BIKASH CHOUDHURY
The FDI policy in retail of Govt. is a bold step in right direction; which needs careful consideration before announcing the verdict. Opposition for sake of opposing in this case would prove counter productive and would be neither in the larger interest of the country nor in favor of small retailers as the case is being made out to be. There may be a short & medium term impact on small mom & pop shops in cities with one million plus population; but, in the long term the benefits would out weight the short comings due to MNC retail play out. India is currently acutely suffering due to poor logistics and technology for distribution; therefore, our farmers fail to get a remunerative price linked to cost of production with a normal profits and at the same time consumers have to pay a very high price for the products which is much higher than cost of production & the quality delivered. It is common knowledge that inefficient logistic and distribution eats away a lot of resources without much value addition. If no attempt is made now, then the problem could be more acute in future as there would be no innovation in the domain of “logistics & distribution” in the country for a long, long time. The Indian Modern Retail for last fifteen years has been able to make a very negligible impact on the technology of sourcing of goods and its distribution. Therefore, instead of trying to reinvent the wheels once again; the country could at the least encourage the retail biggies of the World to bring their Capital, Technology & Management to make a paradigm shift in the method of consumption in the designated cities, in phase one and unlock value that would hold promise for our farmers, consumers and those who would work (School & College drop outs with gross enrolment ratio being 21%) for modern retails of MNC. The FDI policy for retail has also reasonable safe guards that would protect Indian interest that would attract the best in the trade; as the policy is applicable to cities of one million population, 30 % of sourcing from small & cottage industry, 30 % of fruits & vegetables Govt. retains the first right as supplier, 100 million USD being the minimum capital requirement with 50 % outlay reserved for backend and State Govt. having authority to issue trade license to operate.
The old maxim of economics “nurse the baby, protect the child and free the adult” holds good in case of Indian retail trade which is adult enough to compete and learn to survive and excel in currently globalize economy. With the opening up of retail sector our home grown modern retail industry would have the opportunity to partner or to learn the tricks of the trade from the MNC; which will enrich their experience and help develop innovative new business models in the domain. Though, the small retail stores would experience lower sales in short/medium term under the impact of MNC retail; but, it is unlikely to create a meltdown situation knowing the buying habits & patterns of Indian shoppers. There is a distinct possibility of consolidation among small retails to cut costs and gain advantages of scale which they have shunned till date due to dearth of competition. The other important aspect of FDI retail policy lies in its scope for employment creation (3 lakhs per annum) for new skill sets that is abundantly available among our school & college drop outs policy. Apart from, creating a much powerful demonstration effects and experience for both consumers and producers in a scale and scope not seen or heard before. This policy could not have come in a more opportune time like this when Indian corporate are investing abroad to hedge their bets in the country, FDI flows drying up, Dollars going strong against INR and inflation running high; to help attract 5-10 billion USD per annum. With this perspective in mind; we must and should consider the FDI policy in retail very carefully before accepting or rejecting the Idea.
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