consumers. It is obviously good for local competition and I dont see as a consequence, our local kirana shops disappearing. The kirana stores operate in a different environment catering to a certain set of customers and they will continue to find new ways to retain them. I dont see a problem with FDI as it will boost our economy. Zubin Kabraji, regional director, Indo-German Chamber of Commerce Customers feel that retail stores offer better deals, but they dont realise that they end up buying more If 51% FDI is allowed in retail market, it will be a big trouble for the small shopkeepers. The big giants entering the market will surely impact the small store owners. The government says that the farmers will benefit, but I feel it will just be a temporary benefit. Once these giant foreign retailers have monopoly, they will start exploiting the market. I feel in the long run, it will not benefit the Indian economy. For example in a country like France, Walmart was not permitted to set up its stores whereas in Germany, FDI is not allowed. If the US is not allowing Indian goods to be sold in their market, why should then we give them a chance to

set up base here. The discounts that these big retail stores offer in order to lure customers are also now being offered by our kirana stores. I feel that people should not fall prey to big retail stores because it is a trap wherein consumers end up buying more than what is required. Customers feel that they are getting better deals, but they are at the same time enticed to buy more. Suryakant Pathak, MD, Grahakpeth & Secretary, Grahak Panchayat The govt must discuss properly about 51% FDI and have a law in place to control unfair competition We strongly oppose the government allowing 51% FDI as it will surely have a negative impact on the small retailers in the market. These big companies with huge investment capacity will buy goods at lesser rates and pass on big discounts to consumers, wherein small local retailers will not be able to stand against the competition. By attracting consumers and manufacturers, they will create their own monopoly in the market, which will not be good for the retail market in the long run. We already have big malls then why do we want foreign retail chains? Today, the governments intention is to remove middlemen and give better price to farmers but why doesnt it help in bringing down transport cost, which is increasing due to rising fuel prices. The government must properly discuss the pros and cons of allowing 51% FDI and have a law in place to control unfair competition. When foreign countries dont allow import of food products from India, then why should we allow them in our country. Ajit Setiya, president, Poona Merchants Chamber Once monopoly sets in market, small-time retailers, consumers and farmers get exploited I think that by allowing 51% FDI, it will have a negative impact on our retail market and farmers in the long-term. It will lead to creation of market monopoly, which is not good for economic growth. Bringing in big foreign players will, no doubt, give direct competition to big domestic retail chains but small retailers will eventually get eliminated. Though farmers will get good rates for their produce and storage facilities will improve, these are only temporary benefits. In the history of capitalisation, the beginning is always good but once monopoly sets in, small-time retailers, consumers and farmers get exploited. Subhas Vare, secretary, SM Joshi Socialist Foundation

GK Test study material Due on 23rd December 2011



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