Wednesday, May 23, 2012

IT’S THE TIME TO LET LOOSE THE CHAIN

Ever since independence, India has been wary whenever it came to trade beyond boundaries.  Had it not been for Rajiv Gandhi’s initiatives and determination, despite intense criticism in mid-80s, and the new Industrial Policy of 1991, India would far off be lagging behind at a global stand.

Picturing the recent trade scenario, India had been on guard regarding the FDI in retailing. Though a 100% FDI for the single brand retail is allowed, the 30% sourcing clause acts as a bottleneck to the comparable entries. The pitiable impact speaks for its inefficiency as the Swedish furniture and home-ware retailer IKEA, among the firsts to push for permission, expressed that it would be difficult for it to "live up to" some of the conditions of the policy implemented by India, but still looks forward to the entry in the economy when the terms "are appropriate". Abhorring the clause, Mr Arvind Singhal, Chairman, Luxury Connect said, “This condition ( on sourcing) is highly impractical and illogical. Big brands entering India would not like to source from SME players as they cannot match up to the standards of global retailers. We believe that the Government cannot force this condition on brands wishing to scale up in India.”

The proposal of 51% FDI in multi-brand is being debated upon. The policy is expected of not only creating more intense competition but also is believed to bring down prices and facilitate higher quality coupled with consumer satisfaction. Brands like Tesco, Wal-mart and Carrefour awaiting it’s entry would give a motivational kick to the multi-brand retailing of the nation and help them match the international level.

Following the footsteps of China, India proposes to let 100% FDI in multi brand retailing with the six metros- Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore and intends to eventually expand the horizon depending on the success rates in these cities. However, the matter is put to the backburner in the budget2012-13.

The BJP, however, expresses its outright non acceptance out of desperate emergency on behalf of the livelihood of about 50 percent of the country’s population engaged in unorganised retail and try to draw attention towards the impact of such liberalisation in multi brand retailing on the unskilled labour of local vendors and the numerous kirana stores.

Favoring the opening of India’s multi-brand retail trade to FDI, the Economic Survey 2011-12 concluded the positive impact in terms of curbing the food inflation in the country along with other benefits it brings.

Such a policy not only will generate numerous employment opportunities but also will provide the economy the boom it deserves at this hour. The fall in consumption and the slow movements of the sector needs to be accelerated so as to enable the growth, no close equivalent can be viewed. Also the politicians should keep a check over their filthy reactionary rage for it is time we all think towards the nation’s development.

2 comments:

  1. Well, there is a political aspect associated with it as expected. The first proposal to bring the 100% FDI was from BJP in 2003 when Congress denied it. The question to be asked is why had Congress been so adament over the FDI "NOW"?
    The answer is beautifully explained by Dr. Subramanian Swami in his article. When the Congress started facing huge pressures from all sides in issues like JanLokpal and Black Money in Swiss Banks, it had no option and saw this as the opportunity. Sonia Gandhi's trip to the US for the surgery was kept secret due to more than one reason. She flew directly to Switzerland from the USA (where Rahul Gandhi joined her later) to shift her family's Swizz Bank Accounts. Had the FDI been passed during that period, all the Black Money would have flown into India as FDI which would have been a boon for UPA government and the Home Minister as it should have solved many other problems for the party.
    On the other hand, BJP quite aware of this fact did not want it to happen this way. As it is Politics and nothing can be expressed directly, BJP opposed it under the cloak of being "Gareebo ka Messiah".

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  2. Talks are about opening 51% Multi-brand market to foreign investors.
    Current laws permit none in Indian Multi-Brand environment.

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