[Hayek]

Originally Posted by one-77

those who think they're good for the country and themselves will believe they are, and those believe otherwise will keep believing so. Evidence or no evidence, there simply is no convincing the other side. It's akin to debating religion and politics. It isn't about evidence, it's just about belief

Interesting point. But fortunately or unfortunately, the world has benefited from at least two controlled experiments which provide evidence on which set of policies work - East and West Germany, and North and South Korea. We took parts of the same country with identical starting conditions (culture, education, wealth, resources) and applied what are broadly defined as Free Market policies to one and Socialist policies to the other. The results should be obvious to all. But 20 years after German unification and with North Korea itself being a forgotten state, people ignore the evidence from these experiments.

China, albeit in different periods of time, provides more evidence of the same.

Why even the very limited reforms in India since 1991 show us the benefits of moving in the right direction (and let's be clear, India is still one of the most statist economies in the world), while the current slowdown demonstrates the impact of moving the wrong way.

[sgiitk]

I am all for it. At the moment a huge percentage of perishables (fruit & veg) are spoilt in the absence of a cold chain. They go through multiple middlemen leading to higher cost and wasted time. I know after Mayawati messed up Reliance Fresh may farmers were very unhappy. They had bee promised far higher prices. The farmer gets more, we pay less. Who loses- the middlemen. Let them stew. These chaps are smart enough to find some other line of work.

The GM thing is vastly overblown. An MNC does not mean automatic entry of GM stuff!

What will these jokers do about Indian retail giants. Send them to the Arabian Sea or Bay of Bengal. Even today in Germany the bulk of retail is small shops.

[vina]

Originally Posted by sgiitk

... The farmer gets more, we pay less. Who loses- the middlemen. Let them stew. These chaps are smart enough to find some other line of work.

The middlemen may not suffer as much as everyone seems to think. For that matter they are already suffering. They used to be relatively affluent relative to others over two decades ago when the entire economy was poor. Since early 90s they are where they were then while the rest of the city and town economies have moved on.

The problem with supply chain is not the middleman, but underinvestment (rather no-investment). The lack of infrastructure (cold chains, proper storage, good transportation, .... even roads) is the primary reason for the huge costs. FDI will bring that at the very least and raise most, if not all, boats.

The middlemen will still exists because the kirana stores are not going away, not in towns with less than a million of population - which is mover three quarters of the country. In addition the middlemen will actually benefit, the infrastructure will reduce costs for everyone, and may spur even domestic investment (a lot of problems are chicken and egg problems - once someone else is investing, others may be spurred too)


The losers will be the goons who act as "middlemen" - people with power but otherwise no skills to add value. They act as a tax on the entire system, though that tax is not a govt. tax. That tax will go away.

Originally Posted by sgiitk

What will these jokers do about Indian retail giants. Send them to the Arabian Sea or Bay of Bengal. Even today in Germany the bulk of retail is small shops.

The Indian retail giants are the real middlemen who are going to benefit. You need to ask yourself why 49% or 51%, why not 100% FDI if you are going to do it anyway. The Biyanis and Ambanis of the world control access to the market. WalMart, Tesco and Carrefour will most likely acquire some of the Future groups and Reliance Fresh of the world, and the original pormoters will make a killing.

[Jet-thrust]

FDI in retail. Touchy topic. Thought I'd draw up a list of gainers/losers. Requesting brief views/Additions for either list.

Gainers:
Consumer
Farmer/producer
Average citizen in long term thru better supply chain, investment in one's nation, job openings.

Losers:
(No, not your unscrupulous kirana store guy. They will barely be affected. Though they may have to pull up their socks)
Certain Politicians in the long run.

[vikrantj]

I am totally against FDI in retail sector for the following reasons :

1. These investments demands subsides in terms land, water , electricity , taxes. So there investment will be returned to them in a few years even if they do not sell even one item from the shop. These subsidies comes from the pockets of the common man. For example MSIL gets back the stipend paid to new joinee, TN govt re-imburses VAT on every Nokia phone sold which comes out of the Nokia factory in TN.
2. One topic came up which was death of kirana stores. I don't know how far it will or will not affect these stores. But one point in favour of the kirana stores is that they employ the unemployable. The super markets need well trained english/hindi speaking staff with basic education.
3. These super stores to maximise profits and minimize selling price opt for unreliable or cheap merchandize. Sorry I do not see this as a value add.
4. Another thing seemly dicey is employment these superstores will produce. One super store will employ lets say about 500 people (less permanant , more temp staff if history is anything to go by) and we can have say 2-3 such stores for metropolitan cities like Mumbai with population 50L+ and 1-2 stores for Tier 2 cities 10L+ populations. Making the total number of stores say about 200 India wide. So that is employing about 1,00,000 in a urban population base of 70 Crore across India. That's a really tiny amount of employment opportunity.

