On FDI In Retail

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.

Okay next.

“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.


106 thoughts on “On FDI In Retail

  1. For the first time, first!

  2. Well written GB. Yes, BJP’s criticism smacks of hypocrisy and so does the left. Actually the general populace are ill-informed about FDI and its implications.

  3. me first , for the first time 😉

  4. Great post. I wish this comes out in TOI, or HT, or DNA, etc. And our supremely moronic politicians and planners, and think tanks actually read this. I personally thought that the “Lalaji” lobby, which is BJP’s major financial backer is behind this scaremongering. But I guess you are right.

  5. Completely agree. Would I buy vegetables from Walmart? Well, if they do free home delivery like my local veggie seller, and bargain down prices, I might.
    Would I buy my monthly supplies? Maybe. At the cost of the Big Bazaars and Star Bazaars. Would I benefit from Walmart’s supply chain and faster queue movement? Yes. Would a Tier II city dweller care? No!
    Will Walmart be able to build stores as big as in the US? I doubt. No matter how cheap they are, I will not be willing to travel 2 hrs in Bbay traffic to but some measly grocery supplies.
    However, having them here will be fun – there will be better competition amongst the oligopolist retail chains. And perhaps some farmers will benefit.
    Will they wipe out the strong ‘kiranewala’ across India? Ha. And Ha again.

  6. Well written.

  7. well dada..the point is, as was well made out on twitter by someone, the parties do not care about the opinion of people like us, because we are not the voters…

  8. Mandar Dadegaonkar November 30, 2011 — 5:52 am

    What a brilliantly written article, Arnab da! I think it’s the fear of the Birlas, the Ambanis, the Tatas of being beaten by more efficient competition that’s causing this bullshit! As you said, they cannot stand up to Walmart’s superior processes. Well…. get your act in order and try to be more efficient!!!!

    But we would rather sit on our fat bums and complaint about the injustice being meted out by having FDI in retail. There’s FDI in everything object I touched since I woke up this morning.. bring on retail, I say!

  9. @Gokul: Well the Cong was opposed to FDI when BJP was for it back in 2003. Now they are for it. So everyone is a hypocrite.

    If many people did not stop buying from the small kirana stores when Reliance fresh and Food Bazar came up, I don’t think they will move to Walmart either. Many a time, it is just too convenient to cross the road and buy the stuff you want without waiting in long queues, or just ask the boy to deliver it to your home and you can adjust your dues at the end of the month.

    So I agree with GB that Walmart will not gobble up everything in sight.

  10. Nice and well written. Frankly, this whole FDI issue is overblown. Even if the Walmarts, Tesco succeed in India, it only means that the Indian customer will get access to cheaper goods, Chinese or otherwise. Anyways, the Lala’s as well as the Indian retail chains sell a lot of Chinese goods.

  11. The problem is not FDI – the main problem are the lack of government policies. The ‘para’ stores are safe – real challenge lies for spencers, reliance fresh etc.
    BTW I once heard someone in my para store order ‘1 taka r muri, 1 taka r marie, 1 taka r biri’ – hard for walmart to compete on that!

  12. Its all politics.. for Congress too, making moves for next elections.

    Another thing is Indian Psyche is a key factor. For me, the Indian customers are damn chaalu than an average Westerner. Corporations will have tough time satisfying or understanding them. Customers Hazaaron sawaal poochenge aur end mein Kramer(Seinfield) ki tarah chillar mein pay karenge.

    Even in USA, most of the Indians don’t go to Walmart for buying anything and everything except for some of the products, for eg. Organic Milk.
    Same quality milk is relatively cheaper in Walmart than most other places.

    The biggest factor is the difference in the demographics as you mentioned.

    I totally agree with your observation.. Corporations have no countries. For them.. Money is the universal solvent.

    Wonder how is Walmart doing in China…. now.

  13. Brilliant!!
    GB is back…out of Coma finally 😀

  14. Good one. Gb. :).

  15. INDIAN STEREOTYPE : The US-Indians,mostly before their home-bound flights, use Walmart(or CostCo) to pick up (cheap) gift items for their back-home relatives !!:).If they get hard pressed for shopping-time before the flight,then they’d utilize Dubai duty-free!!

    Jokes apart,even I agree to all the sentiments shared by GB & the rest on the FDI issue on this page.I only wish there was a healthy,discerning,informed debate going on in the sabha rather than the same old dirty fish-market ruckus.Don’t we deserve a little less embarrassment for a change as taxpayers?

    I do feel that it will eventually be agreed upon by all parties but only after multiple deliberations & the imposing of umpteen number of populist clauses.

  16. As the post by you and the comment of Mr Mandar Dadegaonkar points out it is the fear of the domestic retail giants that is fueling and helping create this round of panic and headless running around.

    this is being done to avoid competition and the resultant hard choices and changes that will have to be made. Also external competition during the present turbulent times is fraught with risk. Brings to mind the “Bombay Club” [led by the Birlas and Tatas] of the 90s era which sought to stop or at least delay the opening of the Indian Market in 1991 [Narashima Rao led reforms] and again in 1995 [Indian WTO entry]

  17. You forget a very important thing that Manoj Kumar had said about the ‘food’ in Kranti while dancing with Hema Malini ‘Mere chana hai apni marzi ke, marzi ke bhai marzi ke. Yeh dushman hai khudgarzi ke…’ These are deep, profound philosophical thoughts one needs to ponder on.

  18. Brilliant. You ought to have this published in a newspaper. better still, send this out as an open letter, to the Parliament and the press simultaneously.

  19. I am yet to make up my mind on which side I am on.

    I read your article hoping to get some answers. It was funny but unfortunately, that is all it was.

    You successfully explained who is going to be harmed and who is going to remain unaffected but that is hardly the question.

    The question is who will benefit and how, how much will be the benefit and what are going to be macro-economical and ecological(yes only because its fashionable these days to talk about them 😉 impacts. What is the killer need to go for it ?

