Will India's retail FDI experience be better than in China?

Can India hope to bypass the problems faced by international retailers in China merely by attracting investment.

FP Staff September 20, 2012 17:33:10 IST

As the Indian government hopes for millions in investment from international retail chains that will take advantage of the policy permitting FDI in multi-brand retail, should they be looking closer at the experience China had?

"The experience of China and India in multi-brand retail will be very different. China's large manufacturing base has cushioned the ill effects of FDI to a large extent," Praveen Khandelwal, General Secretary of the Confederation of All India Traders, said on CNN IBN

He said that India did not have a low-cost manufacturing base and Indian suppliers would not stand a chance against the low-cost business model of Chinese suppliers and manufacturers.

Will Indias retail FDI experience be better than in China

Will the agrarian sector benefit from FDI in multi-brand retail? Reuters

However, it was countered by Vice President of the CII, Ajay S Shriram who argued that FDI in multi-brand retail will be beneficial to the larger population of India.

50 percent of the investment will have to go into improving the infrastructure at the back end, something that will also halt the increased migration from villages to the cities by creating employment, he said.

But all are not in agreement that merely bringing in international retail chains will eliminate problems with the agricultural and manufacturing sectors in India.

Professor at JNU Kamal Mitra Chinoi pointed out that China's experience with FDI in retail has not been without bottlenecks.

"There have been major demonstrations by farmers in China against FDI. It is therefore not the best way to energise the rural sector," he said.

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