This article concentrating on impact and illusion of FDI on the retail chain and people was written long before FDI got unleashed.
Before I take on the FDI intervention in the retail sector, let me go through small myths and misconceptions that my friends ask me most of the time.
Myth 1: Walmart spent $23 billion for access to overseas market, so its a corrupt company
Myth buster: Lobbying and bribery are completely 2 different aspects, one involves arranging for the documentation and tedious work one need not go through when settled through various channels where as the later involves breaking the law to facilitate one's benefit. Often lobbying seen as disguised bribery is quite different than the other. For example paying the broker to get your papers move smoothly in the office so that you need to be present only at the time of driving test without you being hassled is lobbying and you bribing the officer not to take your test is all together a different concept.
Myth 2: I shall have Big stores and malls in my neighborhood
buster: No company is foolish enough to open its mega mart in every nook and corner like we have our various kirana shops in our neighborhood.One big infrastructure shall eradicate the kirana shops for 1km around,meaning you need to walk at least 0.5 km to reach the nearest mall, terror of parking vehicles strikes back when u have one.
Myth 3: Walmart shall sellA1 quality goods at cheaper rates
buster: Really, u need a buster for it? if yes, start believing Kalmadi is clean and IIPM is the best MBA college in India
Myth 4: Ankur supports BJP a lot
buster: I neither support each one of them, coz both had the same idea when in power. I just like to scrutinize the decisions taken by the Govt that make no logic to me.
There is an American quote, "DO NOT FIX ANYTHING IF IT AIN'T BROKEN". Is our retail market so damaged that we need FDI badly? Has this smooth chain in India really collapsed that we need to fight over it and get it done in full force.
My 6 points should give you an idea of why I have a strong stand against the FDI in retail
[1] NO DRAWBACK IN THE INDIAN RETAIL CHAIN
The present retail system has its roots deep in India with its habituated and no-problem facing customers due to the present system.
[2]NO COLLAPSE IN ECONOMY FROM RETAILER'S END
raw materials-->company-->manufacturer-->dealer-->whole sale-->retail-->customer
this is a universally followed series in the retail sector and this has not been changed because of it high efficiency in management and constructed work forced labor resulting gains.
[3]NO COMPLAINTS FROM CUSTOMERS
My experience tells me that rarely there is a customer who has a problem with the product or with the shop keeper, say 1 in every 10.
[4]NO GREAT ADVANCED RETAIL NETWORK CHAIN IN THE US
The retail network has same layout and format as practiced now in India, they DO NOT follow a special or very advanced technique that differs theirs from ours.
[5]LOCAL CHAIN SUFFERS
As soon as a mega store touches down, it sweeps down the shops 1km in radius, displacing all its working group creating the ever chasing employment crisis again. This BIG store which springs up promising jobs for the people from that place and employs a bantam crowd. End result being all shop keepers who lost their business having failed at self employment.
[6]MONOPOLY IN MARKET
The only reason even India has 3 different Govt-run petroleum refining-to-retail/selling companies is to avoid monopoly. If we start having these giants which find a place in this sector that is not at all the need of this hour, soon replacing all the small competitors shall create a mega chance for monopoly which being company's prime motive.
I shall wrap this up with reminding FDI in retail has only enabled these mega players to enter India, remembering that it being a capitalist driven company shall not serve us any free lunches. And the way I see it, there is a very less probability of a win-win situation here with these players having a bigger cut out of the deal.
K.Ankur
