India set to change its retailing industry

[ravishingravi]

"Policy mandates a minimum investment of $100 million with at least half the amount to be invested in back-end infrastructure, including cold chains, refrigeration, transportation, packing, sorting and processing. This is expected to considerably reduce post-harvest losses. *This will have a salutary impact on food inflation from efficiencies in supply chain. This is also because food, which perishes due to inadequate infrastructure, will not be wasted. " This is imp.

[achilles]

Thats the big misconception people have. How has Wal-Mart helped competition?? In its own country it has run every other departmental stores into the ground. You will still be doing the same thing. When Accenture comes to India to do IT consulting it does not do anything different than TCS. No reasons to be different here.

You've got a point. Although, the avenues of opportunities would increase if I get into Retail.

Trust me' date=' I work for one of the so called supermarket behemoths indirectly and everyone on their graduate programs do some pretty menial stuff.[/quote'] But is it as bad as the stuff Indian companies make their emps do? Coz the companies in India have this- "We'll make him do the work he's not paid for doing as well".

[varun]

Hmm.. so the decision has been suspended :hmmm: Weird to-n-fro decision making

[achilles]

^ I am a part of Team Azim Premji, are you?

[bulbul]

Hmm.. so the decision has been suspended :hmmm: Weird to-n-fro decision making

Nothing weird in Indian Politics :winky: Major elections are around the corner I have one issue with FDI in Retail...everything looks good in Short term...but Long term no one can guarantee these Big players kill the competetion and monopolyse everything...

[Sachin=GOD]

