Why should we shun foreign capital in retail marketing ?

G.S. Vijay Kumar By G.S. Vijay Kumar, 8th Jan 2012 | Follow this author | RSS Feed
Posted in Wikinut>Money>Investing

FDI brings in not only scarce capital for infrastructure, but also modern marketing techniques and inventory management skills.

Guesstimates suggest that the size of our current retail market is around US$ 500 billion which may expand to US$ 800 billion by 2013 and further to US$ 1.3 trillion by the year 2018. Without the organized skills and modern methods, indigenous retail marketing will not be able to provide the people of India, the consumers and the farmers a fair deal.

Foreign Capital in Retail



A fierce controversy has raged about permitting foreign direct investment (FDI) in retail marketing and the acrimony has reached the maximum pitch with the Prime Minister approving the proposal initially and then putting it in the cold storage, albeit temporarily, after prolonged opposition from the opposition parties. The honorable leader of the opposition in the Rajya Sabha, Mr. Arun Jaitley, the powerful advocate that he is, has made a strong case for shutting out FDI in retail, at least for the present. He feels that every change is not a reform and that the present move will hurt domestic interests.
One would like to know what the domestic interests are?

Do they mean preserving the status quo in retail market, with high prices of commodities, inefficiencies in marketing which add up to the woes of the common man who finds his income going inadequate every other month, nay every week?
The poor management of the country's economy has made the "aam admi" miserable every day and much of the small -time corruption and bribery is due to unrelenting inflation.

Some five decades back, India was the most honest nation with exemplary mores. Visitors like Vasco da Gama and Mark Twain have left records about the honesty of the Hindus. They wrote that they have never seen more honest people than the Indian Hindus, who never felt the need to lock their homes while going out on a trip. Today India is ranked 90th in honesty, New Zealand holding the first place. What has happened to bring about a sea-change in Indian attitudes?

The mindless and unnecessary controls, increased penetration of the government in various walks of life and finally the unrelenting increase in prices have brought about these changes to a considerable extent. Inflation brings about an antisocial shift in incomes from the honest working classes to the hoarding classes. Today, if a person buys virtually any commodity, be it rice or wheat or pulses, and stores them for a few weeks, he makes a bonanza while selling. There is no need to work, no need to toil in the fields, no need to do anything, the increase in income is assured. Inflation has brought about a shift in incomes from honest, hard work to idle hoarding. This sea change in people's ethos is responsible for most of the present-day evils. For example, in a vital sphere like health, doctors who were honest are now compelled to order several useless and unnecessary tests just to make the extra rupees. The bigger the hospital and the greater the supporting infrastructure, more brutal are the ways the hapless patient is separated from his money, consistent with the standards of a civilized society.

The top most priority for the country should be to control prices and rein in inflation... FDI in retail marketing will strengthen the government's hands in checking inflation. In the US, when Bill Clinton became President, he radically changed the economy, by importing goods from China at cheap prices, his efforts being fortuitously helped by the cessation of cold war hostilities, and this was further aided by his measures to cut down on social welfare measures. Communist China invited FDI in retail marketing some three decades ago. Crocodile tears are shed for the poor corner store proprietors and neighborhood kirana shops. Lower prices benefit everybody including the small traders.

FDI brings in not only scarce capital for infrastructure, but also modern marketing techniques and inventory management skills. The farmer gets large organized outlets for his products and with our systems of support prices, his interests will remain protected. The middlemen may disappear with the farm-gate to factory-gate to selling-gate links. Guesstimates suggest that the size of our current retail market is around US$ 500 billion which may expand to US$ 800 billion by 2013 and further to US$ 1.3 trillion by the year 2018. Without the organized skills and modern methods, indigenous retail marketing will not be able to provide the people of India, the consumers and the farmers a fair deal.

G.S. Vijay Kumar is a senior corporate executive and a columnist.

Tags

Arun Jaitley, Capital, Fdi, Foreign Capital, Foreign Direct Investment, G S Vijay Kumar, Gs Vijay Kumar, Gsvijay Kumar, India, Retail, Retail Marketing, Vijay Kumar

Meet the author

author avatar G.S. Vijay Kumar
I am a management graduate and have worked as a senior executive for 25 years in the corporate sector.I am a columnist and write on management, Economics and socio-economic topics.

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Comments

author avatar ittech
28th Jan 2012 (#)

Very well done :)

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author avatar G.S. Vijay Kumar
28th Jan 2012 (#)

Many thanks, sir. Kind regards.

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