Under intense pressure from some of its own allies and the entire Opposition, the government on Wednesday announced suspension of its decision to allow Foreign Direct Investment in retail, and immediately thereafter Parliament was back to work, after nine days.
Normal functioning of Parliament had been stalled ever since the Cabinet decided to allow 51 per cent FDI in multibrand retail, with some UPA allies, primarily the Trinamool Congress and the DMK, and the entire Opposition, demanding a complete rollback. The impasse finally ended on Wednesday morning at an all-party meeting, where the government announced its intention to put the Cabinet decision on hold until after all stakeholders were consulted.
Soon after, Finance Minister Pranab Mukherjee made the announcement in the Lok Sabha. He explained that the stakeholders were political parties and Chief Ministers without whose involvement this decision “cannot be implemented.” “It can never be implemented without involving the States.”
Leader of the Opposition Sushma Swaraj welcomed the announcement. “The government has bowed to the wishes of the people. To bow before the will of the people is not defeat. It is strengthening of democracy.”
After the statement by the Leader of the House, Speaker Meira Kumar disallowed the adjournment motions moved by the BJP, the Left and the BSP. The BSP members were dissatisfied and staged a walkout.
The House then took up question hour for the first time since the winter session began on November 22.
In the Rajya Sabha, as soon as a similar statement on the government's intention was made by Commerce and Industry Minister Anand Sharma, Leader of the Opposition Arun Jaitley wanted a clarification on who the “stakeholders” would be. Sitaram Yechury (CPI-M) said the State governments and political parties should be included in the consultation process.
Mr. Sharma said the stakeholders would include States and political parties.
A BSP member said his party wanted a complete rollback of the FDI policy, and staged a walkout along with all MPs of his party.
Earlier, at the all-party meeting convened by Mr. Mukherjee the Opposition agreed to the government proposal of suspending the FDI in retail until “consensus” emerged. All the parties, including the TMC and the DMK, agreed to support the resolution and allow the House to function.
Keywords: FDI in retail, foreign investment, retail sector, Indian economy
As long as growth continues to boost Indians' purchasing power, the retail pie will expand for everyone. The biggest losers from FDI liberalization would be the middlemen who currently do today's organizing of Indian retail—and do it badly. For instance, currently the Indian farmer sells a kilogram of tomatoes for three rupees (six cents) to the first intermediary in the chain. Four more intermediaries later, the mom-and-pop store sells that same kilogram for 15 rupees. Most of the difference goes to the middlemen, not Mom and Pop. Meanwhile, some 20% of the tomatoes rot in transit. On average across the country, vegetables see a markup of 60% by the time they arrive in cities. With the investment and know-how of the foreign retailers there is a scope for introducing modern logistical processes and technologies such as cold storage and working directly with the farmers and manufacturers to reduce wastage, improve quality, remove middlemen and reduce retail price for the consumers.
BJP is being criminally irresponsible in opposing FDI in retail. BJP is not out to protect the Kirana shops because Kiranas don't need protection, they are perfectly capable of competing with their neighborly personalizd service. BJP is actually promoting blood sucking middlemen agents who pay pittance to the farmers and re-sell to the consumers at highly inflated price while accumulating millions in black money. The Indian Council for Research on International Economic Relations, a think tank commissioned by the government in 2007 to study the potential impact of modern retail, surveyed 2,020 small businesses and found that they wouldn't see a decline in overall employment. Small stores can exist side-by-side with corporate giants, beating the latter at some traditional areas like customer service such as home delivery or selling on credit.
With the entry of MNCs like Walmart and Carrefour, it's logical that the small retailers and shopkeepers have a lot to lose. Why doesn't the GOI first identify all the losers and prepare their list alongwith the CVs of all those who are going to lose their jobs, and make the MNCs liable to first employ all of them in their departmental stores, supply chains, packaging and distribution etc? The Indian authorities can enroll all the small retailers within 6 months and then submit their data to the MNCs, after which everyone will be happy! The Walmarts will be able to employ most experienced staff, and the small retailers won't lose their daily bread.
