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

Its Politics !

It has been quite an eventful months in Indian politics. And after being subjected to all the weird quotes and developments, I do have some queries. Anna Hazare’s anti-corruption movement notwithstanding, I have certain other questions

• Who will retire first L.K. Advani or Rahul Dravid?
• Which is doing better? The inflation or the anti-corruption movement?
• So is Congress the natural party of governance or natural party of stagnace?
• If BJP is afraid of announcing a PM candidate, isn’t Rahul Gandhi a chicken too?
• Are Raj Thackeray and Uddhav Thackeray still friends?
• Is there any committee in the world that Sharad Pawar can’t be chairman of?

• Any intelligence on the next terrorist attack on Mumbai?
• Is democracy top-down or bottom-up ? Or is it a 5 yearly poll?
• Who is responsible for appointing these horrendous faces and mouths as Congress spokespersons?
• Air - 2G, Earth- Bellary mines, Fire-Bofors, Water ?? ...Any scam related to water to cover all the elements?
• Now that West Bengal is Poschim Bongo, is Maharashtra interested in being called Marathwada ? Is Goa going be Gomantak soon? Is Rajasthan shifting to Rajputana?

And this is just an observation from The Week That Wasn’t on IBN . Sushma Swaraj has more expressions in a single speech than half a dozen hindi film actresses put together. I respect that. Honest. ♪♫

When cable came to India

Cable has been in India for more than 2 decades now. What many have forgotten is the arrival of it. When AsiaSat1 was launched in 1990, it was the first privately owned satellite communication network covering all of Asia. Its owners were a consortium led by three firms: the Hong Kong based Hutchinson Whampoa, Britain’s Cable & Wireless and China’s CITIC Technology Corporation. In 1991 Rupert Murdoch backed STAR TV launched a joint venture between Hutchinson Whampoa and its Chairman Li Ka –Shing.

What a lot of people don’t know is that cable was present in India a few years before the 90s too, albeit in a more crude and rudimentary form. Even before the arrival of STAR TV and the other satellite and cable networks, an informal, illegal, and unregulated form of cable network was already operating in India.

Cable had unofficially begun in India in 1984, spreading from tourist hotels to apartment blocks and finally to individual households. Videocassettes players, linked centrally to a cable network, fed the networks based on subscription. The numbers slowly crept upto 3450 such cable networks by mid 1990 .In four major Indian cities Delhi, Mumbai, Chennai and Kolkata- over 330,000 households had been formed ,totalling an audience of 1.6 million. A potentially massive market that hungry salivating capitalists would have dreams about.

In 1991, STAR’s package of four channels initially offered news, sports, MTV and general entertainment ;the target audience being the educated urban , middle-class viewer. Around the same time, the economy was liberalised by then Finance Minister Dr. Manmohan Singh, when he presented the union budget in Feb 1991.This made India a very lucrative, emerging market which resulted in a scramble from leading global media companies like SONY,TNT,ESPN and CNBC to enter the Indian market. Subsequently there was a wave of Western programming that was lapped up by the average Indian viewer, who was starved of content for years because of the sole state broadcaster -Doordarshan.

Quite naturally, with the mention of cable comes to mind the cablewallah. Unlike the west, the satellite television didn’t spread with set boxes but through cable. It was delivered via cables and the local cable guys dealt with the households .Although dish reception is legal with licenses, cable redistribution is technically against the law. By an archaic Indian Telegraph Act of 1885, it is against the law to dig roads and lay cables without permission by the Telecom commission.

To circumvent this, the cable operators simply ran their lines over the streets and through the branches of trees and lampposts. The satellite and cable revolution was realised on the basis of this by-passing of law and the lack of the policing to tackle this flouting helped the setting up of an unorganised band of cable operators ,who simply set up satellite dishes at one end and with a few rudimentary wired network over the locality would beam programs and made easy money.

Add to those cables lines the overhead electricity wires and telephone wires. And now you know why we have such messy network of wires hanging all over the cities in India!

After a few years, the consolidation effect kicked in and the local operators with more financial clout acquired others or made them sub- contractors and expanded their business. This also resulted in investment in better networks and amplifiers for better signals. These cable operators are known as multi system operators (MSO) who started acting as middlemen who took signals from the broadcasters and passed them on to local cable operators. The cable operators interacted with the viewers, collecting payment and installing connections.

What is interesting is that nobody can keep track of the number of subscribers and the MSO’s deliberately underreported the numbers so that the cost can be kept down to the viewers as well as getting them more channels from the broadcasters who sold their channel for a particular fee a month. There was massive under –reporting and one person who saw its potential was Lalit Modi .He however could not rake in much moolah during India’s cable revolution.

In 1993, Modi established Modi Entertainment Networks (MEN), and entered into a joint-venture agreement to broadcast Disney content in India; the next year, MEN agreed to distribute ESPN across the country as part of a 10-year contract worth $975 million. These were the early days of cable television in India, and ESPN, like other foreign channels, needed local partners to collect revenues from the cable operators scattered across the country and he too would under-report massively.

The entire business was very shaky and the stranglehold of the cable guys and MSO’ like INCABLE NET of Hinduja Brothers continued for well over a decade. Remember the CAS system that was supposed to come in 2003/4? It was government’s way of regulating cable. They couldn't .But now, with the advent of individual satellite dishes for each subscriber, the industry is undergoing change again. Corporate players like Airtel digital, Tata Sky and Dish TV, offer the viewer more control of his choices, money and remote.

Note: most of the information was obtained by reading a very good book –New patterns in global television by J. Sinclair and Elizabeth Jacka ; Third picture from top by Vatsala Goel (Mumbai), a rooftop in Mumbai .