FDI in retail UPA Retired hurt P. SAINATH

Here's the wonderful thing about the FDI-in-retail debate: never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork. Foreign direct investment in retail may be on hold, but Hillary Clinton can stop worrying about Anand Sharma and Pranab Mukherjee. Å©ow does (Commerce Minister) Sharma view India's current Foreign Direct Investment guidelines? Which sectors does he plan to open further? Why is he reluctant to open multi-brand retail? Those were among the questions U.S. Secretary of State Clinton posed in a cable to her embassy in New Delhi in September 2009, some months after Prime Minister Manmohan Singh began his second term. Note her pointed query on opening up ÃÃŽulti-brand retail.' She had other worries, too. Ÿhy was (Pranab) Mukherjee chosen for the finance portfolio over Montek Singh Ahluwalia? How do Mukherjee and Ahluwalia get along? And Ã…Ã…oes Sharma get along with Mukherjee and Prime Minister Singh? They get along fine, Hillary, and they're all in it together, as a team. Hillary has reason to be concerned about FDI in retail. There's the tens of thousands of dollars she earned from serving as a director on Walmart's board. And the other thousands of dollars contributed to her 2007-08 campaign by Walmart executives and lobbyists. An ABC News report on that in 2008 also observed that as a director, Hillary Clinton remained ÅÂ loyal company woman (Clinton remained silent as Wal-Mart fought unions: ABC News, January 31, 2008). And she surely knows the UPA's FDI retreat is tactical. Pranab Mukherjee put it with disarming candour: we don't want mid-term polls. Hillary too had flip-flopped during her election campaign, going by the ABC News report. (While on its Board of Directors, she had said: Ū'm always proud of Walmart and what we do and the way we do it better than anybody else June 1990.) Yet, Hillary's campaign website of 2007-08, points out the ABC News report, omitted ÅÂny reference to her role at Walmart in its detailed biography of her. As the race heated up, she recanted: ůow I know that Walmart's policies do not reflect the best way of doing business and the values that I think are important in America. Perhaps Hillary's FDI concerns are loftier. She must be worried about the poor Indian farmer. The wonderful thing about the FDI-in-retail debate is the explosion of concern for agriculturists. Never have struggling Indian farmers found so many champions. They've been crawling out of the woodwork ever since the FDI announcement. From Deepak Parekh to Ratan Tata, they've suffered sleepless nights, agonising over the small farmer. They might want to take a look at the American farm population. At their family farms, especially smaller ones, wrecked by corporate monopolies at every level, from giant agri-businesses to mammoth retail chains. Presently less than one million Americans claim farming as their occupation. That figure was over 25 million in the 1950s. With what credibility does our regime, on whose watch farm suicides crossed the quarter-of-a-million mark, speak of helping farmers? Who knows what windfalls the deals struck with retail giants have brought to individuals in this most corrupt government in our history? We need to embrace that old journalistic principle: Follow the money. (Hillary does, though in a very different way.) Meanwhile, look at our government's claims. Who it affects Doing away with the ÃÃŽiddleman': The first to be devastated will be that poor ÃÃŽiddlewoman' the vendor who daily provides our towns and cities with fresh produce. She did not push up the prices and has her modest margin squeezed each time they rise. That woman carrying that huge basket to your doorstep, on her feet 14-16 hours a day to feed her family. She's the first ÃÃŽiddleman' target. The more exploitative middlemen in the chain will be co-opted by giant retail which needs collectors and contractors, though not so many. It will slash their numbers after a while. This is The Mob taking over from the little guys on the block. You're looking at massive displacement in the agricultural supply chain. Only, the new ÃÃŽiddlemen' will be Cardin-clad and Gucci-shod, with better access to government than the farmers everyone's dying to save. That poor woman vendor, whose life we need to improve, not destroy, brings you fresh produce. She has to, or she can't sell it. (Tip: big retail operators pasting the words ÃÃatural' or ÃÇresh' against their names are selling you stuff that could have been refrigerated, even frozen, for days). Ten million jobs: Try not to die laughing. This comes from a school of economics that has gifted the world jobless growth for three decades now. We worked hard for two of those, making a big expansion of jobs impossible within our policy framework. From the early 1990s, fantastic claims have been made of small farmers gaining from neo-liberal globalisation. For instance: farm incomes would rise 25 per cent if Indian prices were aligned to global prices; purchasing power would shoot up. Many steps were taken on such claims, including 100 per cent FDI in sectors like seed. All achieved the opposite. These moves helped double the indebtedness of the peasantry and further spurred the worst-ever recorded wave of suicides. Apart from which we've seen seven-and-a-half million people abandon agriculture in a decade, many driven out by policies to ÃÃenefit the farmer.' Now we should believe that FDI in retail will undo all the damage that these policies from the very same authors caused? And these guys predict 10 million jobs within a year? The UPA wants to open up a sector that for all its awful flaws and hardships presently employs 44 million people and has total sales of close to $400 billion. (That's about 20 times the number Walmart employs on roughly the same turnover.) And gives some sustenance to many millions more if you think families. Small shops and ÃÃig box retail' can co-exist, so croons the corporate choir. Sure, after wiping out countless thousands of tiny shops, the survivors can ÃÄo-exist' with the big guys, who might even have minor errands for them to run. India's powerful will run the more important errands. That was clear from 2005 when then Walmart International Division chief John Menzer told his company's annual meeting: Ūn our six government meetings, we created a very positive image [of Wal-Mart]©ô And: Ÿe've energized the FDI lobby and preempted the anti-FDI lobby in India. (Wal-Mart's Hot in India, CNNMONEY.COM, June 6, 2005) Efficiency: The giant chains can never match the efficiency of farmers' markets selling food produced locally or nearby. Their sourcing of produce from all over the world, central warehousing systems, giant transport operations all these are hugely energy intensive. Which means a lot of what you get is old and much-refrigerated or frozen. Know the other costs of what you pay for. Benefitting farmers: Here's a paradox. Just when we march determinedly towards super markets, people in the homeland of Big Retail are buying more and more from ÅÇarmers' markets. That is, the oldest form of direct marketing by small producers. More and more Americans seek decent produce not drowned in chemicals, pesticides and preservatives. Growing numbers of that nation's small and family farms are selling through farmers' markets each year. In India, every market was once a farmers' market. Over time, farmers have lost control of such markets to traders and moneylenders. Now comes the coup de grace. The coming of Big Retail is not simply about shops in the towns of over one million. It brings a radical restructuring of the entire agri-supply chain. The kind of investments above $100 million will obviously not go towards labour-intensive operations. The new structures that will confront farmers are stronger than any they have ever known. As a paper on the Ŷ.S. Farm Crisis from the Kerr Center for Sustainable Agriculture, Oklahoma, puts it: Ã…Ãarge corporations have in recent years moved to curtail farmer independence through production contracts and other forms of vertical integration. These moves have included establishment of huge corporate-owned Confined Animal Feeding Operations, where animals are raised without farmers. The new middlemen the government welcomes have no regard for village and community. Maximising their own profit is their sole concern. As the number of buyers shrinks to a handful of corporations, farmers will have fewer places to sell their produce. What kind of bargaining power will they have against these mega-middlemen, some of whose worth would place them, if treated as nations, amongst the top ten economies in the world? The ÅÄontracts in the new dispensation will reflect that power equation. The National Commission for Farmers headed by Dr. M.S. Swaminathan had observed that rushing into contract farming without ensuring the needs, safety and bargaining power of the farmer would result in major displacement in the sector. But not to worry, Hillary, your team is still out there batting. Only retired hurt for the moment.