500 years ago India was a very rich country. Europe was desperate to find a new route to India, avoiding Islamic countries in the mid east, which monopolized the very lucrative trade with India. So they financed adventurers like Columbus, Marco polo etc to find a sea route. Columbus discovered America because of a navigation error. The British east India co started trade from madras (now Chennai) India. It systematically destroyed Indian industry like textiles, metals, manufacturing. And India went back to the begging bowl. They wanted to do it for America too but Bostonians threw the red coats out with their famous "tea party".
Wal-Mart is a much more savvy EAST India CO, driven to make more and more profits for its owners. Its shelves are stocked 100% with, as you say, Chinese goods, it will not bring new technology because it has none (it bought an Indian co kosmix (based in US) to get tech savvy, renamed it Wal-Mart labs and moved it to Bangalore to mine cheap Indian brains), it will not bring down inflation because it profits by it, millions of small tradersnow dominate Indian retail trade. It will kill millions of small Indian entrepreneurs and traders with its mass monopolistic marketing. It will create a whole new class of lowly clerks as in USA. It will systematically kill Indian industry by massive Chinese imports as in USA. It will fatten the Swiss bank accounts of willing politicians. Coke cola, which destroyed native drinks like oos Pani etc with its sugary/addictive drinks brought an epidemic of diabetes/obesity to India. Wal-Mart will do million times more damage by killing Indian industry and frugal Indian entrepreneurship. Mahatma Gandhi will have nightmares”
Bizzare situation Goverment has suspended its decision for sometime
facing the problem of majority in house.becase its allys dmk and tmc
in u.p.a were also opossing the move since it was mooted by the
government.so this first time in history that ruling party faced such
a kind of situation.oppsotion also pressurized the government to
reverse its move of implementing the 51% fdi in india. In my personl
view fdi will be benificial for india like country only if we are
implementing it with systematic way.foeign companies may oppress the
farmers if not regulated by proper policies.they may only purchase the
high quality of things from farmers.if farmers failed to so than they
will suffer. As i think wallmart like companies and small shopkeepers
can coexit together.because these companies will do bussiness only in
outskirts of city.so people will not go there everytime.Taking the
cognizance of incidence in laxmi nagar of delhi there was a branch of
reliance fresh surrounded by the shopkeepers and vendors i asked from
one of vendor is there is any impact on your bussiness he replied
smartly they have their own customers and our customers are also
different. Besides it fdi will create the infrastructue here and will
salvage the extra crop from spoling by constructing more cold
stores.farmers will get true price of their harvesting and this will
further mitigate the opressions of farmers in our country and
ameliorate their situation.customers will also find the things cheap
there.They will be also benifitted from this.so in true sense we will
be able to curb the evil of inflation in our country opposition is
opposing this move just becase they are opposition when bjp was in
power they even advocated the 100% fdi so now what happened.so friends
opposition should abandon to take the political milage of issues which
are in interest of country suggestions are invited
Finally the Finance Minister has admitted that FDI in retail can never be implemented without the consent of the stakeholders, viz. political parties and states. Apart from that there are many valid reasons for withholding, rather withdrawing, the decision to allow FDI in retail trade. India is one of the top five retail markets in the world by economic value and employment. Today, retail trade or retailing is the single largest constituent of the services sector. It contributes about 15 percent to gross domestic product (GDP). The total sales turnover of the retail sector is about Rs. 12.5 lakh crores (US$ 250 billion) in 2011; out of this, only about 4.5 percent is contributed by organised retail sector, and the rest (95.5 %) by unorganised retail sector. The sector provided over Rs 80,000 crore as compensation to its employees, who often include family members of owners. Estimates about the total persons employed in retail trade are scanty and conjectural. However, recent survey reports show a tremendous growth in the proportion and number of self-employed persons, particularly in trade. According to a recent report (October 2010) by Labour Bureau out the total work force 384 million, 34 million (8.85 percent) constituted wholesale and retail traders. If self-employed category alone is taken into consideration, more than one-fifth (20.11%) is employed in wholesale and retail trade. In the urban sector 473 persons employed for every 1000 persons (47.3 %); out of this, a maximum 173 persons (36.5%) are employed in the wholesale & retail trade group followed by 154 persons (32.4 percent) in the manufacturing and 146 (30.1%) in the community services group. Thus, the wholesale and retail trade sector dominates urban employment, whereas in rural areas agriculture and allied activities predominate over other categories of employment. But in rural areas also trade category has a dominant presence in the employment front. As per the recent report of National Sample Survey Organization (NSSO) about 38 million persons are employed in the trade sector; of which, 31.16 million (82.01% ) are employed in retail trade, 4.78 million (13.10%) in wholesale trade and the rest (2.06 million) in auto sales, repair and maintenance. According to another estimate currently around 40 million persons are employed in retailing, wholesale and retail put together. Out of this, unorganised retail trade provides employment to about 39 million persons (97.5%), whereas the organised sector provides jobs to around one million persons (2.5%).
