Foriegn Direct Investment
Foreign direct investment (FDI) refers to foreign capital that is invested to enhance the production capacity of the economy. However, FDI in retail is different from the investment in corporate, manufacturing or infrastructure sectors. Retail can be single or multi brand and may be described as a sale to the ultimate consumer at a margin of profit.
While the FDI in single-brand retailing was allowed earlier, FDI in multi-brand retailing is being allowed now. This means a retail store with foreign direct investment can sell multiple brands under one roof. So, it is the link between the producer/manufacturer and the individual consumer. India had to open up the retail trade sector to foreign investment as she is a signatory to the World Trade Organization’s General Agreement on Trade & Services, which includes wholesale and retail services.
The Indian retail sector is highly fragmented with around 97 per cent of its business being run by unorganized retailers. Organized retail is still at a nascent stage. With the entry of FDI, the retail sector will become organized. Foreign investment in food-based retailing would ensure adequate flow of capital into the country and its productive use.
It will promote welfare of farmers by agriculture growth and thereby increasing their income level. At present, intermediaries, known by different names in different parts of the country, flout the business ethics, prices lack transparency and the due share of farmer is not paid to him. Regulated markets have also developed monopolistic character. Indian farmers, at present, realize only 1/3rd of the final price paid by the consumer as against 2/3rd realized by farmers in the countries with a greater share of organized retail. FDI will assist in reducing the dominance of value chain by intermediaries.
FDI in retail will make the consumer happy as well. In the absence of intermediaries, the consumer will end up paying lower price for a better product. Besides, in the unorganized sector, consumer has to argue and fight a lot in case he has to return some faulty product to the retailer. This process will be standardized.
It will serve as an antidote to inflation. The producer will get direct payment from the retailer and the same will be higher than what he was getting earlier due to the foul play by intermediaries. In accordance to the provisions made, any company going for 51% partnership in retail will have to tie up with a local partner. This will improve the income levels of all concerned and will make economy flourish with quality branded products at a lower price.
FDI will improve investment in logistics of the retail chain, leading to an efficient market mechanism. India is one of the biggest producers of fruits and vegetables (more than 180 million tonne). However, it does not have a strong integrated cold-chain infrastructure with only around 5,400 cold storages having total capacity of about 24 million tonne. The irony is that 80% of the capacity is used only for preservation of potatoes. Perishable horticultural commodities find it difficult to link to distant markets, including overseas markets. FDI will become a catalyst in avoiding distress sale and erosion & wastage in quality and quantity of the produce.
Foreign direct investment in the retail sector will spur competition as the current scenario is of low competition and poor productivity. India will flourish in terms of quality standards and consumer expectations.
Fears that the entry of FDI in multi-brand retail may cause unemployment as foreign firms may not procure material from domestic producers and may import the same from international market are unfounded as the entry of big companies like Reliance and Tata has substantially improved the life standard of farmers and villages from where they are procuring. The present public distribution system will also be strengthened with better products and storage facility. Even the FDI retail may be assigned this job.
Allowing FDI in multi-brand retail will bring about supply chain improvement, investment in technology, manpower & skill development, upgrade in the agriculture sector, and benefits to the government through greater GDP and tax income. The organized sector will also lay stress on producing more and will generate more employment in production as well as retail industry.
The opening up of the
Indian retail sector to the world players by allowing 100% foreign direct
investment (FDI) in single-brand retail and 51% in multi-brand is a sign of
more forced reforms to come.
Union Cabinet has decided to
permit Foreign Direct Investment upto 51% in retail sector. When India got
independence from Black rule of British in 1947, leaders of the country
promised to make India self dependent , they told the Nation that they will use
its own resources to build India strong and give Indians all comforts which
they deserve for respectful living.
More than half a century has elapsed; Indian instead of becoming a self sufficient Nation has now become dependent on FDI for survival. Indian leaders go for foreign tours begging FDI in India in different sector. Perhaps Indian leaders has as per their comforts redefined Independence and self dependence.
Positive thinkers in political circle, leaders of UPA and great economist say that FDI in retail sector will create four million jobs; some over enthusiastic leaders in the government say that FDI in retail will create one crore new job opportunity and give enormous benefits to farmers. They do not talk of how many Indians will become unemployed when giant of retail sector like Walmart of USA or Tesco of Europe come in India. If Walmart and Tesco like companies can create millions of jobs, why not domestic companies in retail sector do the same thing.
