Detailed Analysis FDI Good or Bad for India Who will benefit in India if FDI is allowed in Multi Brand this is Kirana Business
Detailed Analysis FDI Good or Bad for India Who will benefit in India if FDI is allowed in Multi Brand this is Kirana Business
Few days back the Union Cabinet of India overcame years of indecision to allow up to 51% FDI in multi-brand retail.
Government also increased the FDI limit in single-brand retail to 100% from 51%.
Government says it will benefit India.
Traders fear the move.
Opposition parties oppose the move as they know they will benefit if they support the traders.
No one is touching the real issues and accepting the truth that today or tomorrow FDI, big global corporations will enter into India directly or indirectly.
Today world is becoming a global village.
Foreign Investment in India is governed by the FDI policy announced by the Government of India and the provision of the Foreign Exchange Management Act (FEMA) 1999.
The foreign investors are free to invest in India, except few sectors/activities, where prior approval from the RBI or Foreign Investment Promotion Board (‘FIPB’) is required.
In franchising and commission agents’ services, FDI (unless otherwise prohibited) is allowed with the approval of the Reserve Bank of India under the Foreign Exchange Management Act.
Examples of Such Business - Pizza Hut or Nike or Spencer
100% FDI is allowed in wholesale trading.
Wholesalers do the business with the Retailers.
Wholesalers never do business with Consumers.
Few days back central government of India, Congress Government announced the cabinet decision to allow 51 percent FDI in retail that is multi brand.
Is it good for the India to reject the FDI policy and direct investment in retail sector by the foreign brands?
Does India and Indian citizens are ready for big brands when 70% Indians do not earn daily more than Rs. 20 a day.
If you will see the history of foreign direct investment in India you will realize that India does not need any foreign funds.
In past history when companies invested Rs. 10 Lakh in one year they made profits of 50 Lakhs or 1 Crore.
India is a very big market
now Question is why Indian Government is opening the Retail sector for foreign brands?
Is it an idea to make people forget the Jan Lokpal Bill and in discussions of FDI never to pass the Jan Lokpal Bill and then put the blame on the opposition parties that they did not allow us to work in Parliament.
Who will benefit because of FDI policy of direct investment, Farmer or Consumer or builders and Indian Malls who are not in a competition to Indian Retailers?
Big owners of Indian Malls in future will sell their Malls to Foreign Brands and those rich owners will get the partnership as well as cash.
they will make lot of Money because of FDI policy.
After 50 Years what will happen in India because of Foreign Direct Policy in Retail?
Regarding this no body can predict one thing we should understand that Big Rich Multinational Companies and Indian Rich People will be seen controlling the Retail market of India and which will decrease the small business shops.
Big Malls and Big retail chains are good for any honest Country but in corrupt nations the benefits do not reach to the poor people.
The benefits of such faulty FDI policy are enjoyed by Politicians,big business houses, rich people and their friends who introduce the laws like Jokepal for their citizens.
India does not have good and excellent laws like USA.
One example –
In USA if any American citizen hides his money in other country the FBI and IRS of USA see that that rich American Citizen goes to Jail.
On the other hand Indian Government and laws do not even allow the Indian citizens [the slaves of India] to know the names of corrupt India who has kept the money in other countries.
The Government knows the names but we Indians do not have right to know the names of Corrupt Rich Indians.
Those corrupt Indians do not go to jail but they pay minimal fine and their money becomes legal.
No one goes to Jail for cheating India.
Like this in every law American law beats the Indian law.
So we should not consider and compare the benefits of Big Corporations and Companies which are enjoyed by the America or China.
Example of China –
China – Do the corruption if you are found doing corruption in China, Chinese government gives the corrupt person a death punishment immediately.
Like this laws are very strict.
What happens in India we know it
nothing happens they get the bail and never go to Jail again in their prime youth.
Indians who visit to Singapore do not spit on the road and they follow the laws.
But same Indians do not hesitate to spit on the road.
Before we talk about FDI one has to understand the complete structure and working of Indian Government and Indian system.
2G was happening and No Government agency tried to stop the 2G.
Aadarsh Society scam was happening no Government Agency stopped that.
All decided to unite and planed to enjoy the fruits of evil.