Studies show that Indian retail trade is one of the most vibrant sectors of the Indian economy and it is growing fastly at more than 20 percent per year. The retail sector besides providing, employment opportunities to millions of persons, often acts as a shock absorber for those who are thrown out of employment for various reasons.Retail shops exist everywhere, all over the country, in every nook and corner in the cities and even in remote villages. The local tea stalls, particularly in rural areas, serve as meeting points for the people, especially political cadres and social workers. Moreover, the local provision and grocery owners have personal contact with the people of the area, and at times of emergency, they lend a helping hand to the people in distress. Moreover, in the Indian retail trading system, majority of consumers buys essentials from neighbourhood stores on credit and pay bills on monthly or weekly basis. Such consumers will suffer with the disruption of the traditional system of retail stores. Thus, at this stage, any disruption of the prevailing system of retail trading will affect all sections of society, including the politicians.-- Excerpts from the forthcoming book, “FDI in Multi-brand Retail: a Retrograde Move," the author of the comment.
FDI in retail will benefit India in many ways: 1)introduce modern logistics such as efficient supply chain & cold storage that will cut down the estimated 40% wastage in farm produce helping to tame inflation & putting more money in farmers' pocket, 2)reduce middlemen who pocket most of the profit today thereby letting farmers get better price & reduce price for the consumers, 3)create jobs in retail without requiring high education level such as in IT, 4)help make medium-small suppliers more efficient since foreign retailers work with their vendors to help them improve quality, 5)Foreign retailers will export more items from their Indian vendors whose efficiency improve with help from the foreign retailers, 6)better quality products since organized foreign retailers have to observe quality control for fear of bad publicity, 7)huge tax revenue for the govt as organized retail will collect sales tax. I hope govt would implement FDI in retail at the earliest.
When I first read about the unpatriotic, fundamentaly flawed,and disastrous decision of te Union Cabinet to permit 51% FDI in multiple reail stores in our Bharatham, I felt as though my blood was freezing in my veins!How could anybody capable of, and duty bound to feel the pulse of the people who elected them, be misled by the relentless propaganda and unscrupulous armtwisting by die-hard foreign business hawks, indulge in this escapade,which would ruin the livelihood of lierally lakhs of small merchants, who grace the streets of our cities and towns,and form an integral and delightful part of our landscape!
As reported, this has now been postponed.Is this a matter for postponement? IT MUST BE DROPPED PERMANENTLY. To merely
postone this, is like keeping a viper in a cupbord of one's home.
All those , responsible for this betrayal must graciouly leave the Cabinet,and apologize to the electorate. They should have no more chance to repeat such fatal blunders.
When US tries to impose restrictions on IT Outsourcing -- either, through tougher Visa regulations OR Policies -- India tries to quote "free trade", "globalization", "this is a competitive world", "WTO norms", etc. Why is India not emulating the same standard when it applies to FDIs?
Aren't these double standards?
All this is for money,not for roadside poor men.
Such venture certaily widen the rich and poor gap.Will add further in inflation,unemp
India is a different type of country with different type of culture based mainly on rural population.They have managed their own way for balancing market forces since centuries.To make modern ways to fit in will take time.Let first money earned by urban popukation be distributed in villages to evn out the rich and poor gap as well as huge unemployment.
Such trend will completely shatter market set up of comodities.