  20. Sorry, I made an error not that it’s of any relevance still. Manoj Kumar is on the scaffold with Dilip Kumar while singing those lines…so you see the impact is much deeper.

  21. For all I care the business class has been stealing on taxes for far too long. It isn’t easy for Walmart to do that and the government won’t let it happen. If the organization that pays its taxes to the government and reduces the burden on the salary class comes along, I have no problems even if it means that the regular businessmen closes shop.

    I am tired of paying taxes to the local shop who just consume it as extra profit by false book keeping. Everybody collects 12% VAT but I doubt how many actually pay anything to the government once their bookkeeping has been manipulated.

    So come Walmart. I want some healthy competition for the tax stealing business class.

  22. VAT in my last comment was meant to be service tax.

  23. Congress has introduced this bill to avoid any discussion about Lokpall bill and other thorny issues. They want opposition to do what it is doing now. Stalling the parliament.

  24. Great article GB. Well done.

  25. I made a couple of comments at a blog by Deepak Shenoy:
    Cut-pasting from there:
    My fear is that over time big retail (Walmart/Tesco/Carrefour) will kill all local grocery stores. After that the handful of big retail will divide up territories among them(unlike lakhs of small middlemen who can never make cosy arrangement). Surely big retail will bring unheard of technology and supply-chain-efficiencies. However with territory divided up, the technology and supply-chain-efficiency will be used to jack up profits rather than passing on the benefit to customer. In the long run, the customer will pay more for food.
    Deepak, your comments please. I would be relieved if I am proven wrong. I am really worried about this multi-brand-retail development.

    Thanks Deepak. However my apprehensions persist. My thoughts are formed on the basis of an article on multi-brand-retail by Shekar Swamy. Unfortunately, googling is not leading to the article directly.
    Another fall out of MBR will be that it will lead to more number of employees than independent entrepreneurs in our society. I am not sure whether that is good or bad.

  26. The food prices are all time high. Govt did nothing to improve the cold storage facility to preserve food. Some fruits & vegetables are highly perishable and big percentage goes waste as farmers, middlemen & final retailers have no preservation system. Distribution is similarly problematic. Plus govt didn’t plan abt rise for food items…and hence high prices.

    sharad pawar is busy with cricket where as country is going hungry. We should stop watching cricket till sharad pawar is there.

    If likes of walmart (instead of govt) improves food preservation, distribution etc it wont be able to give us the highest benefit as it has to maintain air conditioned stores. Had govt done its job we would have benefited.

    And i loved the slap on pawar. My wishlist includes doggy singh, Amul babu, maya memsab, lallu , mulllayam, amar singh,manish tiwari,kapil sibal, sushma swaraj (for showing sympathy to sharad) & for highest impact the lady queen pizza mataji.

  27. VERY well written, again! I am a fan of your blog posts for a while now. Clear, concise writing, at most times echoing my own thoughts but in a much more clear way 🙂 kudos

  28. The Biggest Loser November 30, 2011 — 11:44 am

    I am not opposed to FDI or Walmart, but i am appalled that the government is shrugging off its responsibility of ensuring efficient distribution and leaving it to some private company. Why is there no talk of overhauling the PDS, taking action against those who cause artificial scarcity, or preventing the rotting of food grain in FCI shit holes?
    People who are hit most by food price inflation are the really poor. For whom food probably constitutes 80% of their expenditure. These are not the people who will visit Walmart. What is the government doing about them?
    It is a clear case of misplaced priorities. There are bigger issues in the country today which if anyone starts listing will run into pages. Days after days of Parliament time are being wasted on this bill which means nothing in the bigger picture.

  29. I am following your blogs for past one year but never commented… but this blog really force my fingers to move. I totally agree with your observation on BJB (Cry baby), congress (cry baby when in opposition), and Left (eternal cry baby) views on FDI on retails. feels like country administration is handled by bunch of mad monkeys

  30. One factual mistake in this post is that the large Indian retailers have welcomed this decision. Bharti, Relaince are actually begging BJP to allow this to go ahead. I don’t know why. In my opinion they should feel most threatened by this. One more interesting point is that most large retailers in India are either losing money or barely making even. So maybe they are just waiting to be taken over by Wal-Mart.

    The question is, if it is so certain that Wal-Mart will not be successful in India, then why do we care inviting them here? If McDonald did not make any difference to Indian life, then why are they here? If Indian retailers are so smart that they can outsmart Wal-Mart, then why have they not modernized the supply chain and get rid off the inefficiencies. Why are we waiting for Wal-Mart to come and fix our supply chain, reduce wastage, give a better return to the farmers, as if they are a bunch of missionaries in a charity mission? Don’t tell me that Relaince cannot raise $100 M from the market to invest in retail (that’s the criteria for FDI to enter India).

    The fact is they have not made any impact in improving the efficiency of the supply chain, because that’s not what they want. They want profit, period. So does Wal-Mart, probably the most ruthless and predatory MNC in the planet. If we know that they will not be successful then we don’t want them here. The fear is, they might, with a kitty of $400 B. In that case, we definitely don’t want them here.

  31. Ahhhh, FINALLY you are back, Arnabda! The last 4-5 blogposts seemed too half-hearted.

  32. Arnab,
    I have no additional apprehension due to foreign hand. With similar incentive structure, Indian-hand behaves the same as foreign-hand. My worry over FDI is not that it is foreign, but that it is ‘huge’. If the huge stores create an oligopoly, that will subvert free market economy. Market economy’s goodness comes from the presence of huge-number of suppliers, not a handful of big-chains.

    You made the point that Walmarts will need to be located on city outskirts. Deepak Shenoy made the point of udhaar/mashkaabari and home-delivery aspect of local Kirana. If these points save the day for local kirana, that will be great. But what if it does not?

    The stake at hand is something far more crucial than McDonald chain’s success/failure. Eating out at McDonald’s is not essential, buying grocery is. It is not prudent to stake basic nutrition of India when final outcome of FDI in retail is ambiguous.

    May be what is happening in parliament is the best thing that can happen. If it leads to few states allowing and few states disallowing retail FDI, we can try out in real world for real feedback rather than theoretical bokbok. Then depending on results, we can decide either way.

