Normally developing countries vie with each other to attract FDI in several sectors where the domestic savings and investments cannot ensure the latest technology and the robust infrastructure - both trade-related and manufacturing on its own. Gradually but slowly FDI has been permitted in India with some amount of restrictions like the maximum cap on the percentage of foreign investment, but a flood of opposition against FDI in retail has sprung up from various sections especially the constituents of UPA coalition Government at the Centre. Generally speaking the foreign direct investment is opposed on the following grounds:-
'First, there is the fear that the small 'mom-and-pop' retailers, who number in the millions will be crushed. This is a common fear when restrictions on the expansion of the larger retailers, even when entirely domestically owned, are proposed. When the Japanese restrictions on such expansion were repealed under US pressure, there was a similar fear. But little of what had been feared transpired. Supachai Panitchpakdi, Secretary General of UNCTAD, told one of us (Bhagwati) recently that when he had overseen similar Thai reform as deputy prime minister there had been widespread such fears; again they proved groundless. The same is true of China. What enables the little shop keepers to survive, even flourish?
In the absence of refrigerators and cars, most Indian customers do their shopping daily and from local stores 'down the road' or 'around the corner'. It is impossible also to establish personal rapport, which many consumers seek, with a Wal-Mart employee, the way one can with the local storekeeper.
Second, the proposed Indian reform additionally raises the traditional bogeyman about foreign direct investment (FDI) because the opening of the large stores is linked to the entry of foreign multi-brand retail grants such as Wal-Mart, Tesco and Carrefour. India today is perhaps the only developing country where the jaundiced view of FDI persists, everywhere else it has been consigned to the dustbin. In fact, most developing countries today compete to attract FDI".
If one cound recollect the days when the banking centre was computerised there was a huge opposition from the employees' unions, fearing that they would become unemployed due to the computers, but the reality is that nowadays no banking office can afford to work without the computer. Similar is the case in railway / airport reservations and also in the working of any Government or Corporate office in the country. Employment opportunities have neither fallen nor have the existing employees been thrown out of employment. On the other hand computerisation like mechanisation in other sectors has only added to the productivity and comfort levels of the workers involved in any human endeavour although individual attention is needed to maintain the specific quality or uniqueness in quality. When you speak of quality of products in large numbers there is no way of producing them unless it is done in large scale by sophisticated machines and trained manpower. Quality of work or service both at the production level and marketing level can be ensured only when large players are allowed to operate and maintain services. One reason for general opposition for FDI in retail is that small retailers will go out of job. Right now we are aware of the predicament of small farmers in regard to production of agri produce. Their operation is mostly uneconomical and they are either confronted with surplus production with uneconomical prices offered or not getting the full price for their products due to too many middle-men in the process. Similarly, the consumers may not have the variety of goods they would like to select from, and at a reasonable price. One remotest possibility at a future date could be that major players might become monopolists and corner the profits at the cost of producers and consumers. Such an eventuality can be averted by a strong democratic government at the centre and in the states.
I for one having seen the plight of both the producers and the consumers for more than four decades in the field would advocate the opening of the gates for FDI in retail during the next 10-20 years so that the Indian farmers start enjoying the latest technologies with huge investments from FDI and the retail market gets a boost-up on the lines we see normally in other developing and developed nations.
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