Originally Posted by sgiitk

I am all for it. At the moment a huge percentage of perishables (fruit & veg) are spoilt in the absence of a cold chain. .

The solution to this is better distribution and storage via a political will not by inviting the foreign companies to do it for us.

Note from Team-bhp support: Please use the EDIT or MULTI-QUOTE buttons instead of typing one post after another on the same thread!

[Abes]

I'll tell what I have seen here in Salalah!
A few years back, there were only small shops, no big supermarkets.
Everything was very expensive, even the local produce like vegetables & milk.

Then a supermarket, by a big chain, started, everything in there was so less expensive than in the small local shops.
What I heard is that the local shopwalas went complaining to the authorities & all, that the supermarket is undercutting them! But, the authorities asked back why they are selling the local produce (which they are procuring at a cheaper price) at a price higher than in the supermarket. How much profit were they making all along!

All that is history, that supermarket chain has opened another hypermarket. Prices in general has come down! Availability of different varieties of thing has jumped multi-fold! Over all consumers have benefited.

Should we care about the greedy shop owners?

[msdivy]

Originally Posted by vikrantj

1. These investments demands subsides in terms land, water , electricity , taxes. So there investment will be returned to them in a few years even if they do not sell even one item from the shop. These subsidies comes from the pockets of the common man. For example MSIL gets back the stipend paid to new joinee, TN govt re-imburses VAT on every Nokia phone sold which comes out of the Nokia factory in TN.

If somebody invests and get the returns, then what is the problem? BTW, running business on subsidies is bad idea and nobody can sustain that model.

2. One topic came up which was death of kirana stores. I don't know how far it will or will not affect these stores. But one point in favour of the kirana stores is that they employ the unemployable. The super markets need well trained english/hindi speaking staff with basic education.

Employment in kirana stores is closed for others, who are not part of the family. English/Hindi is not a must. A retail shop may at most have 4 or 5 in customer facing roles. Rest don't need any English skills. Even for those facing customers, why do they need English?

3. These super stores to maximise profits and minimize selling price opt for unreliable or cheap merchandize. Sorry I do not see this as a value add.

If there is no value, customers won't buy.

4. Another thing seemly dicey is employment these superstores will produce. One super store will employ lets say about 500 people (less permanant , more temp staff if history is anything to go by) and we can have say 2-3 such stores for metropolitan cities like Mumbai with population 50L+ and 1-2 stores for Tier 2 cities 10L+ populations. Making the total number of stores say about 200 India wide. So that is employing about 1,00,000 in a urban population base of 70 Crore across India. That's a really tiny amount of employment opportunity.

That is new employment and for every store added, there is employment oppurtinities created. 2-3 stores won't cover a big city like Mumbai. For example, Big Bazaar has 10 big stores in bangalore. This inspite of presence of other big retailers.

Originally Posted by vikrantj

The solution to this is better distribution and storage via a political will not by inviting the foreign companies to do it for us.

It hasn't happened so far and there is no reason why it will again in future.
PS: In Karnataka there is cold storage by Govt but that is on very small scale and has not expanded for almost a decade. There are n reasons why the capacity didn't expand.

[rm_arjuna]

IMO FDI is very good for India and I support it ,reasons being :

a) more employment at every level - each store / mid size supermarket employs atleast 8-15 people , support a large workforce IT support / security guys / housekeeping / logistics / transport guys etal.

b) more competition means better pricing all around and more benefit for consumers, current retail margins of all FMCG MNC majors are around 9-13 % wherein in china,south east asia and other countries is between 18-25%.since retail chains control 80% of market and these companies cannot afford to ignore them .

c) more tax collection for Govt. thru VAT,Sales tax , most kirana shops will not even report half their business income for IT purpose.

d) apart from agriculture other SME industries will also grow which would feed the pvt label brands for each retailers ,since pvt labels enable more margins.

[poloman]

Despite the large posts these discussions are not going to lead to any where. There will be leftists, centrists and right wing minded people in equal measures. But what is shocking is the casual way the government is implementing these decisions. Other day our deputy chairman of planning commision was asking Kerala people to leave their fertile lands for industrial purposes and depend on other states for their food needs. Kerala is one of the most fertile areas in India with abundant rain.Can any one with sane frame of mind make such statements? If the same princple is applied all over India, the results will be suicidal. People of Kerala will understand what I am talking about.This was the same gentleman who defined the poverty limits in our country.