    On a different note, your last paragraph jarred. You say whoever is opposing FDI is Nehruvian/Indirian protectionist. Generic statements like this stink of ad-hominem.

  33. The bill has passed,,,,I don’t think it will be revoked!

  34. You missed another beneficiary: the farmer. I read somewhere that in India, the average stops between farm-to-home is 6. And each stop has a middleman who wants to profit, adding to the total cost the consumer pays, and reducing the price that farmer gets.

    Walmart and like will get most of the produce from the farmers directly, as it cost-effective for them, and sell it for a lower price. Farmers and consumer benefit. Its only the middlemen, controlled by one or the other political party, who will lose out. Thats the reason BJP and the others are opposing.

    If the local kiranawalas are doing great business inspite of Reliance Fresh, More, etc…, then retail giants will never be able to supplant them.

  35. The United States is the world’s largest recipient of FDI. And we know the current condition of USA. I wish people understand this.

  36. Big retail will need to fight long checkout queues. The kiranas have an over-the-counter edge.

  37. As a matter of fact, Walmart would be a disadvantage in one crucial respect—its treatment of labor.
    The blog is mostly spot-on, except the above part. Walmart is notorious for its questionable labour practices (just Google “Walmart labour”), and these go on despite criticism from the general public and shareholders.
    That said, the domestic sector (including the now deified mom-and-pops) probably indulge in worse practices.

  38. Chiron,

    Just needed to answer this. The “questionable” labor practices Walmart has are things like not giving workers health insurance etc. You think any retail store in India, far less Lalaji, gives health insurance to make Walmart appear bad? However many of the retail shops that Walmart sent out of business *did* give workers health insurance and a decent benefits package. Hence they are pilloried. They however do not make their workers sleep in go-downs or box the ears of employees who have goofed up (both of which I have seen Lalajis do) and if they did, and the fact that they did was known, they *would* have a shit-storm in the US.

  39. The MacDonalds analogy is a good one — haven’t seen it in the mainstream media who only talk about how coke – pepsi killed thums-up (well they didn’t as Chauhan sold his stakes at a higher value than he would be able to make from the business since stock price equals present value of future cash flows and in any case thums-up lives on which means everybody won).

  40. @Vipul: Why do you think US is the largest recipient of FDI while there is a net outflow of capital away from India? The Indian currency has fared miserably over the last couple of years. And don’t worry. The US lawmakers will do nothing for another year or so and let the Bush tax cuts and corporate freebies expire in Jan 2012. That will save the country over seven trillion. There are reasons why folks far smarter than you and I are investing in the US.
    @GB: Nice post. The incompetence of Indian politicians can be only countered by privatizing just about every sector in India. As you point out, Lalaji will do fine and my favorite fishmonger from Lake Market will prosper even more. It is the freshmarts and hypermarts that are scared shitless.

  41. politically a new way to admire & a new perspective to understand FDI- well writtern GB.

  42. Some of the big Indian retailers welcome FDI in retail because they would like to reduce their losses (as they can not compete effectively with the small kiranas or other Indian big retailers) by selling part ownership to foreign partners or outright sale to foreign companies. For reasons mentioned by you, I guess, some (though not all) of the big foreign retailers will also make losses and will leave India eventually. BJP and left parties have a big vote bank among small traders and middlemen. It is interesting to see that some of the farmers’ organizations (not very small or marginal farmers) are now supporting FDI in retail as they hope to gain from a better price for their produce after the elimination of the long chain of middlemen (and mandis who operate like a cartel) and development of cold chains and a more efficient supply chain by the big foreign retailers (though it may take a long time to happen, given the bad state of roads and power which no Walmart will develop). If the farmers lobby supports FDI in retail, some of the opposition by BJP and left may also dilute to some extent.

  43. before that GOVT SHOULD FOCUS ON CORE ACTIVITIES of business and try to make a good platform for business people . it will definitely helps in carrying the engine of growth . instead of blaming BJP please go for hypotheses then only we would be able to know————————————-before fdi GOVT should focus on development of domestic trade

  44. Even i felt that the McDonalds – Walmart comparison is not 100% right. @Sambaran has the right take on it.

    I remember an opposing comment that I read somewhere which equated the possible Walmart entry and its repercussions to the coming of the East India Company and its consequences! Duh!!

  45. i hate hypocrites November 30, 2011 — 4:07 pm

    superlike…a typical Arnab Ray

  46. Whatever protest is going on against FDI, I feel, is based on ignorance and opportunism. I agree with the notion that nothing much will change except for the cities where prices getting slightly lower and unorganized supply chains becoming more organized owing to competition.

    If I buy something from my local shop, I will keep on doing it. Suddenly a new pseudo patriotism has risen up in recent times. And it will soon fade into oblivion.

    Nice read.

  47. The sad thing is that in the end, only the people who do not caste ballot will read it. This FDI non sense drama is expected from CPI, Mamta, Lalu, Mulayam, Maywati etc. But, not from the sensible pan India party like BJP.

    BJP is failing to play responsible opposition, again and again. Apart from Congress, they have the largest pool of leaders who can speak English well, can understand economics well, and have traveled abroad also (on Sarkari kharcha pani. Coming from those quarters, this anti FDI rant is utterly dissapointing.

    On the lalas, if you visit Delhi shops anywhere, these Lala are the one who sell at MRP(no discount),more likely to adulterate your goods(catch hindi channel TV`s for exploits of urea based milk products and ghee etc). They underpay their employees with pittance and promote child labor, a serious issue always ignored.
    The price of your average vegetables goes through 4- 6 middle men with average minimum price hike of 10% at each point, not to forget wastage, multiple transportation and storage cost which jacks up prices atleast 2X before it reaches you. Big chains with direct sourcing would benefit farmers, no two theories about that.

    Finally, the amount of jobs that would be created in entire value chain with FDI in retail, and the infrastructure developed is more than welcome.

    These shriveling old fools in political system are unfit to think for the future generations. They need to be retired and relegated to dust.

