FDI - Bring it on

FDI (Foreign Direct Investment) is about to be allowed in the retail sector in India. If the proposed bill is passed, FDI is to be allowed – with 100% for single brand and a 49% ceiling in multi brand outlets. There are wholesale protests from several political parties against it , but the Prime Minister is firm in his stand. Various reasons against the policy are being bandied around, but this reform has long been overdue. Besides, competition in a market economy is important and so are fresh funds and regular funds. What is there to be circumspect about, to be worried about? There was similar resistance in 1991 too, but we now know how the view was short sighted.

Yes, intense competition may kill local brands. But that’s only because they are uncompetitive. Sure, Bajaj scooters’ sales plummeted, but they re-invented and now they export their Pulsar bikes to Latin America.

Coca-Cola couldn’t kill ThumsUp and had to buy it out and it is still Coke’s best selling product in Indian even today. McDonald’s could not kill the Chholey Bhaturey wala and dhabas still give KFC a hiding when it comes to flavor and pricing. So there !

The competition may lead to better supply chain management and lesser goods will rot in government godowns or worse still- in the open.

The farmer will earn more, the consumer will benefit with more options. Only the middle men will get eliminated. What is wrong in that? ITC is already doing that with its ITC Choupal stores in rural India.

Local grocery stores buy from supermarkets and sell with marginal gains in their shops, which are in closer proximity to you .Convenience, home delivery and monthly credits are added benefits. Don’t worry about him. He will innovate and survive.

And what is this running scared of Walmart. It has failed and shut shop earlier in Germany, Indonesia and Argentina.

Besides there are better retailers like Tesco, Carrefour, Sainsbury’s and Metro. And these all will run with a 51-49% partnership with an Indian company.

Brands come to India because of the numbers. If they can’t cope, they will scamper to other countries that they can plant their stores in .

There are a string of conditions that have to be followed- sample this. 50 % FDI investment in cold storage and warehousing. 30% manufacturing to be sourced from local producers and supermarkets can come up only in cities with more than 1 million population.

Call it AgarWalmart, KhandelWalmart, SabharWalmart, MalamaalMart…but please give better prices to consumer and farmer- Pankaj Pachauri, NDTV