[msdivy]

Originally Posted by poloman

But what is shocking is the casual way the government is implementing this decisions.

That is the bane of any Indian Govts so far. Nobody from Govt explains the rational behind their decisions. We need some who comes on TV, takes questions and defends their decisions.

[R2D2]

Now that FDI in Multi brand retail is allowed, it is only a matter of time before Amazon steps in and ramps up retail activities from their foot-in-the-door search engine Junglee.com.

[Wolfheart]

Originally Posted by Hayek

There is nothing to discuss. There are NO disadvantages from allowing MNC retail giants in - they are, for the foreseeable future, going to have a tiny share of the Indian market, and are going to find it tough to compete with our child labour abusing, sales tax evading, home delivery based small retailers. Those of us who wish to go and shop in these retailers can do so, those of us who wish to get stuff delivered at home by calling the next door kirana can do so as well. So this is what I call a "no regrets" move - it gets foreign investment into the country, sends a positive signal to markets, helps bring some supply chain technologies in, helps combat protectionism against our IT exports in the West by demonstrating that trade is a two way street, helps keep our local large format retailers on their toes, and will not materially harm those small retailers who are customer focussed

If there really was nothing to discuss, you wouldn't be contradicting yourself by writing this reply then would you? Your reply consists of multiple simple- minded sweeping generalisations.

Your statement that MNCs will find it tough to compete with child labor abusing and home delivery based retailers is complete rubbish. In fact in the USA alone, each year millions of dollars worth of apparel, toys and other products manufactured in chinese sweat shops are sold by large MNC retailers. Did you say home deliveries would be a problem for MNC? Wrong again. McDonalds and KFC have been making home deliveries for quite some time, here in Mumbai.

NO Disadvantages? In fact in Mumbai, there used to be these Irani Cafes and Udupi Cafes serving a wide variety of delicious snacks and meals at reasonable prices. Most of these were at promient busy locations such as outside railway stations, colleges, court houses and so on. From my neighborhood, most of them have disappeared and been replaced by McD's, KFC and those rip off coffee chains. Many local fashion designers and custom tailors have gone out of business because of chain stores and malls. I miss the diversity, variety, choice and often better quality of products that was available.The same thing could happen with many other local vendors and establishments now. Besides, justifying the need for giant retailers to send a positive signal to markets, and combating protectionism in IT export is quite daft. That is the Government's job.

Originally Posted by vina

Diet colas are not as harmful as the regular ones, and frankly I am one of the imbeciles who would want to be illuminated about the dangers of Aspartame - I don't know of any.

"does anyone wish to discuss" - what is there to discuss, you seem to have hard evidence on everything, and those who disagree are imbeciles. A quotation from a not-so-famous actor is should surely be the guiding principle for us.

So according to you, credibility is in direct proportion to fame? Interesting!!! How about Eddie Griffin then? Famous enough for you? Here's what he said:
"Who cares about who the messenger is? Did you get the message???"

[Wolfheart]

Originally Posted by gthang

I do NOT think we need retail giants in India, and agree with your points. I really dont know what evidence you can provide on this forum to convince Team BHPians about the health risks of GM, but for most people, one look at the obesity levels and health issues rampant in the western world should be enough.

I don't think it's my reponsbility to convince the naysayers or to give them any evidence. If there's a serious issue, any sensible person will heed warnings and tread carefully.

Originally Posted by gthang

From the looks of things, most people just want WalMart, etc., for the convenience, and "perceived" savings, and hopefully cleaner atmosphere with hopes of Developed world shopping experience. Just eagerly awaiting to be prey for the marketing experts in strategic product placement so that a shopper with a list for 10 items goes home with 20. A new generation of American type "Junk" shoppers waiting. Just hope India's junkyards can keep up..

Completely agreed! I'd also like to add that there are some folks with a kind of colonial hangover who perceive anything coming from the west as beneficial and desirable.They are so enamored that they just want to ape anything western and be deliberately blind to the disadvantages and dangers.

Originally Posted by gthang

Dont think many people are concerned about the long term effects to the country and it's main demographic, the agricultural sector. Not only are the GM crops not healthy (pending investigation by some), they usually are engineered for single crops so that the farmer has to keep going back to them for their "specification" seed. So, what's preventing them from setting seed prices?