    BJP is reading the wrong side of the print again, after India shining.


  48. Great post!

  49. In a haste to write an article?? A Bong that too? not worth any comment…wasted my time…

  50. I agree with your take that the whole drama around FDI in retail is crass politics at best. One thing i do not get is the whole notion that the decision of allowing FDI in retail should be dependent on whether existing retailers benefit or lose. Shouldn’t the consumer decide? If consumers get good value from foreign retailers they will buy there. If they do not, and if local shops continue to provide value then consumers will go there. Foreign retailers are not exactly going to chain people up and force them to shop. If local small retailers are not able to compete then its better that they do infact lose market share. Private sector monopolies are rare unless helped by the protective hand of the government.

  51. A pleasant surprise after reading the last few articles from you. I wish you would write more articles on politics like these instead of films and other stuffs.

  52. wasn’t walmart roundly criticised for paying employees very low and keeping the cost of its merchandise low as well, thus forcing indirectly, its employees to buy from walmart itself and thus creating a customer base it should never have? …
    @GB i heard this a long time back and i am not too sure of the veracity of it … care to shed some light on this practise of walmart?
    also last i heard walmart had lost out to indigenous shopping marts of germany so stop the hue and cry already!

  53. http://www.dw-world.de/dw/article/0,,2112746,00.html
    the link for reasons why Walmart did not succeed in Germany .. quite old, but as i said, i had read about it a long time ago 🙂
    and here is how metro had fared a long long time ago in india

  54. Anirban, Never heard of this. And it makes no sense also—the employee base of Walmart is not enough to sustain its business.

  55. Arnabda, its nice post. But like all political parties you have your own views and you are trying to prove that it is the correct one and all opposed to it are morons or living in the past. Fact of the matter is that no one, No political party or you and me can say with any conviction,what will be effect and consequences of FDI in retail in next 5-10-15 yrs. What everyone including you are saying is pure conjuncture.

    Walmart or Tesco may not succeed and Lalji’s shop may survive than what’s the great idea of FDI in retail ? Both the system will coexist and then some farmers will get better price and some consumers will buy cheap. ( Those who can travel some distance to the walmart). May be Aam Admi who can benefit most from these cheap produce is far away from store and transport cost will negate any benefit.

    But walmart may succeed. It may provide free home delivery,or may open small stores as they will in SF Bay Area, then Lalji’s Kirana store may have to shut down. That brings us to most important aspect. None of the Walmart stores employ lot of Labour and usually pay Minimum Wages with few benefits. You have argued that person working for Lalji has raw deal. Agreed, but Lalji himself and his family is Principal worker there. So benefits are for him. you talk of ” Eliminating” six middlemen in the supply chain,each making 10%, What will we do with these six middlemen? Send them to US,Gulf Countries,Russia? We mean that they will lose their business and livelihood. There are 2-3 other labour dependent on each middlemen, Community in the smaller towns is dependent on these people for survival. The cost increase of 10% sustains these communities. We/ Govt. will have to find gainful employment for these middlemen and people and communities dependent on them. If we cant do that then there will be social and economical disaster. Walmart may become very profitable but society and nation may suffer grievously.Today in U.S. earning of this segment has stagnated and it has resulted in occupy Wallstreet movement. This issue need discussion,research and clear idea of adverse consequences and its solutions.—PK

  56. Preceptive take. Between looking after interests of foreign retailers and the local ones – what happens to the Aam Addmi? I am sure she will not mind getting better service and consistent produce. The Kirana dukaan (corner shop of US) is hardly going to be obliterated by walmart or carrefour.
    Competition is always better for the consumer – at least you have a choice. If the Indian shops raise their game they walmarts wont get a footing – as happened in Germany.I believe the farmers lobby has welcomed FDI – they will get a better price than the Indian chains – who pay farmers even less using bulk clout but charge a premium over the sabjiwala with his thela!!

    And if Manoj Kumar typifies the patriotic indian then Kanhaiyalal epimtomises the canny Lalaji – who is upto to no good in the back rooms (all double entendres meant!!)

  57. Its McDonald, not MacDonald’s, for humpsake.

  58. Kuntal,



    And I misspelt MacDonald’s once…every other time I spelt it as McDonald’s (note the ‘s). Sigh.

  59. Thanks, a good article

  60. 1) Why cant we have a caveat that for first 5 years these giant retailers will only source made in India products and services.
    2) I don’t think it just threatens lalaji, it threatens any retail and wholesale. Be it photostudio, cloth stores, food grain, spectacles, foot wear etc…It kills trading class.

  61. One of the most analytical FDI posts I have read in recent times. Rest are mostly agenda-driven.

  62. Much is being said about how employment is generated for Lala ji`s and their kinds.

    The FDI deal is only for cities with population of 10lakhs and above. That qualifies for less than 50 odd centers. If you happen to visit the markets where these so called lala jis operate selling food items, shoes, bags, plastic items etc. You will realize that these people are the real reasons for the so called “black market” real estate bubble. These people thrive on not paying taxes, and to stash money, they pump up the cash only real estate market.

    The govt has clearly said, sourcing of 25 – 45% from India, and certain minimum % from SME. Can you imagine the jobs created with this in the SME?

    Is any subzi hawker interested in investing for cold storage chains? The private players in cold storage chain as of now are real estate squatters. They buy land for these units from government on subsidized rates, and out of their capacity of 4X, would run only 1X at jacked up market price. This is the case if you happen to do some real ground work. These people hope to change land usage plan in future to turn into some building etc at later date.

    The so called inefficiencies within the system gets removed only when you force people to work efficiently, and this is done by a shock to the system. We need this FDI for exact same reason.

    21 odd years of market liberalization has not made market participants to invest for farmers sake in cold chains, logistics, providing better seeds etc etc. Nestle provides seeds and logistics help to people producing cocoa in Africa, South America to ensure steady supply of chocolates to yours truly.

