Reader debate: Is FDI in retail bane or boon?

The government’s decision to open up Foreign Direct Investment (FDI) in the retail sector has created an uproar of opposition in the political arena. However there seems to be a greater diversity of opinion among our readers at least. On Sunday 27 November, Firstpost published an article titled, Manmohan Singh’s big retail risk  which has received a number of comments arguing both for and against FDI in the retail sector.  We found these comments extremely interesting and thought provoking in terms of the points they raised, and have therefore decided to publish a cross section of them here.

Some readers such as Arul Prakash feel that the measures will put farmers at a disadvantage and also result in a situation where consumers are not given the freshest produce. He writes, “Once they come the farmers who now have several middleman to sell their goods..will have only a few retail stores to sell in future. Usually that means price he gets will not be as competitive as it is today. Second! the same supermarkets may not actually give the best products grown in India to Indians..third! they can allter the food habits of the nation. Instead of eating fresh foods we will all be eating canned foods soon!”

“Guest”, an anonymous commenter on the article also feels that FDI will be more bane than boon.

He says, “Manmohan Singh and his team may believe that Walmart, Carrefour etc. are coming to India to uplift the condition of agricultural sector and will improve supply chain efficiency. We believe they are coming for sheer profit motives and if that means squeezing the billion+ Indians, selling Chinese goods, killing indigeneous ventures - they will do that. Today’s  independent entreprenuer and businessmen will become their salaried employees.”

On the other side of the debate, Shiva Kakkar does not believe that the entry of foreign players such as Walmart will necessarily kill off the kirana stores, and says that India’s bad supply chain management could do with some propping up. He says, “Opening up of foreign store does guarantee one thing - stiffer competition and aggressive pricing and better quality of service.  But that doesnt mean that Kirana store guys would die of hunger. They have their own clientele and I have seen that when competition stiffens they tend to adapt to it. I come from a tier 2 city. When Reliance and Big Bazaar first entered, there was the same opposition but after that I have seen many small Kirana store owners turn their stores into departmental format and they seem to have maintained their clientele. Secondly, I have noted that they tend to have a better hold of tastes of the local public, for eg. which variety of rice or wheat sells more than others etc. The one good thing was that it was only after the onslaught of retail chains, the kirana guys started valuing customers. I have seen men who wouldn’t give a damn if you stomped out of their shops change their attitude and give better service. Still, the return policies and complaints department happens to be a problematic affair for local stores. Truly speaking, I am thrilled how foreign retailers would handle the Indian retail scenario.

Secondly, people arguing on supply lines being ‘hijacked’ by Walmart need to see the footage rolling on Rice and Wheat rotting in rains that was flashing on every channel barely a month ago. Had efficient supply chain management been there, thousands of tonnes of those grains could have been saved. Accept it -  India is BAD at supply chain management, be it PDS or private. We need expertise of foreign retailers. Maybe, it has a lesson or two for us too.”

Meanwhile another reader, “Catamaran” says that the government decision is a brave one, and the opposition to the move should be ignored in the interest of India’s future. In his own words, “Good Move…by Government..Every good thing has opposition in this world before the actual fools start to see the benefits of it….same happened when India was opened to foreign companies in 1992..now see where is INDIA..at least the world recognize us today…Wait n Watch..INDIA will do much well by these kind of brave decisions..”

Yet other readers such as Sai, see both the positives and negatives of the FDI move. On the positive side he cites “Infrastructure buildup, more cold storage’s, less food rotting, for urbans and semi urban’s its very good in terms of creating new job’s for those who wanted to work but not finding it and also encourage for part time jobs, introduction of new brands, its will be only allowed to 50-60 cities i.e only 20% of total population, 80% people still go for kirana’s…”

However he sees negatives too. “Walmart especially has very bad track record in handling its own employees, developed countries US and Euros have negative statement that Multi Brand retails cut the jobs and give less returns to the farmers from what they were getting before they enter there market, might hamper Kirana’s where they will open store, may in coming years will lead to cane foods in India and at higher prices so will lead to higher inflation…. The biggest concern is that may change peoples mentality, India is country where people saves more, but after these multi brands enter, people will spent more and save less(as we all know how we behave when we enter a shopping mall).. that’s the reason why US and Euro went through 2008 melt down and still wont be able to recover and might in 2-3 years will be declared bankrupt’s.”