FDI in retail: the red pill we all have to swallow

I remember a scene from a episode of famous comedy south park, where characters learn that there is no point in burning down the walmart as long as consumerism remains a way of life. If it is not walmart than some other store will become a giant and the same process would repeat. In India, now, when we are faced with eventuality of direct foreign investment in retail sector, similar questions need to be answered.

First issue is whether we should allow organized sector to open retail stores or not? Everybody today favors this step and we all in urban areas use one retail chain or other for convenience, lower costs and trusted material. Big Bazaar, Vishal mega mart, Mother dairy etc are now part of every town. So, this issue is settled.

Second issue is whether we should allow foreign companies to operate in this sector or not? Anti-liberalization lobby thinks that it will spell doom for small shop keepers. I agree to that. But this does not mean that people will get unemployed. People, most certainly will change jobs; they will start working in big retail chain in place of small shops; they will have lesser control over business, but they will have better financial facilities (fixed salary, pension etc). With the time, job profile has to changed otherwise we will be stuck in same old hindu rate of growth.

Another contention is that Indian companies will not be able to compete with global giants. So what? If private sector take benefit from open market than they should have capacities to face the competition. I am sure Indian companies will learn to remain profitable. At the time of opening of every sector people question it, but eventually it helps Indian economy to grow.

As far as farmers are concerned, they will be the first to benefit from such moves. They will have better storage facilities, better market linkage and in long term better technology also.

So, those who think that FDI in retail sector is a bad thing, need to think again. I am not a die hard fan of consumerism; but if you are in the colosseum, you have to swing your sword; otherwise you will not be left to teach the world about devility of being a gladiator.


5 thoughts on “FDI in retail: the red pill we all have to swallow

  1. Even though I do favour the move but the point that only the job profiles will change is unacceptable. The no. of guys employed by the chains would definitely be lesser (actually very less) and What abt the middleman? other concern is what is happening today in US..are the governments not favouring for mom & pop shops?


  2. what makes you think that the number of people who are going to get unemployed , the same number will be recruited to the retail chains .
    according to a survey or by the way of common sense when machines take place of humans the no of people recruited at a newer place is far less than the number of people who were earlier getting employment.


  3. @vaibhav singh
    obviously people doing same kind of work will be less in number. But there would be work with different set of required skills. There would be need of training. People with better education shall get better employment. The whole process is same as process of industrialization. There is obviously momentary losses and pain for few for a greater and more sustained good.


  4. Hi Chakresh,
    I wanted to respond to the usage of the term “Hindu rate of growth”. It is high time we stop usage of this term. When India was stuck at a growth rate of 2-3%, the west derogatorily used the term Hindu growth rate to mean a weak growth rate. Fast forward to 2010, India’s growth rate is in 8-9%. Should we update the term Hindu growth rate to 8-9%, meaning a powerful growth rate is equal to Hindu growth rate. Morevoer, the avg GDP growth rate of Middle East countries in in 2010-2012 is in the range of 2-3%. Should we rate this as a Muslim growth rate? I do not want to give this a communal colour, but if someone abuses me with a derogatiry term, I would not take the term as a compliment and use it myself.


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