To FDI or Not to FDI?

In India, every opposition party thinks that whatever decision taken by the ruling party is wrong but while they themselves were in the helm, whatever they did was right. Crores spent on each session of a parliament yet our MP’s always find a way to skip the session for one or other reasons. Current winter session also not an exception. Since it started, everyday there is something then other to stall the proceeding. First few days were for 2G Specterm and now it is for FDI. It is the decision that taken by the ruling government to allow FDI in retail. According to my knowledge once it was the idea of two timing BJP government too but as of now they are in the opposition so they decided to oppose it in a way so every MP can stay back to their respective place and enjoy the hospitality for free.

India enjoys a strong position as a global investment hub with the country registering high economic growth figures even during the peak of financial meltdown. As a result, overseas investors rested their confidence in the economy which eventually pushed foreign direct investments (FDI) in India.

All about FDI [Foreign Direct Investment] in retail – The pros and cons.

In India retail trade takes place through five types of outlets - local grocery shops, up market retail shops, departmental stores, supermarkets, and hypermarkets. Local grocery shops are more popular with rural population as well as small towns as shop keepers known to the peoples and they often allow credit transactions. Goods available in most of these shops are unpacked and often quality wise below par. The fear expressed by some people is that allowing FDI in retail trade and the entry of international retailers could lead to a diminution of grocery shops and retail stores.

When we have near about a million such grocery shops when with our population of over 1 billion will be benefited with FDI in retail. It is obvious that the interests of the consumer should take priority over those of the retailer.

FDI will provide access to larger financial resources for investment in the retail sector and that can lead to several of the other advantages that follow. The larger supermarkets, which tend to become regional and national chains, can negotiate prices more aggressively with manufacturers of consumer goods and pass on the benefit to consumers. They can lay down better and tighter quality standards and ensure that manufacturers adhere to them. Many consumer goods manufacturers will find that supermarkets account for an increasing share of their sales and will be afraid of losing this valuable and reliable customer to competition. The fact that a well-known chain of supermarkets sources from a manufacturer becomes a stamp of quality. With the availability of finance, the supermarkets can invest in much better infrastructure facilities like parking lots, coffee shops, ATM machines, etc. All this will make shopping a pleasant experience. The supermarkets offer a wide range of products and services, so the consumer can enjoy single-point shopping.

Small-scale industries have not died. Instead, they have learnt to co-exist as suppliers to large-scale industries. In the case of retail trade, the grocery shops in large parts of the country will enjoy built-in protection from supermarkets because the latter can only exist in large cities. A possible outcome can be that Indian groups with strong local brand quality like the Tatas will collaborate with international supermarket chains like Sainsbury, to set up supermarket chains in India.

INDIA’s  TOP FIVE SECTOR WISE- FDI INFLOWS

FROM APRIL 2000 TO APRIL 2011

Sector	Amount of FDI Inflows (In US$ million)
SERVICES SECTOR	27,668.40
COMPUTER SOFTWARE & HARDWARE	10,821.18
TELECOMMUNICATIONS	10,610.77
HOUSING & REAL ESTATE	9,654.59
CONSTRUCTION ACTIVITIES	9,490.96

!!!Development can take backseat where Mamata Banerjee, CPM and BJP exists!!!