    The so called middlemen in the chain are “pests” within the system. If you happen to see their kinds, the only thing they do is withhold efficient pricing by hiding information and abuse allotted licensing rights to them in Marketing committees sites. I sincerely hope that they do some meaningful work and get retrained from “service economy” to “manufacturing” or “farming”.

    The farmers in this country have to rely on being underpaid, to pay for the “sincere” middlemen within the system. And now, they will pay because the gutless short sighted system is going to sell them short for elections.

  63. Sure shot Benefits of FDI in retail:

    1. End customer gets better quality product at reasonable price.

    2. Farmers get a better deal and, as experience suggests, inputs from company sponsored experts which improve farming practices. The Farmer to consumer chain is shortened 3 fold. Good for the farmer. Good for the end user.

    3. Government gets proper sales tax most of the time as the FD retailers will bill everything.

    4. The Local trader(who incidentally has a decently deep pocket) is forced to improve his service and quality of products. Of course he enjoys the ‘over the counter’ and location advantage which keeps him competitive.

    5. Thousands of urban and semi-urban people get jobs with companies which will have to follow standard labor laws.

    6. FD retailers will have to create massive infrastructure. Good for the economy in general.

    The only problem I find is that a whole lot of middlemen may be out of jobs. Possibly the Retailers would absorb them in their supply chain. Possibly.
    Except this part, FDI in retail should be a boon to the nation in general.

    Similar arguments were given when computers were introduced in the banks (people would lose jobs ..etc etc).

  64. It’s not about patriotism, and while this article is fairly well written, the McDonald analogy doesn’t hold entirely true. Food choice is a cultural thing which doesn’t change even after 100s of years of oppression.

    Changing one of the fundamental driving forces of our economy which is built ground up sourcing all these materials and products, needs more thought than just whether to allow FDI or not. safeguards need to be put to ensure existing infrastructure is not shortchanged.

    There is a reason Toyota and Honda use materials made in the US, and it’s not because they are sourced cheaply

    On a side note, It will be interesting how their “super efficient” supply chains operate in our “super” highways.

  65. well written

  66. You say that Walmart functions well in US because of driving for shopping culture.
    Well, then Walmart won’t even have high success in places such as Mumbai.
    Where I live in Mumbai , there doesn’t seem to be a potential site nearby where Walmart can open a shop. And if it opens a shop in city outskirts, I don’t see myself going to buy stuff there. Because as you said, the travel-to-shop infrastructure simply doesn’t exist here. Same could apply to other metros.

    Any chances, that Walmart will tweak it’s business model and open relatively small shops , in India?

  67. For Walmart to grab majority of our monthly grocery budget in India and in process kill lalaji stores following must happen:

    Everyone has a car (still a luxury, though the nos are increasing in larger cities). Imagine going in auto or changing 2 town buses or on bike to get your grocery when lalaji’s boy can deliver in home..
    Improvement in traffic, parking and petrol price (forget in PPP, pure dollar converted value it costs 5.5-6 USD per gallon in India). Any incentive to drive down 10-15km to buy monthly supply is lost..
    Alternative to above 2 is stores in every corner which makes the whole walmatr model ineffective..
    Need substantial discount on MRP which I doubt Walmart will be able to bargain in India unless they get huge market share..

  68. Sethuraman Atisivan December 1, 2011 — 1:30 pm

    Very good read. I just have a question regarding McDonald’s analogy. The company sells junk food. In India, we already had deep rooted huge variety of junk food from North to South. It is obvious that McDonald’s cannot come and just uproot this giant spread of indigenous junk food. The case of Walmart is different as they are going to sell the same stuff which you get at a corner shop but (may be) for a cheaper price.

    I have been to Walmart in Canada. I remember especially on the boxing day sale, they were giving away stuff for dirt cheap prices. I think at least in bigger cities, their impact will be more phenomenal than the influence McDonald’s have in the Indian Metros. I think it will be more than merely “marginal” as you have indicated.

  69. One disagreement. The large Indian retail chains are all in for FDI.

  70. Nicely written. Please also bring out the tax evasion angle of the Lalaji.

  71. as always is the case, the opposing sides take extreme positions. i am agnostic on this issue, simply because it does not matter and it won’t have a big impact either ways. wal-mart coming to india won’t take lalas out of business at the same time they won’t be solving our pds and processes issues. they won’t be bringing prices down. (whoever believes this, should take a hike). at most like the McDonald’s and KFCs example both walmarts and lalas will co-exist.

    india has a history of indianizing everything. we even indianized islam and christianity for crying out loud. two of the world’s biggest and most powerful religions.

    what is striking to me in all this hoopla is how congress shrewdly manipulates the nation’s discourse when it is at receiving end. (remember the timing of nuclear deal?)

    look at the timing of all this. the parliament was about to start its winter session and bam! the cabinet brings this proposal. they knew they were going to be up against the wall on 2G..

    they killed 2 birds in one stone. or may me more. took all the wind out of 2G and Anna movement. got opposition all riled up on an issue that may have minimal impact on indian economy if at all; when there are so many pressing issues. and best of all, they got the urban indian middle class and the twittaratis and Facebookers and the bloggers behind them who were let loose by Anna..

    no wonder congress has ruled us all these years and will continue to do so. as for bjp, well.. congress again ‘got’ them. the emotional fools just could not resist congress’s bait.

  72. Many here seems unaware that Walmart is already present in India since 2007 through Bharti in 9 locations of Amritsar, Chandigarh, Jalandhar, Kota, Bhopal, Ludhiana, Raipur and Indore. They follow the same US model of wholesale cash and carry and open stores at cheaper out of city locales. The chandigarh store is on the outskirts of Chandigarh called Zirakpur.

    Open the fact sheet, they are employing 3372 associates, with 90% sourcing from India.

    The so called Lala`s import from China in bulk containers evading duty and sell the same stuff in markets for 5X price and BJP cries for price rise then.

    Now when it is actually a chance to do something good for this country. BJP is backfooting.

    BJP does not deserve to be in power, it speaks of nationalism and sent Afzal Guru in chartered plan with an ex Army Jaswant Singh.

