FDI in multi-brand retail will hurt domestic sector
Foreign direct investment in the retail sector has always been a raw nerve for India. Whenever this discussion is initiated, it leads to opposing and debate and rightly so since it is the domestic sector that is going to be hurt the most if it is implemented.
Farmers and small traders will face heavy competition, something they are not ready for. FDI in multi-brand retails has its advantages and they are many but it is usually the disadvantage that takes the upper hand, causing a negative response from commerce and industry ministry.
Agree1. Farmers and traders will lose: Our farmers and small traders, with their little to no facilities to handle retailing will be at a complete loss when multi-brand retails from other countries will start opening up. As more and more people get used to the ease of buying from them to save something we are always short of these days, time, farmers and small retailers will be at a huge loss.
2. Losing employment: All the local retailers, which we know are huge in number in our country, will face heavy loss as people start pouring into hypermarkets and supermarkets. Many will be bound to close down sooner or later which will lead to an increase in unemployment. We already have to worry about the shortage of jobs for youths graduating these days and to add to that there will be concerns of self employed people giving up on their retail businesses.
3. Inflation: Letting all the multi-brands to open up in India will initially lower the prices of low goods with local sellers competing with the brands but later on, there is bound to be a price surge once they settle down on a stronger ground. Keeping up with their pricing, local vendors will hike the prices too, paving way for inflation.
4. Unorganized retail sector will suffer: The organized retail sector might not face the consequences heavily, but the unorganized retail sector, which is responsible for providing employment to major part of the country, will suffer greatly. They will be left at the mercy of foreign brands wooing people will their state of the art products, which will go our people swooning on their feet again.
Disagree1. State of the art agriculture sector: With the inclusion of FDI in multi-brand retailing in India, we can expect to get all the state of the art agricultural facilities for farmers who would be able to sustain food produced with the help of their cold chain infrastructure, something that we seriously lack at the moment. There is lot of waste which can be avoided and the farmers will benefit too.
2. Direct buying: Organize sectors like keeping the prices competitive and hence they usually opt for purchasing directly from the farmers with no involvement of middle men and dealers who currently take all the profit, giving only 10-20 % to the farmers. With the right pricing for their products, the farmers will be at a better place compared to their current scenario.
3. Better investment: When retail sector deals directly from the farmers, it is evident that they will be entitled to bear a big part of the investment too. This will also ensure security to farmers who are at a loss with the mercy of weather playing on them. Sharing the load could go ahead to become the ultimate solution for the woes of farmers in India, something that we haven’t been successful in doing so far.
4. More taxes: When revenue increases, it will benefit the domestic sector too in turn. There will be more funds for development of infrastructure, more job opportunities for youth and better facilities for people who are often saddened to see what our country lacks in comparison to the west.
5. Reign on price hike: With direct buying from the producers and keeping with the competitive rates, the retail pricing will be reasonable instead of surging high at the whims of middlemen and distributors. It could lessen chances of inflation to a good extent, though this is something that is highly debated with those who think that the opposite of it has more chances.
FDI in retail sector can be beneficial or painful to the retail sector depending on the policies that govern them. They could be kept in check with set of restriction to prevent farmers and small traders into falling prey to these giants of trade. However, with the right set of rules they can be as advantageous as we allow them to be.
