FDI- AN Overview
What is FDI - ( Foreign Direct Investment)
What is FDI in retail A company to get foreign funding the products that it sells to the Public should only be of a ‘single-brand’. so that is Single Brand - It means that Foreign companies would be allowed to sell goods that are sold internationally under a single brand. Multi Brand- It means that Foreign companies can sell any branded products in agreement with the Producrs. For example : Single Brand : If Nokia gets permission, Its retail outlets can only sell products under its brand name Nokia and cannot sell any otherbrand. Multi Brand : Wall Mart
When did Govt Introduce FDI in India : the government in a series of moves had opened up the retail sector slowly to Foreign Direct Investment (FDI) In 1997. In 2006 51% of FDI in single brand retail was permitted and it was upgraded to 100% since Jan 2012 .
But FDI in MultiBrand is under consideration. - An Overview
Who are Retailers : Retailers are the interface between the Producers and Consumers( Individuals for personal consumption).
Who are Excluded in this Link : It excludes Manufacturer, Institutional buyers , Bulk Customer Retailers
Categories in Retail Industry
1) Organised Retailers - These are traders who have licence and are registered for their Sales and Income. There by pay their taxes. These include Semi corporate, Corporate Supermarkets and some large owned Large retail business.
2) Unorganized Retailers - These are traditional low cost retailers like local shop (Kirana), General stores, Convenience Stores etc, majority of them are not licensed and do not pay taxes but make huge profits.
How Does it Work - The Foreign Investors must relly on the Domestic Partner as per the norms example if FDI in retail is 51% (51% by the Foreign Investors and 49% local Partner). The Key is local Partner would help the foreign Investors about the local consumers.
Some of the Organised Retailers are TATA, RPG, Raheja groups. The Foreign Investors need not tie up with the existing Organised retailers they can look up to new players.
Concerns of Political Parties and their Arguments
- Unfair competition
- Large scale displacement of persons employed in the retail sector (unorganized)
- As Manufacturing Sector is not included in this chain the displaced unorganized traders will not be absorbed by the Manufacturers.
- There is a lack of Investment in the logistics of the retail chain leading to inefficient Market mechanism
- It has very limited Cold Chain Infrastructure resulting in huge loss of Fruits,Vegetables and other commodities perishing before they reach the retail Market
- Some of the commodities do not find its distant destination because of Logistic deficiencies.
- Lack of Adequate Storage facility
Intermediaries, Traders who say they would loose their jobs and trade . These people do not pay taxes. These Intermediaries often flout norms and they dont have any transparency in their pricing, because of these people the Producers (farmers) get only 1/3rd of the total price the end user pays. But Producers (Farmers) get 2/3 when it deals with Organised Retailers.
It is a Wolf cry that these so called Kirana shops and other unorganised sector crying Foul on FDI retail. These people not only cheat the Farmers (Producers) but also cheat the Consumers. Political Parties who cry on the Farmers suicide rate need to think aloud.
What does FDI in Food based retailing do to the country
- It ensures flow of capital
- It ensures Productivity and promote Farmers income
- It increases agricultural growth
- It ensures lowering Consumer Prices.
- It ensures Quality standards
Though it needs to be fine tuned for the Masses by adding clauses like making mandatory sourcing of at least 30 per cent of the value of products sold from Indian ‘Small industries, Cottage Industries, Artisans and Craftsmen. We would rather leave it to the Pundits in the Parliament.
FDI in Aviation :
FDI in aviation may bring relief to cash stapped Indian carriers like "Kingfisher" which
is struggling to pay even the Salaries to its employees. Even before Govt could give a Nod
The Airline "Kingfisher" already jumped the Gun stating it is already in talks with Foreign
Investors??
The Prices of Air fare that has seen steady increase, the move to bring in FDI in aviation
will further increase the Airfare! Though FDI in Aviation never took off in 2009 , Govt as face saving might try to shun "Retail" and bring in "Aviation" sooner than later!
FDI in SME
SME (Small and Medium Enreprises) this is a huge Untapped Market where in if FDI is invited to invest in this Segment there could not only be inflow of funds but also allows to grow the SME in exponential speed.
Industrial Organisations like ICIER, CII, FICCI with their independent scientific studies have welcomed this move.
This move by Dr Manmohan Singh was not even welcomed by Sonia and Rahul because they are not visionaries. They always think of Populous Bill than a Good Bill. Populous Bill might translate into votes the Gandhi family is keen to have Food security Bill than the FDI bill . As such scientifically proved that Food security would bring further chaos and open up large scale scams by the center.
Sonia family along with TMC, BJP, LEft and other regional parties are worried more about the populous sentiments and mythical fear of the unorganized retail sector would be displaced.
For Once all these parties introspect yourself, all you parties have one way or other have been a hurdle to the growth of this country .
None of the Parties or their leaders that includes Sonia family are any wiser than ICIER, CII, FICCI if so you would never be bashed and thrashed by the public and as such political community as whole as been seen as filth in the eyes of the common MAN .
Though this my personal opinion I feel there are many out there who wanna disagree some like @thinkerspad who have hard datas and many opposes just for the sake of it!
Cut across your party and your Ideology to help India Grow.
