FDI in Multi-Brand Retail: Part I

The commerce Ministries’ Department of Industrial Policy and Promotion bypassed the parliament and issued an executive press release on FDI in Single and Multi Brand retailing. A hasty political move bunched with a host of many other tough anti-people decisions. The congress which in the past, swore on its charka, Panchyat and Gram rajya changed its skin and exposed its true colors.

The congress ministers, in particular the HRD minister in an article on Times of India offered a new perspective to view FDI in retail, a context of capital Inflows, Job creation, Industrial and Infrastructure growth.

The conventional marketing option available to the Indian farmer is through the APMC, Agricultural Produce Marketing Council. Traditionally a farmer’s choice of food or cash crop depends upon in basic needs. The choice of cash crop depends on the season, measure of land available and risk appetite of the farmer. A farmer primarily cultivates, for the food security of his family and his local economy, the leftovers if any end up at the local APMC. A farmer cannot sell outside the committee’s ambit.    

Supporters of FDI in retail often sight many opinions; all of them could be classified under two factors, Capital creation and Individual (Human) development.  

The prime requirement for a wholesome development of the economy is capital. The capital requirement for us to graduate to a Developed Nation is huge, which cannot be satisfied by local resourses. So the country needs more of the white man’s dollars for more development. Dollars would fetch us good quality roads, schools, Hospitals and better grocery services. More and more of the entrepreneurs would join the organized sector, hence more sales and Income taxes. Competition would bring good storage Infrastructure. It is believed that these storage facilities can reduce the food wastage and bring down food Inflation.

As for the Human development, FDI in retail can eradicate child labor, prevent exploitation of labor, and bring mass employment opportunities. ‘Annachi’ stores or what’s called as Kiranas in the north may upgrade their services. Consumers may get high quality products at discounted prices. Farmers may get professional advices for their ventures and good prices for their harvest.

Passing the baton of power and responsibility is an accepted norm of day; it’s sweetly defined as Liberalization. Liberals proffer many promises, and if you have trust in these promises; you are on the right side of Kapil Sibal’s History.