Please let poor people make their small livelyhood.A farmer cutting sugarcane can not be asked to run computer.It takes its own time with development of the education system.Govt.must concetrate to increase number of schools in villages before doing all this nonsense.Still there are schools under the open roof and under the shade of trees.India and Indian companies have made enough money for rich class.Let villagers have the benefit of th
In my view, the Government has out-manouvered the BJP by putting FDI on Hold. The Congress knew that the BJP gameplan was to continue the paralysis of parliament. This would mean that Annna's Lokpal would not be passed and another fast will be undertaken to target the Government, which will boost the BJP's image. What is increasingly clear is that the BJP has become completely irrelevant and have zero ideas or vision. They are stuck with an old man spending time on Rath Yatras. Hence, for once, the Congress has not fallen into the BJP's trap by pushing the FDI button now
The question is not merely whether some retailers will lose business
but also whether it will benefit the consumer of choice of goods and at
a cheaper price.
This is great news. Unless the government has a plan for providing jobs to the millions of kirana store owners that will go out of business over the next 3-4 years, allowing FDI in retail (which uses very little labour) would have been a very bad move.
I strongly condemn the FDI investment in retail as this would affect the entire cycle of economy.India being a developing country allowing foreign investors at this juncture is risky as this would cause lot of unemployment issues within the country.Unemplyoment is a critical problem already being faced by the West. Why should we create the same problem after sometime by involving FDI in retail. Given a chance, India shall excel by itself and shall become the developed country down the lane.
At long last, after a tortuous nine-day journey, we have reached the end of the tunnel, to be greeted by the bright morning sun. Wisdom and courage displayed by the ruling and opposition parties in arriving at a consensus to holdup the FDI Retail proposal is, indeed praiseworthy. This will eventually lead to a roll-up of the proposal as the majority of States governed by Opposition parties, combined with the opposition by millions of petty traders are vehemently opposed to the proposal.One important lesson to be learnt by the ruling party especially is that the entire nation has become fully conscious of their rights and the events taking place in the country and, therefore, their unqualified support to any piece of legislative measure affecting their welfare, cannot be taken for granted, as heretofore. This is no doubt a healthy development which all political parties should should bear in mind and augurs well for the future of the nation,
Opening FDI into retail market is good and bad; it depends on what restriction policy and supported by the governance policy. From the Indians vendors’ point of view opening up FDI is not good. However; this can be overcome with support of everyone within the government and outside the govt. One option could be put restriction on the “sourcing” of the goods, make a restriction policy that 95% of goods must be from within India and only 10% could be exported. This will also help to avoid make India as dumping ground for unwanted materials. It is possible that some countries may convert the unwanted waste of their own into a product and dumb into India. With respect to human resource; make it exclusively the employment shall be only to Indian citizens.
Be it in retail or other sector FDI is needed for country's economic progress..this government has failed in attracting much needed FDI in financial and other sectors..the other parties are no better..all political scamps are good for themselves..
The drawbacks of opposing FDI should also be realized here.
1.Customers will loose the benefits of enjoying higher global retail standards at lower rates.
2.Customers will have to live with adulterated, substandard goods in the market without any opposition or competition.
3.We are ready to give up our attitude to improve which is bad.
India has not done this the first time. We collaborated with Honda to form Hero Honda, Suzuki to form Maruti Suzuki etc. We borrowed the technology for Railways, Telephones. Why not this one?
I remember the initial days when computers were introduced and my father came back from work for a day's strike. They were opposing computers since one system can do 100 people job. It was introduced with oppositions. Today, India has created greatest software export market. Come on people, India is global leader now. We cannot afford to live incompetent anymore.
Priorioties of the UPA government are different. While it(Congress) comes to power with the slogan of being Aam aadmi friendly and forgets who aam aadmi is as soon as it comes to power. Priorities of the UPA govt shows that it is more committed to the corporates. Had Congress done this -putting FDI on hold very early without wasting nearly two week of the Parliament session, it would have been good.
This is what called democracy but once again government has failed to prove its influence among its allies and has showed its lack of decision making ability.Taking back of its decision clearly reveals that 51% stack of foreign investors in retail could have been a severe blow to the local retailers of India.I don't see any point in giving this stake to the foreign retailers to cater inflation. Though the government may earn some foreign investments but this will make the situation even worse by displacing our retailers from the market and hence, will increase unemployment.
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