Looking at the BJP, one often gets the impression that they have been afflicted by the Subhash Ghai disease, an obsessive compulsive disorder wherein the sufferer tries to recycle in the 2010s what worked in the 90s. With disastrous results. For instance, who else believes in 2011 that calling a jeep a “Rath” will make those riding in it appear like mythic Hindu heroes?
Well I might have been wrong about the exact decade in which the BJP’s clock stopped working. It was not the 90s after all. Hearing Arun Jaitley speak of the perils of having our food supply in “foreign” hands, all I see is a desperate attempt to revive the pop-culture bogeyman of the license-raj 70s days, that phirang Bob-Christo archetype snarling in his accented Hindi about “dirty Indians” while the noble Manoj Kumar would be tied up in a galley, looking to the side surreptitiously at Hema Malini,a symbol of India (or more precisely its food security) caught in the vice-grip of foreign avarice, writhing sensuously on deck.
Will FDI in retail devastate India?
I think I would be able to answer this question better if I understood the significance of the term “foreign” in today’s globalized marketplace. Corporations, you see, don’t have countries. Like Jeniffer Lopez, they just have bottomlines. That’s the only thing they are loyal to.
Consider this. The most “American car” (i.e. most parts sourced from manufacturers in the US) according to this article is the Toyota Camry (80% US parts). Yes Toyota, a “Japanese” company does more for supporting US manufacturing than the American “domestic” manufacturers. Not that this says anything about Toyota’s “national” loyalties. The Japanese auto giant is doing this as a PR counter to the chest-thumping “Buy domestic” advertising campaigns of their traditional America-based rivals, demonstrating their superior “patriotism” to their American customer-base. (Honda is the company which comes second on this “patriotic” scale in the US. Says something for corporate patriotism doesn’t it?)
I have been hearing some of the arguments from the FDI haters. “They” will flood the market with cheap Chinese manufactured goods, killing off Indian local manufacturing. And wait, why do we think that Indian-owned retail stores don’t or won’t do this? Oh because they are patriotic.
“They” will force small Lalaji stores out of business. And somehow Indian-owned retail chains won’t?
Not that I do not get the logic that underlines all of it. The Walmarts of the world have huge resources, they will come in, install their patented, mega-efficient supply chains, lower prices to unreasonable levels, muscle local competition out and then raise prices back again, reap ginormous profits, flow the capital back to the mother-ship, make “us” their slaves (as we are charmingly told here), tie comely village lasses to flagpoles and go Muhahhhhaaaaa. The assumption here is that foreign retailers are deadly efficient and will do a more effective job of killing off local businesses than Indian mass-retailers, who are somehow benign because they 1) have less resources than the firangs and 2) cannot stand up to Walmart’s superior processes. Plus they are of course “Indian”. So if they force other Indians out, it’s all fair. Must not forget that bit.
Many many years ago when American fast food chains was about to enter the Indian market, we had heard similar prophecies of impending doom.
McDonald’s is the largest owner of property in the US, do you know? We nodded our head. That was news to us.
Once they enter India, they will spread all over the country, like an attack of headlice. And then using their financial might and their patented food fabrication technologies, they will keep their prices unnaturally low, force small food-places out of business, change India’s eating culture, flow the capital back to the mother-ship, make us their slaves, tie comely village lasses to flagpoles and go Muhahaaaa. Yep they said that then too. There were also protests, agitations, violence and overall much hot air.
Years later, when I walked into a McDonald’s outlet in Mumbai and the Indian waiter informed me “Sir if you order one side, you will get a free Valentine rose.” I actually felt bad for the evil yellow arches and what we had reduced it to in India. Yes, the roadside oily snacks go on, egg rolls and mutton rolls are consumed as lustily and packets of biriyani are as religiously gulped down. In short, the American fast food joints have not had the revolutionary effect on the gustatory landscape of India that had been prophesied, remaining at best a marginal presence in some metros, enjoying none of the ubiquity it enjoys across the Atlantic and certainly not competing at the lowest segment of the food industry, like it does in the US.
The reason MacDonald’s of the US is so different from the MacDonald’s of India is because US is so very different from India. Not that it is easy to understand or explain the complex phenomenon of chains like Walmart and Ikea but their success is critically dependent on the following factors—-construction of mega-stores in suburban areas (typically near highway exists) where land is cheap, the American culture of driving large distances to shop, the well-developed infrastructure that make this driving possible as also the fast movement of goods. In other words, Walmart’s success is intrinsically tied into the American way of life. That model cannot be transplanted to India directly because the environmental assumptions it depends on….well they are just not here. The Bob-Christos and Tom Alters will have to device totally new locational, procurement and marketing strategies if they want to succeed here and, if anything, there it is the local “Indian” retail chains that have had the first-mover advantage.
As a matter of fact, Walmart would be a disadvantage in one crucial respect—its treatment of labor. While Lalaji can make his employees sleep in the back-room where the rats run about and thus keep costs low, if Walmart tried to make their employees do anything similar, someone could just put that up on Youtube and then Walmart execs would have hell to pay in the US in terms of the ensuing PR disaster. Lalaji, if he got Youtubed, would just laugh it away.
And so this whole “They will come and wipe us out” is just a load of panic-mongering. What will likely happen to Walmart and the larger chains is exactly what happened to McDonalds. Like McDonalds, Walmart will not be a player in the lowest segment of the market where traditional local stores, the “little guys” whom everyone is crying for, will be safe.They will have a largely urban presence and minimal penetration in the backwaters and villages where the little store selling Exide Batteries, Nirodh Condoms and Five Point Someone will continue as if nothing has happened. If anything, it will be the large Indian retail chains that might feel the pinch, which is why it is they who are driving the anti-FDI movement while claiming of course to be representing the “the poor store-owner.”
Of course, the real thing is it is all politics. The government at the center stands to gain, in obvious ways, when anything foreign comes in. That explains their desperation to get the damn thing done, which does not rise above making promises that it might not be able to keep. The BJP has to look after its base: the urban “Indian” business class, who have the most to lose from increased competition. So do regional parties, unless the foreign entities deal with them too. So it is inevitable that all of them will get under the Center’s skin on this one. And the Left, including the official Left and Didi, well for them anything that comes from the West smacks of imperial agendas—-these people are even worse than the BJP, they haven’t been able to get over the class-warfare rhetoric of the 50s.
And while all this sabre-rattling happens over what is essentially a non-issue and hoary arguments from the darkest days of Nehruvian-Indirian protectionism are brought out from the mothballs, vital national time and energy is irretrievably lost.