Major scams and crimes come out in public domain or knowledge in India because of Supreme Court of India and few people or NGO who dare to file Public Interest Litigation writs in High Courts or Supreme Court of India.
Otherwise we fear the machinery and system.
Short History and Current FDI Retail Policy –
FDI has been permitted in wholesale trade on cash and carry basis.
In 1997, FDI in cash and carry (wholesale) with 100 percent ownership was allowed after getting permission from the Government.
License Raj = Corruption Raj
In 2006 51 percent investment in a single brand retail outlet was permitted.
As per the current regulatory regime or say Policy
Foreign Direct Investment (FDI) up to 51% is allowed with prior Government approval, in retail trade of ‘Single Brand’ products. Guidelines notified, vide Press Note 3 (2006 Series), require:
i. Products to be sold should be of a ‘Single Brand’ only.
ii. Products should be sold under the same brand internationally.
iii. ‘Single Brand’ product-retailing would cover only products which are branded during manufacturing.
Meaning of Single Brand in connection with FDI?
Single Brand means a retail store with foreign investment which can sell only one brand.
The government has not defined the meaning of single brand and Multi Brand.
As Government of India will open the Multi Brand for Foreign Investments then
Big companies like wall mart or Carrefour and Tesco will open their big luxuries Kirana stores in India.
Currently in Indian Metro cities one can see the Indian rich people opening such luxuries and very big Kirana shops.
Do you know what definition of Retail as per law is?
In 2004, The High Court of Delhi defined the term ‘retail’ as a sale for final consumption.
Retailing is the interface between the producer and the individual consumer
Buying for personal consumption.
This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers.
A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit.
As such, retailing is the last link that connects the individual consumer with the
manufacturing and distribution chain.
The retail industry is divided into
1. organized sectors – The sector which pays income taxes, sales tax etc or licensed retailers or hypermarkets and retail chains
2. unorganized sectors – this sector includes local Kirana Shops or pan bidi shops or hand cart vendors or pavement vendors
Currently in India Presence of Organized sector is very limited.
Unorganized sector needs the help of Government of India but problem is in last 64 Years India failed to give them facitlies.
Indian government does not have storage facilities to keep the extra food produced by
farmers. on television we see that how the food is kept in open 24 months.
Even i read in a newspaper that government storage house was rented and farmers produce was kept openly in a rainy season.
When Government failed on government front then forget about government helping farmers and others so they can build their own facilities and save the food produce by them.
Currently in India majority Kirana shop business is family oriented and if you ever watch it closely you will find Child labor working in Kirana shops.
Traditional retail sector exploits labor. Did you ever ask the boy what is your salary when he brings your monthly kirana shopping to your home.
If you never asked him now ask him what is his monthly salary and his age.
Do you know any Indian company or business house helping farmers or consumers?
Currently in India situation is farmers do all the hard work and they enjoy the minimum or lowest share of the profits.
Middle men that is Dalals or agents earn more than farmers.
Farmers commits suicide as they can not give education or food to their kids.
Ever heard any agent committed suicide for the above reasons.
Business people purchase from the farmer 2 or 1 Rs KG. and that same produce we consumers have to pay 50 or 100 Rs. KG.
Foreign direct investment is good for the India but reality is that Indian laws are not ready for the FDI investment.
Currently if the FDI comes into India only and only rich people of India and politicians will benefit.
No Indian Consumer will benefit.
No Farmer will benefit.
In If you will try to read the studies made by the different people in different nations you will find that farmers always get less money, consumers always pay more
With or without FDI farmers and consumers both suffer.
When FDI will come into India it will be a start of monopoly and we know that Our Indian laws do not punish any criminal.
Here corruption has become a religion for many people.
In India laws are made for the benefit of Rich and not for the benefit of poor.
If farmer commits suicide no one pays attention but when rich air line say we are suffering losses immediately top politicians say that do not worry we will help you or we will arrange loans for you, using those loans you can pay your debt like this in India we work.
American farmers are not rich they are surviving on the subsidies given by the American government.
America government gave a subsidy of US $ 307 billion under the US Farm Bill 2008 to farmers it’s for 5 years.
