FDI in Retail -II

Arguments against FDI in Retail

The most important argument against modern retailing and supply chain integration is that it displaces labour in a labour-surplus society. Till such time that we are in a position to create jobs on a large scale in manufacturing and construction, it would make eminent sense to keep on hold any policy that results in the elimination of jobs in the unorganised retail sector.

The primary task of the government is still providing livelihoods and not create so-called efficiencies of scale by creating redundancies. If we assume 40 million adults in the retail sector, it would translate into around 160 million dependents

Opening the retailing to FDI means dislocating millions from their occupation and pushing vast number of families under the poverty line. The Western concept of efficiency is maximising output while minimising the number of workers involved. This will only increase social tensions in a developing country like India, where tens of millions are still seeking gainful employment

Consider a chain such as Wal-Mart with a single point of procurement entering India. Since it already procures huge quantities from China, this make for a massive entry point of China's largely state-owned consumer goods industry into the insatiable market made up of the new consuming elite.

The global retailers would collude and exercise monopolistic power to raise prices and monopsonistic (big buying) power to reduce the prices received by the suppliers.

Clearly, the number of points in favor of FDI exceeds points against it however, asan observer, that makes little and sense and wisely so. What matters is the gravity of these points which clearly indicates that for every argument that is against FDI, there is a point countering it in favor of it.

Our nation is one of the fastest growing economy in the world and any step that needs to be taken has to be with utmost care but is the question of fair play too big here?

UPA govt. would be putting a big question mark on the jobs of many of those who voted in their favor which might be the biggest “against” for FDI however with the introduction of 51% FDI in single brand retailing, Govt. has sent out a positive signal. But does that mean Menzer should start smiling?... well the answer is no, not immediately and when it would be only Govt policies and time will tell.