    It speaks of price rise and then does not want the consumer to benefit from lower prices.

    It speaks of farmer suicide but does not want the farmers to get higher prices from national distribution chains.

    It is time for BJP to stop from hooliganism and shutting down shops and pretend that it cares for the citizens of its country.

  73. This FDI farce magnificently highlights all that is wrong with Indian politics. Opposition parties are just that: parties that oppose, often at the cost of good decision making. It is high time political parties realise that its populace is no longer as ignorant as it used to be and start putting forth a united front where it makes sense. They would have my vote if they did. After all, everyone knows that their differences are artificial. The BJP itself was a vociferous supporter of not 51% but 100% FDI when it was in power.

  74. “villages where the little store selling Exide Batteries, Nirodh Condoms and Five Point Someone will continue” – comparing Chetan Bhagat’s bestselling novel to condomn and car batteries 😀

  75. the Bob-Christo reference — bhery gud bhery gud
    profiling/dismissing non-urban retailers as Lalaji — bhery bad bhery bad

    G Bong,
    B-Town themes set you apart but let’s not push it.

    PS: sorry, couldn’t resist using ‘bhery’ 😛

  76. Your post misses the context of the issue substantially. You discuss what is ‘foren’ and what is ‘indian’ but there is nothing new there. Most of these points were discussed ad nauseam in mid 90s when India was supposed to a wet dream of consumer companies with its 200 mn middle class. Remember the attacks on KFC outlet in Bangalore and the fear that Kellog’s corn flakes would replace idli-dosa.
    While the political parties are raising the bogey of ‘foren’ the reason they oppose retail FDI are rather varied.
    Commies – Don’t they oppose everything
    Mamta – commie with a green flag and even lower IQ
    DMK – pissed off that they can’t steal any more but they will come around once suitcases are received.
    BJP – Here the issue is slightly nuanced. The FDI in retail would impact one section rather badly – The middleman. Organised retail is supposed to wring efficiencies out of the system by cutting the many links in distribution chain which do not add much value but earn good money nevertheless. This parasitism is especially acute in the agribusiness where the chain can have more than four links. This I hear has been BJP’s support base. So even in the heydays of economic reforms in NDA regime, this was a bit of hot potato issue. And that might be driving their stand.
    Or it could be a sign of ascendancy of RSS in BJP. RSS has always been a believer in dotty economic ideas. Remember that they were big backers of Swadesi Jagaran Manch – a now defunct organisation.
    Or it could just be the frustration of a tired political organisation riddled with internal factions and incapable of winning mind share despite the obvious ineptness of the current regime.
    I would like to hope that better sense would prevail but that is too much to hope for from our politicians.

  77. You are really uneducated. Writing on blog is very easy as compared to doing actions on front similar as farmers work….If I come and kill your lively hood, then what you will earn and then what you will do…..Why don’t you write against the govt, whose policies are allways bad, unethical and with corrupt malpractices…Show up with your address, I will take live confrontation with you….

  78. An amateurish comparison – McDonald’s vs Walmart.

    What McDonald’s offers was very different from the road side momos, rolls, bhel puris or even vada pavs. Hence, McDonald’s could never have killed these road side stores.

    However, Walmart is going to offer the same product which you get in a local kirana store at reduced price. With an efficient supply chain, reduced prices, there is likely to be a redistribution of jobs. I do think FDI in Retail would be good for India but I find your analogy invalid.

  79. BTW .. the comment of Raja just above me is hilarious !! specially the last line … Cant help but laughing out loud on this ..

    @GB – some of your comments can surely give some good competition to Rediff comments 😉

  80. Hello Arnab,

    While you make some cogent arguments and demolishes certain assertions made by the anti-FDI brigade, you have conveniently glossed over the supply side of the supply chain. The whole issue of contract farming, how it will benefit only large farmers (who constiute less than 3% of Indian farmers), how the Walmarts and Tescos procure grapes from Greece and olives from Italy and how such procurement practices will impact India’s already pitiable agriculture. I would have liked to see some points addressing these issues.

    The analogy of MacDonald’s simply doesn’t whole water for me. The reason why MacDonalds or Pizza Huts have remained on the margins is because their very concept (right from decor of their eateries to the burgers they sell) are inherently alien (if I can used this word for lack of a better one). So, their potential customer base constitutes (and will remain limited to) only the Upper Middle Class Yuppies. Same is the case with a Barista or CCD or (if and when) Starbucks enters India. But a multi-brand retail, where margins are wafer thin, is a different game altogether.

    As far as the fact, why Indian retail biggies are not threat to “small boys”, you have answered it mostly yourself (To me, the argument of “being Indian rhetoric” is an insult to your readers’ intelligence. None of the anti-FDI arguments, even by the JNU types, has made such a stupid assetion.)


  81. India is a big country, we have room for everything and everyone here, if we know how to get one..purely from common sense and without going much details into the socio-political aspect of it, I truly believe that after Walmarts and Tescos come they will not make much difference to smaller retailers. Might be the retailer from the nearby areas will loose business initially, but that is again reversible in a long run.
    Eg: Suppose a Walmart Comes up in EM Bypass Ruby Connector. People like me who lives in the peripheries, will usualy not go everyday/weekly to buy aalu or tomato puree from Walmart instead will prefer ‘Aloker dokan’. Most of us Indian famalies have something known as ‘Masher bazar'( not to be confused with macher bazar’) Now one might think of doing that sort of stuff from Walmart because by doing that we just might save about 5-10% of the bill. I say whats wrong with that.. if the govt thinks that the aam janata does not deserve a saving in their monthly grocery bill ( and that is just what some state govts are doing) that is purely screwed up thinking and all we do sit at our home is give these people vote. If the local groceries think that they are loosing business they should come up with brighter ideas..
    Competition will always be there but that does not mean cutting down on some newer initiatives that will actually help the country in a long run by providing employment, skilled training, and revenue generation for a nation which already has a problem with all three departments.
    Lastly, if we ask ourselves why do we go to a particular ‘lalaji’ while we have several lalajis in a single hood, its basically because of Relation ( by that I mean behaviour{‘babohar’} for Indians),Distance ( I cant remember getting dressed up for going to aloker dokan), Emotional connect ( ‘aaha re Raju tar bou abar paliye gayeche’ but not always as in ‘ jor hoyeche to ki dokan 3 din bondo kore rakbe naki??), little benifits we get like easy paying options ( ‘ ae aajke nei kal diye jachhi’) and home delivery of monthly groceries, they dont charge for carry bags either ( still to understand this funda ).. and to top it all something that we all Indians have in different proportions- reluctance ( ‘ Abar ke jabe oto dur ae to ekhan thekei niye ni’) These are nothing but marketing fundas explained in layman’s term..All these things are too strong in us and its going to stay even after the Walmarts come dont worry folks take it easy.. let FDI in retail come, its for us…