Yes I also agree a few thousands of educated youth will get job in retail chain and get handsome salary too , a few corporate brokers will also get opportunity to earn considerable amount of brokerage but millions of poor and middle class families who survive on small scale retail business will be rendered workless and constrained to starve or become slave in the hands of English people, the same slavery which their forefathers had to adopt and practice under the colonial rule of British before we got freedom in 1947.
Rahul Gandhi asks loudly people of Uttar Pradesh, “How long you people will prefer going Mumbai for begging”. He does not think it fit to ask cabinet ministers and Doctor Manmohan Singh “How long India will survive on FDI and FII” . He does not ask Chief Ministers of Congress Party led states, how long they will go to Bangalore or Hyderabad or Mumbai or Delhi for higher study and for attractive jobs. Lacs of educated youth from the state of Rajasthan, Maharashtra, Kerala, West Bengal, Harayana are working in IT sector in the state of Karnataka, Andhra Pradesh and also in foreign countries .
Stock Market in our country depends on FII and when FIIs start selling stock, the entire market bleeds and it is ultimately the weak Indians who become the victim and who have to suffer huge losses on their investment. Rahul Gandhi does not advise Manmohan Singh led government to make stock market self reliant and not depend upon foreigners.
Big corporate depends on External commercial Borrowings and their business depends on exports and imports. When other countries commit economic blunder, they economy collapses and ultimately India also become victim even if our country is headed by great economists. It is crystal clear our survival now depends less on our performance and less on our intrinsic values but more on foreign buyers and sellers,FDI and FII and the policies of the world.
Our leaders are very much hopeful that if FDI is allowed in retail sector, millions of job will be created and poverty of Indian rural folks and farmers will be eliminated or at least help in reduction of poverty of India.
Here It is worthwhile to mention here that the Walmart which originated and prospered in USA failed to create considerable job opportunities in USA and Tesco which has its root in Europe failed to create even a lac job opportunity in Europe . USA is facing the problem of unemployment and passing through bad days. Financial crisis which erupted in USA and Europe in the year 2008 still persists.
Poverty level in USA has gone up. People of USA has left farming and have to depend on other countries for even vegetables , pulses, wheat ,rice and other cereals . People of USA have to depend on India and China even for packed food, junked food, cloth and goods of daily uses.
To open the eyes and ears of leaders of UPA government I submit hereunder the conclusion arrived at by an renowned economist Mr. Stephen M Ciccarella Jr. who is a professor in Cornell University - Department of Economics; Public Policy Institute of California .this is the abstract and finding arrived at by this great men after prolonged research on the life of US farmers, poverty in rural areas of USA before and after entry of Walmart retain chain in US market.
Abstract:
We estimate the effects of Wal-Mart stores on county-level retail employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variables approach that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. The employment results indicate that a Wal-Mart store opening reduces county-level retail employment by about 150 workers, implying that each Wal-Mart worker replaces approximately 1.4 retail workers. This represents a 2.7 percent reduction in average retail employment. The payroll results indicate that Wal-Mart store openings lead to declines in county-level retail earnings of about $1.2 million, or 1.3 percent. Of course, these effects occurred against a backdrop of rising retail employment, and only imply lower retail employment growth than would have occurred absent the effects of Wal-Mart
If anyone is inclined to know more about poverty of USA, change in fate of farmers in USA after entry of companies like Wal-Mart, they should thoroughly read the book /article namely “Concentrated Poverty in America”
One may also use this link to have a fair view of the positive and negative impact on American economy , American retailers, farmers and Super Markets and American farmers and American society .
Farmers in America and European countries have left farming and this is why agricultural production in these countries is gradually coming down and down. Unemployment has become a headache for US administration and other developed countries. By adopting FDI in retail India is going to invite a chain of problems, farmer may discard farming due to lesser realization of their products , existing retailers will be reduced to zero and local vendors will become slave in High profile retail chain sponsored by Foreign based Walmart and Tesco.
More than half a century has elapsed; Indian instead of becoming a self sufficient Nation has now become dependent on FDI for survival. Indian leaders go for foreign tours begging FDI in India in different sector. Perhaps Indian leaders has as per their comforts redefined Independence and self dependence.