The Hindu

[Vijay.Sharma]

I still don't know a great lot of the industry and its workings to have a fully informed view but from whatever I have learned I don't think large scaled FDI is in the interest of India as a whole. I'd prefer if there is investment from the desi companies themselves (and there is absolutely no dearth of money in Indian companies...we can go buy Arcelor and so many other global companies but can't invest in our own country?) For a customer, correction...middle class and higher earning customers, it might seem like a good idea but I am not sure I (being one of those middle class and higher earning fellas) want to see the end of kirana shops. I don't want to go to a bloody huge mall to buy a pack of biscuits or a packet of milk early in the morning. I don't know about you but I am pretty satisfied with the "customer service" I get at the local kirana shops. I think they are better than FoodWorld. In Bangalore most of the kirana shops are owned by the coastal Muslim Mallus and they are very efficient in what they do. They do home delivery too. People think if Wal-Mart comes in then prices will reduce or that there will be more variety. I doubt it. Choice and variety of brands will come in only if associated industries also enter into India. So if you are imagining a Wal-Mart store where you will find anything from bike engine oils to bed sheets to vegetables to laptops, you might want to wake yourself out of that dream. It ain't happening. There is a Bharti-WalMart venture called Easy Day and those dhukans reflect more of the future when FDI is introduced. Those dhukans are no different from the FoodWorlds and M.K.Retails of Bangalore Indian companies have money. I want government to introduce policies that will give very good incentives for these companies to invest in local market. I want the Wipros to take their other businesses mroe seriously. I want Infy to invest in Retail...software retail to start off with (in a big way). I don't see any reason why FDI is necessary when we already have funds here. We need to unlock those funds by making things sweeter for desi companies.

[ViruRulez]

The main advantage of this move would be in cleaning up efficiencies in the back-end. There is a clause in the bill that forces the foreign companies to invest 50% in the back-end supply chain.

Did not know that. If that was the case then the bill was not that bad as termed by the half-knowledgable people and opposition parties and allies.

Nothing weird in Indian Politics :winky: Major elections are around the corner I have one issue with FDI in Retail...everything looks good in Short term...but Long term no one can guarantee these Big players kill the competetion and monopolyse everything...

For long term benefit, the Bill should also keep a clause that low cost cheap products cannot be imported to India. Or keep an import duty on anything imported from outside India in those supermarts. Just keep a way to keep low quality Chinese goods out of them so that Indian local businesses are not hampered. At the same time, I have never understood why we have never grown in manufacturing. China has nearly the same population as we do and has become the manufacturing hub of the world. We do not have any less workforce compared to them yet we are lagging behind them by country miles in manufacturing. If they are so good at manufacturing at cheap costs then why can we not do that too. We have poor unemployed villagers who can be used in manufacturing. There is enough workforce available with basic training. And half of the manufacturing process can also be automated like China does. If we try we can also become a manufacturing hub like China in the future. And it is not as if China produces only crap. Most products including top brands have their parts made in China and only assembled in the sold country. So, why don't we try to push our manufacturing industry too and make it as effective or even half of China. At least use up the massive population in something productive for the nation.

[Tiger80]

I still don't know a great lot of the industry and its workings to have a fully informed view but from whatever I have learned I don't think large scaled FDI is in the interest of India as a whole.

If we want globalisation then we just cannot say that only that FDI that benefit us should be allowed

For a customer, correction...middle class and higher earning customers, it might seem like a good idea but I am not sure I (being one of those middle class and higher earning fellas) want to see the end of kirana shops. I don't want to go to a bloody huge mall to buy a pack of biscuits or a packet of milk early in the morning.

There is no way local kirana shops are going to shut down.Indian population is very large you cannot have Walmart at every 1km so local kirana shops will be their

People think if Wal-Mart comes in then prices will reduce or that there will be more variety. I doubt it. Choice and variety of brands will come in only if associated industries also enter into India. So if you are imagining a Wal-Mart store where you will find anything from bike engine oils to bed sheets to vegetables to laptops, you might want to wake yourself out of that dream.

