Faced with stiff criticism, both inside and outside Parliament, from the Opposition as well its own allies, the United Progressive Alliance government on Monday made an attempt to soothe ruffled feathers and reach out to the Opposition leaders and Chief Ministers of Tamil Nadu, Bihar, West Bengal, Odisha and Uttar Pradesh on the contentious issue of allowing 51 per cent foreign direct investment (FDI) in multi-brand retail.
Seeking to dispel apprehensions and asking them to rise above “petty partisanship” on the issue, Union Commerce and Industry Minister Anand Sharma, has written to Leaders of the Opposition in the Rajya Sabha and Lok Sabha, leaders of the DMK, Biju Janata Dal, Trinamool Congress, CPI and the CPI(M).
The Opposition and allies like the DMK and the Trinamool Congress have demanded a rollback of the decision.“I felt it is my duty to dispel some apprehensions expressed by certain political parties. The parties should rise above ‘petty partisanship' and strengthen Indian political systems. Wide consultations were held before the decision was taken,” he said in his letter.
“The policy has evolved after a process of intense stakeholder consultations, which commenced on July 6, 2010, when a discussion paper was floated by our Ministry. Comments from a wide cross section of stakeholders, including farmers' associations, industry bodies, consumer forums, academics, traders associations, international investors were analysed in depth before the matter was deliberated by the Committee of Secretaries on July 22, 2011 and Cabinet took a decision on November 24,” he said.
The letter has been sent to leaders Sushma Swaraj and Arun Jaitley, Sitaram Yechury, D. Raja, Lalu Prasad, Chief Ministers Nitish Kumar, Mamata Banerjee, Jayalalithaa and Navin Patnaik, among others.
Mr. Sharma said studies on the global experience with foreign investment in multi-brand retail revealed that even in developing countries such as China, Brazil, Argentina, Singapore, Indonesia and Thailand, local retailers had found innovative ways to co-exist with organised retail chains.
The government was also mindful of ensuring food security for the poorest of the poor, retaining the first right to procurement of food grains. The first right would rest with the public distribution system, he said. On concerns over the predatory pricing that may be resorted to by multi-national retailers, he said the Competition Commission would ensure that such practices were scrutinised.
Much ado about nothing. First of all, the average Indian customer is in the habit of buying groceries, vegetables, and consumables from stores nearby -- mainly because of convenience. Our roads are congested, very few people own cars, fuel is getting more expensive for people to travel long distances to buy these items. The real estate for mega malls are usually far more expensive and upscale. I do not believe that entry of these chains will make any difference until we reach the developed country stage of using a lot of processed food for daily consumption.
What the minister means in intense stakeholder consultations nobody knows. What public surveys conducted? How much of this decision is supported by people in online public polls by media- that could truly show if people liked it or not? This is Government for Politicians, by Politicians and never will reach out to people.
The Foreign direct Investments and its effects on the Indian kirana stores are debatable. And, an end customer may be benefiting from organized competition. The policy makers are responsible to make clear more about the investment pattern and tax implications on such investment. A preferential treatment for local investments should be devised, in terms of tax rebates, or rather, a premium tax on the income generated by foreign investors.
Retail unlike other areas is closely knitted with common man's life and any thoughtless policy or provision will be costing dearly. Most of the foreign retailers are well known for their dubious business practices. It should be made sure that, enough tweaking of regulatory rules is done to tackle such hi-fi fraud practices. On an emotional front. such activities is against the proclaimed policies of India as a socialist democracy. India is on a race to embrace global capitalism, which have proved its fragility Humpty times.
I live in Australia where the small trader has been gobbled up by the large corporations with deep pockets. The farmers have very little bargaining power, and are unable to match the might of the duopoly that exists. The price of milk and bread were drastically reduced recently with the farmers having to bear the brunt of lower margins. I'm sure illiterate small Indian farmers and traders would be worse off.
India must insit that all manufactured goods should be sourced from within India. China has been in violation of WTO for a long time. It makes sure there are roadblocks to Imports and it had got away with it. Why should now India allow FDI in retail to facilitate imports from China. All the Western Retail outlets source their merchandise from China. You only have to walk into any Wall-Mart to see the Made in China on all the Products. These Big Retail outlets are in existance to make money. So they will source from the low cost source supply chain that is China. They like to Import from China for two resons. One the supply is ininterupted as Stikes are not allowed in China. Second it is low cost due to huge infrastructure built up by China and large productions result in low cost. India need not allow FDI in retail to enrich China. If India allowes it should ensure that major sourcing is in India and not China. If in the process it breaks WTO so be it.
Sharma should be hauled up for misleading the nation
What is clear is that the Central Government has no clarity on opening up the retail industry, invigorating it, or helping the existing one grow. There are way too many contrasting and ambiguous signals coming out at the moment, and it is hard to discern what the impact of allowing global giants into India will be. If Indian manufacturers are forced to compete on equal terms with foreign consumer goods manufacturers, judging on value for money available to say, a consumer in the USA, Indian manufacturers are doomed. I cannot say this is unhealthy. Today in the Indian retail sector, shady middlemen make a healthy part of the profits. This is not good for any economy. If on the other hand, we are forced to live with Indian money being expatriated, then we need to rethink this.
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