Positive thinkers in political circle, leaders of UPA and great economist say that FDI in retail sector will create four million jobs; some over enthusiastic leaders in the government say that FDI in retail will create one crore new job opportunity and give enormous benefits to farmers. They do not talk of how many Indians will become unemployed when giant of retail sector like Walmart of USA or Tesco of Europe come in India. If Walmart and Tesco like companies can create millions of jobs, why not domestic companies in retail sector do the same thing.
Yes I also agree a few thousands of educated youth will get job in retail chain and get handsome salary too , a few corporate brokers will also get opportunity to earn considerable amount of brokerage but millions of poor and middle class families who survive on small scale retail business will be rendered workless and constrained to starve or become slave in the hands of English people, the same slavery which their forefathers had to adopt and practice under the colonial rule of British before we got freedom in 1947.
Rahul Gandhi asks loudly people of Uttar Pradesh, “How long you people will prefer going Mumbai for begging”. He does not think it fit to ask cabinet ministers and Doctor Manmohan Singh “How long India will survive on FDI and FII” . He does not ask Chief Ministers of Congress Party led states, how long they will go to Bangalore or Hyderabad or Mumbai or Delhi for higher study and for attractive jobs. Lacs of educated youth from the state of Rajasthan, Maharashtra, Kerala, West Bengal, Harayana are working in IT sector in the state of Karnataka, Andhra Pradesh and also in foreign countries .
Stock Market in our country depends on FII and when FIIs start selling stock, the entire market bleeds and it is ultimately the weak Indians who become the victim and who have to suffer huge losses on their investment. Rahul Gandhi does not advise Manmohan Singh led government to make stock market self reliant and not depend upon foreigners.
Big corporate depends on External commercial Borrowings and their business depends on exports and imports. When other countries commit economic blunder, they economy collapses and ultimately India also become victim even if our country is headed by great economists. It is crystal clear our survival now depends less on our performance and less on our intrinsic values but more on foreign buyers and sellers,FDI and FII and the policies of the world.
Our leaders are very much hopeful that if FDI is allowed in retail sector, millions of job will be created and poverty of Indian rural folks and farmers will be eliminated or at least help in reduction of poverty of India.
Here It is worthwhile to mention here that the Walmart which originated and prospered in USA failed to create considerable job opportunities in USA and Tesco which has its root in Europe failed to create even a lac job opportunity in Europe . USA is facing the problem of unemployment and passing through bad days. Financial crisis which erupted in USA and Europe in the year 2008 still persists.
Poverty level in USA has gone up. People of USA has left farming and have to depend on other countries for even vegetables , pulses, wheat ,rice and other cereals . People of USA have to depend on India and China even for packed food, junked food, cloth and goods of daily uses.
To open the eyes and ears of leaders of UPA government I submit hereunder the conclusion arrived at by an renowned economist Mr. Stephen M Ciccarella Jr. who is a professor in Cornell University - Department of Economics; Public Policy Institute of California .this is the abstract and finding arrived at by this great men after prolonged research on the life of US farmers, poverty in rural areas of USA before and after entry of Walmart retain chain in US market.
Abstract:
We estimate the effects of Wal-Mart stores on county-level retail employment and earnings, accounting for endogeneity of the location and timing of Wal-Mart openings that most likely biases the evidence against finding adverse effects of Wal-Mart stores. We address the endogeneity problem using a natural instrumental variables approach that arises from the geographic and time pattern of the opening of Wal-Mart stores, which slowly spread out from the first stores in Arkansas. The employment results indicate that a Wal-Mart store opening reduces county-level retail employment by about 150 workers, implying that each Wal-Mart worker replaces approximately 1.4 retail workers. This represents a 2.7 percent reduction in average retail employment. The payroll results indicate that Wal-Mart store openings lead to declines in county-level retail earnings of about $1.2 million, or 1.3 percent. Of course, these effects occurred against a backdrop of rising retail employment, and only imply lower retail employment growth than would have occurred absent the effects of Wal-Mart
If anyone is inclined to know more about poverty of USA, change in fate of farmers in USA after entry of companies like Wal-Mart, they should thoroughly read the book /article namely “Concentrated Poverty in America”
One may also use this link to have a fair view of the positive and negative impact on American economy , American retailers, farmers and Super Markets and American farmers and American society .
Farmers in America and European countries have left farming and this is why agricultural production in these countries is gradually coming down and down. Unemployment has become a headache for US administration and other developed countries. By adopting FDI in retail India is going to invite a chain of problems, farmer may discard farming due to lesser realization of their products , existing retailers will be reduced to zero and local vendors will become slave in High profile retail chain sponsored by Foreign based Walmart and Tesco.