  82. Another match saving act by Jadeja

  83. The Lalajis will never be wiped out, they provide just too much convenience for all of us to be wiped out by Wal-Marts. One thing that FDI in retial will change in India is efficiency hopefully…though I haven’t met a Lalaji till now who sells Five Point Someone 🙂

  84. Let free market prevail.
    Enuff said.

  85. A Seriously humorless post…

    1. Comparing Food retail and Multi brand retail is like comparing apples with a sabzimandi…
    Yes the bania will survive no doubt… but with a clout that is comparable to big food which can get us congress to declare a pizza as a vegetable, our sonia congress and dmk mps and mlas will be sitting ducks.

    2. BJP has been called a banya party from the time it was formed …

    u had some seriously good material … but u sadly chose bjp bashing

    Why are u not talking about ur Momota di – is she a modern version of bjp? She has stalled the parliament for a few days now because congi cant face bjp without her support…I wont talk about ur commis because she seems to have neutered them, and with nothing more to add they declare they will walk out (maybe do a strike)

    What about dmk which has done a circus ka bandar routine 100% fdi was proposed by Mharan .. Now they recently opposed it ..and once kani is out they have done a quick support pirouette…

    Lastly congress is a party of dalals , and with their recent performance the bjps ills look trivial and i doubt that the final version of the bill will be so distasteful that most Foreign chains which are already nervous with their wholesale CNC chains, wont bite the bait until upa substantially dilutes norms .. that after more vote buying, deficit spending and wasteful expenditure that gets our debt to gdp ratio to above 75% and rupee above 55

  86. GB: “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.”

    Isn’t this true to a large extent although expressed in charming historical metaphores? Describing a situation humorously does not take away the sting or the danger. Knowing what we know the government should insist on substantial local participation and have enough safegaurds. Europe, Japan, and Taiwan trade freely with America and are thriving. So could India prosper by trading with American MNS. Follow the pattern of those countries that are successful in foreign trade. Do not put too many restrictions and do not be too liberal either with FDI.

  87. Rima Bhattacharyya December 4, 2011 — 4:08 am

    Why don’t the political parties have a decent debate in parliament so that the common man understands the pros and cons of FDI in retail in India? I mean a proper debate without everybody shouting at the top of their voices all at the same time and Meira Kumar going baith jaiye , baith jaiye… !

  88. There are some people who will always go to the local store. Walmart public is different.

  89. @Rima Bhattacharya,

    Why blame the political parties alone?

    Most of the blogs and main-stream-media articles are not having reasoned debate.Pro-FDIers are beginning with the assumption that opposting parties are vote-bank-strategists or nehruvian-socialists. Anti-FDIers are beginning with the assumption that congress is doing this for big-kickbacks. Each side is calling the other either unpatriotic or stupid.

    With this level of distrust in aam junta itself, why expect parliament to behave any better?

  90. We must remember that the amount of money that a household spens on groceries is going to be fixed (increasing at a moderate rate every year)
    so if they planned to spend 5000 on groceries and used to spend it at the local grocer and he made a margin of 10%, he used to make 500 from one family. But with Walmart coming in if the family did two monthly trips and spent 4,000 at walmart and only 1,000 at thelocal grocer, he now makes just 100. How would he survive if his income is cut by 80% ? Since retail is a low margin business, the shopkeepers survive on volumes. Just because you buy a few things from the grocer doesnt mean he will survive.

    It is true that the consumption levels are rising and Indians are consuming more than what they used to but the logic still applies.

    The statement “Corporations dont have countries” isnt entirely true. If the political climate got a little tense, a walmart or tesco could
    react differently from how a Big bazaar or Reliance or the local store would react. We dont live in a perfect frictionless world where “all” companies could move funds from one asset to another across countries.

  91. I liked the humour in the 1st 2 paras but after that I think this post is the worst commentary on FDI in retail. really?….comparing walmart to McDonald, thats bad analysis I would say.

    I agree parties like BJP and TMC are just opportunists and taking advantage but FDI in retail is a BIG decision and needs to be taken carefully.

    Now some myths

    1) FDI in retail will reduce inflation – Retail mark-ups in India are lowest in the world. It does not matter how many stages a commodity passes till it reaches the customer if each stage is similar to a perfect competition, which currently it is with large number of players at each stage. if some retailers become dominant in this chain (which in long term they will), all they will do is buy low and sell at market price. They are not here for charity.

    2) FDI is good for farmers – This is the lamest argument. Farm price as the part of the final selling price is the highest in India barring fruits and vegetables. What chance will the farmrs have while selling to the biggies I wonder. If anything the retailers will keep all the benefit created in the supply chain.

    3) BIG retail can coexist with small retailers – Again if you ask retailers near any Big Bazaar, the business has been affected to a large extent. however with limited capital the scalability of big retail is limited in india and we have seen the story of the fall of Vishal Megamart as it tried to attract customers with low prices, but walmart can survive that. As in India the culture of driving far for shopping is not predominant the small retailers are surviving. Hence there should be a most important caveat for the foriegn retailers a least in the food category that they should not be inside the cities. if they are let inside rest assured the small retailers have no chance.