As per studies in Europe also the subsidies given by Government to farm sectors are increasing.
President Barack Obama in his speeches he said to American citizens that start to purchase from the local stores.
When FDI comes to India it may or may not eliminate middlemen but the profits of middle men will not go towards the farmers or consumers that profit goes to politicians and company owners.
India has signed the GATT agreement thus Indian government has no right to tell the big retail companies from where to purchase.
By saying 30% will be purchased from Indian farmers is a white lie.
Thus demand 60% produce should be purchased only from Indian farmers.
In study entitled “Wal-Mart and Poverty”, Pennsylvania State University in the United States has clearly brought out that those American states that had more Wal-Mart stores in 1987, had higher poverty rates by 1999 than the states where fewer stores were set up.
Wal – Mart USA turn over = US $ 400 Billion = Jobs created = employs 2.1 million people.
Now in India Indian retail sector too has a turnover of US $ 400 billion, but has 12 million shops and employs 44 million people.
So who is creating more Jobs FDI will not create jobs FDI will fill the bank accounts of Politicians and Rich Indians.
So who will benefit because of FDI in India.
Only Rich Indians and Politicians will benefit because of FDI in India.
Wal-Mart Stores, the world’s biggest multi-brand retail chain, had told the US Senate that it had lobbied for “discussions related to India’s Foreign Direct Investment (FDI).”
Wal-Mart spent Rs. 52 Crore between 2007-2009 towards FDI in India or say getting entry into the India.
the company had also incurred Rs 6-crore in the first 3 months of 2010 for the same purpose.
It has disclosed “discussion related to India FDI (Foreign Direct Investment)” as one of the issues in its lobbying with the US lawmakers in the first two quarters of 2011, during which it spent nearly USD 4 million.
Hourly Salary of the Wal – Mart CEO Michael Duke's is $16,826.92.
Now question is where Wal- Mart Spent Rs. 52 Crore.
To come into India they will keep spending money on lobbying , I hope wikileaks or someone tell us where the lobby is spent by company and who got that money.
This is just start I am sure one day FDI will come into India
We like it or not
thus in our hands we got only one thing to see that FDI does not come into India and if it comes into India
It comes with the good laws which will protect the Indian Consumers and Farmers.
Good Law - Any Company can invest 100% in retail but it will be mandatory for that company to purchase 60% farm produce from Indian farmers or producers or manufactures.
Before allowing FDI Indian government needs to study in transparent manner not behind close doors the benefits of FDI.
After that government should make such strict and good laws that the benefits will be enjoyed by poor people of India and mainly farmers and consumers.
Another law government should pass is that big corporations will not be allowed to import any food items from other nations.
Big Kirana shops must and compulsorily buy everything in India and sell in India or they can export it.
But they should be banned to import from other nations.
Government should not become the permit giver.
Government should give the clear cut policy and allow them to do business in India.
If Government becomes the permit giver then Corruption will happen.
Then these big companies will do the corruption and then wrong laws and policies will be framed and no one in India will enjoy the real benefits of Big Companies.
In this that is once the good laws and good FDI policy is introduced then the competition will rise and farmers will get the good money for their produce.
Big companies will build the storage houses so Indian food will be stored and it wont be wasted.
Currently Indian Produce is wasted because we do not have storage facilities.
Because of Big companies the supply chain will improve, child labor will be reduced; government will get more taxes and many other facilities we Indian citizens will get
But Currently India is not ready for doing business honestly.
Our laws and system encourages corruption.
Thus currently I do not support FDI in India.
I hope BJP and other opposition parties will see that Congress fails in bringing the FDI in India.
I do not oppose FDI.
FDI is good, Competition is good in business.
FDI can benefit India but reality is India is not ready for FDI.
Indian system will never allow the Indian citizens to enjoy the benefits of FDI.FDI will help Rich Indian Business houses and politicians and not to the farmer or Indian consumers today or tomorrow also.
Thus do or die but oppose the FDI in India.
Suggested Reading –
FDI in Multi Brand Good or Bad for India Answers to Doubts regarding FDI in Kirana Business Part 2
Reality views by sm –
Friday, December 02, 2011
Tags – FDI Multi Brand Single Brand Good Bad Oppose