It is always imperative to understand the topic in its right
perspective before you place your views on it. Let us first think what do we
know about this hot, contemporary and fiercely-debatable topic and once we have
clarity on the same, we may proceed to present our opinion based on facts in
the given time. Any essay or write-up on the captioned topic should describe
two broad issues – what is FDI in retail and how is it beneficial to India. The
essay below will give you a clear idea about it.
FDI in retail is a boon for India
Foreign direct investment (FDI) refers to foreign capital that is invested to enhance the production capacity of the economy. However, FDI in retail is different from the investment in corporate, manufacturing or infrastructure sectors. Retail can be single or multi brand and may be described as a sale to the ultimate consumer at a margin of profit.
While the FDI in single-brand retailing was allowed earlier, FDI in multi-brand retailing is being allowed now. This means a retail store with foreign direct investment can sell multiple brands under one roof. So, it is the link between the producer/manufacturer and the individual consumer. India had to open up the retail trade sector to foreign investment as she is a signatory to the World Trade Organization’s General Agreement on Trade & Services, which includes wholesale and retail services.
The Indian retail sector is highly fragmented with around 97 per cent of its business being run by unorganized retailers. Organized retail is still at a nascent stage. With the entry of FDI, the retail sector will become organized. Foreign investment in food-based retailing would ensure adequate flow of capital into the country and its productive use.
It will promote welfare of farmers by agriculture growth and thereby increasing their income level. At present, intermediaries, known by different names in different parts of the country, flout the business ethics, prices lack transparency and the due share of farmer is not paid to him. Regulated markets have also developed monopolistic character. Indian farmers, at present, realize only 1/3rd of the final price paid by the consumer as against 2/3rd realized by farmers in the countries with a greater share of organized retail. FDI will assist in reducing the dominance of value chain by intermediaries.
FDI in retail will make the consumer happy as well. In the absence of intermediaries, the consumer will end up paying lower price for a better product. Besides, in the unorganized sector, consumer has to argue and fight a lot in case he has to return some faulty product to the retailer. This process will be standardized.
It will serve as an antidote to inflation. The producer will get direct payment from the retailer and the same will be higher than what he was getting earlier due to the foul play by intermediaries. In accordance to the provisions made, any company going for 51% partnership in retail will have to tie up with a local partner. This will improve the income levels of all concerned and will make economy flourish with quality branded products at a lower price.
FDI will improve investment in logistics of the retail chain, leading to an efficient market mechanism. India is one of the biggest producers of fruits and vegetables (more than 180 million tonne). However, it does not have a strong integrated cold-chain infrastructure with only around 5,400 cold storages having total capacity of about 24 million tonne. The irony is that 80% of the capacity is used only for preservation of potatoes. Perishable horticultural commodities find it difficult to link to distant markets, including overseas markets. FDI will become a catalyst in avoiding distress sale and erosion & wastage in quality and quantity of the produce.
Foreign direct investment in the retail sector will spur competition as the current scenario is of low competition and poor productivity. India will flourish in terms of quality standards and consumer expectations.
Fears that the entry of FDI in multi-brand retail may cause unemployment as foreign firms may not procure material from domestic producers and may import the same from international market are unfounded as the entry of big companies like Reliance and Tata has substantially improved the life standard of farmers and villages from where they are procuring. The present public distribution system will also be strengthened with better products and storage facility. Even the FDI retail may be assigned this job.
Allowing FDI in multi-brand retail will bring about supply chain improvement, investment in technology, manpower & skill development, upgrade in the agriculture sector, and benefits to the government through greater GDP and tax income. The organized sector will also lay stress on producing more and will generate more employment in production as well as retail industry.
Your perspective is very appreciable.It helped me complete my project. Thank You
ReplyDeleteVery presented, logical and rational depiction of perspectives concerning arrival of increased percentage of FDI. Keeping your views in mind, would intend to provide certain supplimantary remarks ; any step which is taken by any governing system to provide strategic impetus to its economy entails negative as well as positive impacts or output.FDI push don't not indicate inception of colonial power. It will not only make us dependent but also will create space for unemployed youths and domestic investors. It will invite small investors to reach form bottom to apogee. Additionally five years later 30 / percent materials foreign investors are bound to purchase from Indian market. It will not only enhance commercial activities but also spure the demand of equipments produced by domestic corporates.
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