    Retailers will bring supply chain efficiency – Most important infrastructure problem in India is of Roads and Power and no retailer can solve that only the governments can. Cold storages dont run on batteries.

    Government has put in a few caveats for the retailers, but in India bending rules is as easy as buying chocolate. FDI in cash and carry business is allowed, but Metro Cash and carry is doing retail business in full flow by issuing member cards to individuals. Similarly outlets of Bharti Walmart Cash and carry were raided for simlar issue in Punjab.

    Coming to your post, which large retailer is opposing FDI in retail?? Kishore biyani is the most vocal speaker in favour of fdi and so are the others as they will get the much needed additional capital for scale.

    We need to ask ourselves why exactly do we want foriegn retail in India? Is there a real need for foriegn capital in retail? Arent Indian retailers doing good enough?

  92. Again if you ask retailers near any Big Bazaar, the business has been affected to a large extent.

    Why is it the responsibility of a billion consumers to keep these small retailers in business? Compete or perish – that’s how it works for any other business, and it should for these small retailers as well. Besides, for all the extent to which their “business has been affected”, you still find mom-and-pops all over the city, often within walking distance of the Big Bazaar/Rel Fresh/Star Bazaars and in spite of selling at higher prices than these. How can Walmart can miraculously drive these people out of the market?

    we have seen the story of the fall of Vishal Megamart as it tried to attract customers with low prices

    Most of the scare-mongering around WM is about the notion that WM will offer rock bottom prices and drive out everybody else. Your own example of Vishal shows that low prices are not the be-all-and-end-all in retail. So even if WM does come in and offers rock-bottom prices, that would not guarantee its success as there are more factors at play.

    Hence there should be a most important caveat for the foriegn retailers a least in the food category that they should not be inside the cities.
    Which is tantamount to asking them to not do business in India.

  93. I think you should not spout opinion like fact, especially if you are not qualified enough to do so. To compare Walmart to McDonalds is a fallacious argument atbest, and not knowing the ground realities at worst. The amount of “eating out” that is done by indians has exponentially increased when compared to the 90s. So, any market capturing that has happened has not negatively impacted in a large way. Infact if you are staying in india, you would know that in most food courts in malls it is McDonalds that has a huge like when compared to other shops. The Indian fascination for the firangi stuff is legendary!

    Big Indian retailers have already impacted the small shops. The number of small shops and the amount of business they do has decreased significantly in the last five years. Ask any small supermarket owner! The big retail stores do deliver goods home for free, unlike what some people think here.

    I think the time has not yet come to allow FDI in retail. Waiting another 5yrs could turn this segment reasonably healthy, otherwise we could end-up with what happened in the case of aerated drinks! I don’t mind that Coca-cola and pepsi are doing well here, but i do mind that they are not listed in the indian stock markets.

  94. interesting views and observations. On Toyota, the point is that thy set up factories in the US as tariffs were very high on automobile imports, and if I recall correctly, some quotas on auto imports from Japan, with which the US the Big Three were battling. Since the factories were a way of overcoming the tariff barrier, they were called ‘tariff factories’. Cannot understandthe fear on Walmart, as it has miserably failed outside North America. in any case, what have ‘Indian’ traders done for their suppliers?
    incidentally, u may recall the jingoism over whether ICICI Bank and HDFC bank were any longer Indian.

  95. Am I wrong in saying... December 7, 2011 — 6:33 pm

    phewww.. all economists & social reformers here… looks like a 2nd tier B school’s business economics class where the lecturer bored of regular classes just (to have fun) tossed up a word “FDI in retail” and all i-too-have-a-point students rushed in to you know, make a point..
    But the rascal bunty in the last bench wasn’t interested in all these stuff coz he was busy watching the latest XXX clip on his mobile phone, he downloaded it last night and apparently kicked on the local CD parlor owner on his balls. infact, he likes piratebay more than the one eyed CD parlor owner Santosh who rents him pirated movies and aparently kicks the producers balls. The producer of filum industry usualy drives on his own but sometimes takes a taxi ride in an unknown city wherein the taxiwala kicks on the balls of rickshawwallas and the ball kicking game goes on and on untill you realise that your balls are also being kicked.
    So, if you are really worried about the fake sympathies you are harvesting for the baniyas… why dont u really do something for them to start with.. stop downloading buy original CD/DVD from retailers. Meanwhile, I download some more XXX.

  96. Tribute on Dev Anand when its coming. You had a noce tribute on shammi but nothing on Jagajit Singh or even Bhupen Haarika.

  97. Nice one. But “and Five Point Someone will continue as if nothing has happened”.. u had to take a dig @CB didn’t you? 😀

  98. GB, as pointed out by Rahul and Subhendu, organised Indian Retail players are in fact, almost without exception, in favour of FDI. One gets the impression that most of them are looking to cash out on their investments and take a fat packet and exit the segment or at least have substantial infusions (probably the former). Big retail is not doing very well from what I can tell, with a few exceptions. All supermarkets (grocery / fresh) are troubled.

  99. Agree with most of this – the only thing I wd differ on is that ironically it is the local “modern retailers” who are the msot desperate now for FDI given taht they are reeling under debt, poor cash flows and profitability. The situation a few years back was different and tehy were actually against FDI as they had not yet got their foot in the door to make a killing out of allowing FDI. Actually I wd argue that what India needs is not 51% FDI in retail but 100% FDI so that the “rent-seeking” Indian promoters dont make money on this whole trade and the investment actually goes into putting up stores, infrastructure, etc. Otherwise, it is just regulations in India allowing venal Indian promoters to make money by selling out to these “foreigners” (as we have seen umpteen times in other sectors like telecom for e.g. where Indian promoters who did nothing to build businesses were able to wangle money out of foreign cos that were looking to invest in India and partly the rationale for teh 2G scam).

  100. Kirana stores in India are big thieves who still charge more than MRP and pay no taxes. I think if they close down it will do the country great good. Also with retail chains buying directly from source and eliminating the influences of mandis its a great way to curb inflation. Also Indian business in retail can get a shot in the arm if some tie ups are available.

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