If these arguments are scare mongering, why is it that farming is heavily subsidized in the US? How come the system does not work in it's origin country?

Cheers

Originally Posted by vikrantj

I am totally against FDI in retail sector for the following reasons :

1. These investments demands subsides in terms land, water , electricity , taxes. So there investment will be returned to them in a few years even if they do not sell even one item from the shop. These subsidies comes from the pockets of the common man. For example MSIL gets back the stipend paid to new joinee, TN govt re-imburses VAT on every Nokia phone sold which comes out of the Nokia factory in TN.
2. One topic came up which was death of kirana stores. I don't know how far it will or will not affect these stores. But one point in favour of the kirana stores is that they employ the unemployable. The super markets need well trained english/hindi speaking staff with basic education.
3. These super stores to maximise profits and minimize selling price opt for unreliable or cheap merchandize. Sorry I do not see this as a value add.
4. Another thing seemly dicey is employment these superstores will produce. One super store will employ lets say about 500 people (less permanant , more temp staff if history is anything to go by) and we can have say 2-3 such stores for metropolitan cities like Mumbai with population 50L+ and 1-2 stores for Tier 2 cities 10L+ populations. Making the total number of stores say about 200 India wide. So that is employing about 1,00,000 in a urban population base of 70 Crore across India. That's a really tiny amount of employment opportunity.

Good to see some refreshingly accurate reasoning!

[Gandhi]

Originally Posted by vikrantj

I am totally against FDI in retail sector for the following reasons :

1. These investments demands subsides in terms land, water , electricity , taxes. So there investment will be returned to them in a few years even if they do not sell even one item from the shop. These subsidies comes from the pockets of the common man. For example MSIL gets back the stipend paid to new joinee, TN govt re-imburses VAT on every Nokia phone sold which comes out of the Nokia factory in TN.

This is true for any FDI, not specific to retail. If such soaps were not given to companies, we wouldn't have got any foreign players in the country and local players would've kept looting general public. For example, BPL, Onida, Maruti et al. Competition is always better for the consumers and economy in general. What government needs to keep an eye on is one company monopolizing the market.

Also remember that these companies have to invest portion of their profit back in Indian economy.

2. One topic came up which was death of kirana stores. I don't know how far it will or will not affect these stores. But one point in favour of the kirana stores is that they employ the unemployable. The super markets need well trained english/hindi speaking staff with basic education.

I consider this as a plus point. More population with basic education and basic skills is good for the country. This should encourage population to get at least basic education as you've pointed, language doesn't matter IMO.

3. These super stores to maximise profits and minimize selling price opt for unreliable or cheap merchandize. Sorry I do not see this as a value add.

How is this different from Big Bazar? People buy stuff only if they see value. We have such a huge population, different people see different things as value add. I would never purchase anything from Big Bazar because I don't like the quality of the goods sold and overall shopping experience.

The small time kirana stores WILL survive if they add value to society. They will have to up their quality of service, hygiene standards, variety of goods etc.

4. Another thing seemly dicey is employment these superstores will produce. One super store will employ lets say about 500 people (less permanant , more temp staff if history is anything to go by) and we can have say 2-3 such stores for metropolitan cities like Mumbai with population 50L+ and 1-2 stores for Tier 2 cities 10L+ populations. Making the total number of stores say about 200 India wide. So that is employing about 1,00,000 in a urban population base of 70 Crore across India. That's a really tiny amount of employment opportunity.

You are only counting no of people directly employed in the stores. What about their back-end departments like storage, accounting, software support, customer support, maintenance etc etc.

Also, as msdivy mentioned, Bangalore has 10+ Big Bazars across the city in addition to Hyper City, More, Hyper Market, Total, MK Retail etc etc + the small time kirana stores.

One point you forgot is that most of these kirana stores don't report more than half of their income to avoid taxes. More and more large businesses means more income for the government through taxes.

[apachelongbow]

All bleeding hearts keep arguing against big business, FDI etc. Tell me who among us dont want cheaper prices, better goods return policy, shopping in clean, well lit, airconditioned and safe complexes, properly managed parking lots and above all accountability? Does your local kirana/mom and pop/dalal store offer this?

How does FDI negetively affect India? Are they taking away jobs? From what I know, more shops mean more jobs. May be the kiranawalla can be a subdistributor to the same big store in near future. Atleast we will have a chain of food storage and procurement, leading to less wastage of food.

Also each state govt has to authority to either choose or reject FDI. If Bengal and Kerala want to keep their people poor and underprogressed, they have a choice in doing so. What is the point of opposing it at the national level?