If Walmart will directly procure from farmers then it will benefit farming sector.The argument that are now given against FDI in retail were given when Indian companies entered retail.also if walmart import products then it may reduce inflation.Our Government is still stuck in the era of 50s and 60s and think that just by providing wheat and rice its job is finished ,they don't understand that now people have started eating other items too ,so because of over population we need food products.Now because of limited supply of land we have to import large amount of food products so that our population can get enough nutrition.Wal mart can definately help in this regard.

[Vijay.Sharma]

If we want globalisation then we just cannot say that only that FDI that benefit us should be allowed

I am OK with globalization...never said no to that. My argument is that, why not unlock the existing funds in India first. And as I said I am not too aware of the details of this so am not really in a position to make up my mind either way. I am still on the wall.

There is no way local kirana shops are going to shut down.Indian population is very large you cannot have Walmart at every 1km so local kirana shops will be their

I dunno

If Walmart will directly procure from farmers then it will benefit farming sector.The argument that are now given against FDI in retail were given when Indian companies entered retail.also if walmart import products then it may reduce inflation.Our Government is still stuck in the era of 50s and 60s and think that just by providing wheat and rice its job is finished ' date='they don't understand that now people have started eating other items too ,so because of over population we need food products.Now because of limited supply of land we have to import large amount of food products so that our population can get enough nutrition.Wal mart can definately help in this regard.[/quote']It's not about Wal-Mart procuring directly from farmers. Farmers are not the only ones involved in this whole supply-chain system. There are intermediaries. Intermediaries are also of various kinds...there are the low level intermediaries like the people who go around selling vegetables on cycles in your colony and the high end rich wholesale dealers. The low end intermediaries will have nowhere to go if Wal-Mart procures directly from farmers and this would mean the loss of livelihood for lacs of such intermediaries. See the FDI sounds extremely juicy and sweet for us urban, upper middle class people because we believe we may be privy to more international brands, etc. And from that perspective FDI is a no-brainer. But we must remember we are hardly 5-10% of the nation's population. There are lower and mid middle class people who are about 30-40% of the nation's population. They buy on credit, monthly book systems with kirana shop, do not buy many of the over priced brands. Wal-Mart affects them. Wal-Mart is not just about vegetables and grains...it is anything to do with retail including soaps, shampoos, coke, biscuits, etc. Here is a different perspective, of course it is polar opposite to pro-FDI but take from it what you can -

[Tiger80]

It's not about Wal-Mart procuring directly from farmers. Farmers are not the only ones involved in this whole supply-chain system. There are intermediaries. Intermediaries are also of various kinds...there are the low level intermediaries like the people who go around selling vegetables on cycles in your colony and the high end rich wholesale dealers. The low end intermediaries will have nowhere to go if Wal-Mart procures directly from farmers and this would mean the loss of livelihood for lacs of such intermediaries.

I live in Gurgaon and almost every kind of mall is close to me, the recent addition is Spar which has purchased an entire mall.Now what impact of these malls have on people which are selling vegetables on cycles or small shops? almost zero ,infact these days more vegetable vendors come to sell.Now who was hit by these retail giants? it was big ration shops and the one which were not selling products cheaply.The problem is India politicians always start talking about poor while the reality is they serve the interest of rich and poor people just get misguided by media. Also by having too many intermediaries we are just increasing inflation and increasing non productive employment.If only 3 intermediaries are required and we have 7 then 4 people are engaged in non productive employment.As it is not possible for govt to take their jobs but govt should ensure that in future more should not join that non productive employment.

See the FDI sounds extremely juicy and sweet for us urban, upper middle class people because we believe we may be privy to more international brands, etc. And from that perspective FDI is a no-brainer. But we must remember we are hardly 5-10% of the nation's population. There are lower and mid middle class people who are about 30-40% of the nation's population. They buy on credit, monthly book systems with kirana shop, do not buy many of the over priced brands. Wal-Mart affects them. Wal-Mart is not just about vegetables and grains...it is anything to do with retail including soaps, shampoos, coke, biscuits, etc.

Well first of all Walmart is not going to be allowed in small towns below the population of 1 million.second point is Govt has given the authority to states ,so if poor states feel that walmart is not good then they can ban its entry.And the point you mention that local kirana shop provide credit ,this is a very good point this point proves that these type of shops will not get affected because Walmart can never provide credit.Also I don't think Walmart will target these type of poor buyers,infact there is good chance that these shopkeepers may start buying from walmart and sell it to poor people