Will FDI help Indian retail market grow?; Pune speaks up

The UPA government is keen to open up the Indian market for foreign investments despite opposition from other parties in Parliament. According to the government,  the 51% foreign direct investment will benefit consumers and farmers, and will also aim at bringing down inflation, along with protecting the interests of small traders. DNA Speak Up explores

51% FDI will accelerate retail market growth, providing more employment opportunities
It is a basic principle that creating competition in general is good for the market. But I have a doubt that since proper procurement and distribution system is not yet fixed, how will the rest fall in place when the giant retailers enter our market. Back-end procurement will still remain a big problem. 

The 51% foreign direct investment (FDI) will obviously have a negative impact on small retailers, but it will benefit the consumers as they will have wider choices at competitive prices. It will accelerate the retail market growth and provide more employment opportunities.

The debate that by introducing 51% FDI, a lot of money will flow out of the country is an old school of thought. Lot of our Indian companies are operating abroad and have successfully contributed to our economy. The bigger issue is that with benefits we might end up paying a price hence we must work on a reasonable solution.
—Sumita Kale, economist

Farmers will benefit from FDI as they will be able to get better prices for their produce
The FDI Bill will definitely have a positive impact on the retail industry and the country by attracting more foreign investments. With big retail giants coming to India, it will surely improve our back-end storage and procurement process. Once these multi-chain retailers establish themselves, they will create infrastructure facilities, which will also propel the existing infrastructure.

The farmers will benefit from FDI as they will be able to get better prices for their produce. The elimination of the intermediate channels in the procurement process will lead to reduction of prices for consumers.

The regulation in the FDI Bill that 30% of the total procurement has to come from small and medium enterprises will benefit the domestic businesses. Off course a policy is needed to protect the small and medium market channels from Chinese invasion.
The fear that FDI will have a negative impact on the small retailers is completely wrong. It is not that everyone will run to these giant
retail stores.
—Anant Sardeshmukh, executive director general, MCCIA

Foreign brands will promote healthy competition in market
Every time the government brings up the subject of FDI, the domestic retailers with the support of some politicians jump to lobby against the bill. As we are initiating the FDI, there is bound to be some problems, which can definitely be resolved. The government in near future can appoint a regulating body to monitor the retail sector just like other sectors.

By allowing 51% foreign investments in the Indian market, it will teach the local retailers about real competition and help in insuring that they give better service to Indian consumers. It is obviously good for local competition and I don’t see as a consequence, our local kirana shops disappearing. The kirana stores operate in a different environment catering to a certain set of customers and they will continue to find new ways to retain them. I don’t see a problem with FDI as it will boost our economy. 
—Zubin Kabraji, regional director, Indo-German Chamber of Commerce

Customers feel that retail stores offer better deals, but they don’t realise that they end up buying more
If 51% FDI is allowed in retail market, it will be a big trouble for the small shopkeepers. The big giants entering the market will surely impact the small store owners. The government says that the farmers will benefit, but I feel it will just be a temporary benefit. Once these giant foreign retailers have monopoly, they will start exploiting the market. I feel in the long run, it will not benefit the
Indian economy.

For example in a country like France, Walmart was not permitted to set up its stores whereas in Germany, FDI is not allowed. If the US is not allowing Indian goods to be sold in their market, why should then we give them a chance to set up base here. The discounts that these big retail stores offer in order to lure customers are also now being offered by our kirana stores. I feel that people should not fall prey to big retail stores because it is a trap wherein consumers end up buying more than what is required. Customers feel that they are getting better deals, but they are at the same time enticed to buy more.
—Suryakant Pathak, MD, Grahakpeth & Secretary, Grahak Panchayat

The govt must discuss properly about 51% FDI and have a law in place to control unfair competition
We strongly oppose the government allowing 51% FDI as it will surely have a negative impact on the small retailers in the market. These big companies with huge investment capacity will buy goods at lesser rates and pass on big discounts to consumers, wherein small local retailers will not be able to stand against the competition. By attracting consumers and manufacturers, they will create their own monopoly in the market, which will not be good for the retail market in the long run. We already have big malls then why do we want foreign retail chains?

Today, the government’s intention is to remove middlemen and give better price to farmers but why doesn’t it help in bringing down transport cost, which is increasing due to rising fuel prices. The government must properly discuss the pros and cons of allowing 51% FDI and have a law in place to control unfair competition. When foreign countries don’t allow import of food products from India, then why should we allow them in our country.
— Ajit Setiya, president, Poona Merchants Chamber

Once monopoly sets in market, small-time retailers, consumers
and farmers get exploited
I think that by allowing 51% FDI, it will have a negative impact on our retail market and farmers in the long-term. It will lead to creation of market monopoly, which is not good for economic growth. Bringing in big foreign players will, no doubt, give direct competition to big domestic retail chains but small retailers will eventually get eliminated. Though farmers will get good rates for their produce and storage facilities will improve, these are only temporary benefits. In the history of capitalisation, the beginning is always good but once monopoly sets in, small-time retailers, consumers and farmers get exploited.
— Subhas Vare, secretary, SM Joshi Socialist Foundation