The Union Cabinet has approved 51% FDI (Foreign Direct Investment) in multi-brand retail business and 100% FDI in single-brand retail business.
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The overseas retail chains will be permitted only in cities with population of more than 10 lacs as per the last census – and 51 cities qualify under the specified norm.
Thus are the great gates of Indian retail market thrown open to gargantuan overseas retail chains like Walmart, Carrefour, Teso and others who have been eyeing the juicy Indian retail market estimated to be worth $450 billion.
The cabinet approval of FDI in multi-brand retail has some conditions attached. Approval of the FIPB ) Foreign Investment Promotion Board) has to be obtained by the overseas investor. The investor has to invest at least $100 million and half of the FDI is to be allocated for “backend infrastructure” and 30% of the products sold should be purchased from small scale industries. The conditions do not look intimidating or even mildly inconvenient to the giants raring to enter the Indian retail market; nor do they seem to be particularly effectual.
Investment in “backend infrastructure” includes investments made in processing, manufacturing, distribution, design improvement, quality control, cold chain, warehouses, packaging etc.
In the case of single-brand retail business, the products should be sold under the same brand name globally and the products should be branded during manufacture. Moreover, the overseas investor – the retail chain – should own the brand.
Objections from Trinamul Congress did not prevent the Cabinet from approving FDI in retail business. Perhaps, Congress, the major partner in the ruling UPA, is confident that Ms.Mamata Banerjee would once again administer a stern warning, as she did when petrol prices were raised last, to the effect that they would not tolerate another such approval and leave it at that.
The Left parties have also been critical of the government’s decision – but who takes them seriously? They have their own historic blunders to contend with, after all! Moreover they do not have any political clout of any consequence. The BJP has also criticised the decision. But, then, didn’t they ride the liberalisation bandwagon themselves?
Corporate lobbies are said to have lauded the decision. But can we expect anything else from them in the matter?
Perhaps we can also expect World Bank , IMF etc to nod in approval and flash a smug smile at us.
Has the government consulted the small traders eking out their livelihood from their small shops before being so largehearted in opening the gates for foreign direct investment?
Has the small farmer who is now most likely to be crushed under the wheels of these corporate juggernauts been sounded? Do they even know the impact this decision could have on on their lives and lifestyles – because they lack the bargaining power to end up with fair deals?
They might have been – if anybody seriously believed that a government should be of the people, by the people and for the people. But Lincoln, so far as we know, seems to be the last man to have thought so.
Governments all over the world have become insensitive to the needs of the people on the whole – and our governments faithfully reflect the global malaise. Lobbies rule while the common man is crushed. Mahatma Gandhi must be stirring in his hallowed grave.
Once upon a time it took mighty armies to conquer and subjugate nations. Now one can achieve the same ends peacefully through trade. Why do they need bullets if hapless souls can be driven to suicide … peacefully? Who cares to kill with a bullet when bushels of gold an be transferred out of the country without a drop of blood? Non-violence, yes. But not the kind that would make Mahatma Gandhi smile in approval.
Countries which are protectionist to the core when it comes to their domestic interests (read ‘votes and vote banks’) advocate that we open our doors to them for ruthless exploitation. And we acquiesce.
No, we do not believe in any “ism”. But we do strongly believe that the proper function of a government is to ensure the welfare of all its citizens and to free them from hunger and oppression. Have successive governments succeeded in meeting that objective?
Tags: fdi retail in india
