INDIA: F D I IN RETAIL SECTOR

Although the opposition parties in India have tried to elicit a Parliament Veto for the foreign direct investment in the retail sector which only needs a Cabinet decision and no Parliament approval, by moving motions against it in both houses, the operation back-fired when in both houses the opposition motion was rejected. The whole exercise, consuming two weeks’ Parliament session, thus ended in anti climax for the opposition parties and Instead  of  Parliament disapproval the game  ended in reinforcing the Government decision.

 The opposition parties have nothing against the retail giants as such, they only want to garner the votes of Indian retail merchants who have been propagandized to believe that the foreign retailers would decimate them. The political parties when go out of power use all tactics for votes to get back  to power and it is more glaring in Indian politics. It is unknown how the entry of retail giants would fare in India, however the present economic scenario makes it imperative for the continuation of economic reforms to boost the economy and foreign investor confidence.  

It does not need a big intelligence to imagine that the small merchants are not going to affect as big a way as the political parties’ project by the opening up of a few foreign retail shops in big cities. Actually it is not the merchants' business that would affect with the arrival of retail giants but the business ethics that would have to undergo a forced change and that is indeed a welcome factor for the people and for the nation as a whole.  In plain words, the traditional hoarding, black-marketing and artificial price rising would not be easy any more when foreign shops arrive on the scene as they are unlikely to join in such games and the pricing will be left to the market forces ultimately.

To cite an example, the price of rice, the staple food of Kerala, is increasing by leaps and bounds now. The price hike is merchants-created and not on account of lack of stock of rice. A news report said that tons of Rice was destroyed in the Food corporation godowns due to lack of  storage space. The merchants leave no chance to make a profit.

(The Congress party while explaining the benefits of F D I did not go in to such facts in order not to further antagonize the merchants)

What makes the Congress party to carry forward the reforms ?

In the first place there is a section of population in India that looks upon Congress and Dr Manmohan Singh to carry forward the reforms for economical growth. If the Congress Party evades it, the result will be disastrous for it. Though B J P is also a national party it has not ruled the Nation long enough to break a path of its own and as a result of it the party is confused of its mooring ground. Though called as a rightist party it stood with the leftists in the F D I issue.

In spite of the  approval of Parliament for the F D I,  it may take time for retail Giants to start operation  in India as a number of amendments to existing laws in areas like labour etc  have to be made before they can operate here.