India’s federal government recently announced a number of economic reforms aimed at attracting foreign direct investment (FDI) to boost the country’s economy, including further opening its retail sector to allow multi-brand retail operations with foreign ownership of up to 51%. Despite political posturing against the policy, it passed a vote in both houses of parliament. In the following commentary, K. Sudhir, the James L. Frank ’32 Professor of Private Enterprise and Management, professor of marketing, and director of the China India Insights Program, says the move will benefit India’s economy in a number of ways, from improving infrastructure and regulatory environments to the acquisition of technological knowledge.
[This article has been reproduced with permission from Qn, a publication of the Yale School of Management http://qn.som.yale.edu]
Good thoughts on the subject. I would also like to add that, FDI in retail could provide better prices to farmers since it would eliminate the middlemen who are currently making huge profits and it is the middlemen who are currently opposing the bill. It would not threaten Kirana stores as giant stores might be established away from the city centers. This could also bring a considerable employment opportunities in supply chain and distribution areas. The retail giants would have to legally comply to labor enforcement laws and hence they have to pay better wages to workers. There could be a lot a technology implementation that would take place making the service more responsive.
on Feb 25, 2013There are some of us who recall the debate as to how computerization in India\'s offices and government institutions would lead to job losses and unemployment on a mass scale. There used to be mass protests and government office shut-downs. When the IT revolution was in its infancy there were those in the US who commented on how 4 day work-weeks would come into effect. Passage of time has a different story to tell. The nay-sayers for FDI in retail, need to look at the criminal waste of almost everything due to our inefficient public distribution system, lack of storage and cold chain. It is here that their argument of \"inclusive growth\" falls flat on its face since in a country where there is grain and food surplus, people in their millions, starve everyday. Every year India faces a loss of Rs 50 thousand crores worth of both perishable and non-perishable food items due to lack of skilled manpower and shortage of infrastructure, this comprises of 40 per cent of the total food produced. With estimates of poverty ranging from 30% to over 70% (an on-going debate between planning commission’s and other economists on minimum desirable level of expenditure), wastage of food grains is a crime against humanity. FDI in retail will improve the existing supply chain infrastructure and skilled workforce plugging the gap between the source of produce and consumer.
on Feb 2, 2013