Friday, July 15, 2005

Wal-Mart way to disaster!

As Manmohan Singh leaves for US on a much publicized visit, there are several issues speculated to be on the agenda. But the one issue the media (I'm sure) will not highlight is the proposal to allow FDI in the retail sector.

For sometime now western retailers like Wal-Mart and their governments (read US govt) have been pushing India hard to allow them to set shop here. And our own "Singh parivar" eager to establish its so called "reform" credentials is supposedly thinking of allowing 26-49% FDI in retail sector. This is nothing but a recipe for disaster!

While I disagree with almost everything the Left Parties stand for, I am desperately hoping that they stop this suicidal mission. FDI in retail sector is not similar to other sectors. Simple reason: there is no Indian company in this sector. What the government wants is that several million small shops owners should stand up against the might of Wal-Mart & co. No prize for guessing what their fate will be.

Already the FMCG sector is totally in the hands of the foreigners. I bet most people in India don't know Hindustan Lever is a British company. Indian FMCG companies like Godrej, Dabur, ITC etc are miles away from challenging their position. Such a scenario is certain to be repeated in the retail sector. The present Indian retailers like ITC, Foodworld, Nilgiries etc will be peanuts for the incoming global giants.

But the real tragedy will be that of millions of small shop owners. For a moment, can you think what so many of our youngsters do when they can't fetch a job. Easy answer! Most of them end up starting a small shop (grocery, medicine, Xerox, consumer goods,spare parts etc). Now their only means of decent living is being threatened.

The arguments in favor of Wal-Mart's are all hogwash.

Claim: Wal-Mart will source more from India for its US market if it sets shop here.
Fact: This will happen anyway if we improve our productivity and cut costs.

Claim: It won't flood Indian markets with cheap low quality Chinese goods.
Fact: As we in US say "What is not Made in China?"

Claim: It will employ several people.
Fact: It will only create Onyx employment. (Who's this? Sweepers working for an MNC in Chennai who wear flashy clothes!)

This infact is the real problem. The retail store/shopping mall culture aims to create wealth for the foreign/Indian retail giants and generate employment for unskilled lower class Indians. But it effectively shuts the door for the educated middle class Indians. In a country boasting of the world's biggest middle class society, this is wholly unwelcome. (For all those who think I am exaggerating the story -- can you name any Indian soft drink?)


Anonymous said...

we need the left on this occasion...surely...

Anonymous said...

The Indian companies should try to compete with Walmart, rather than wailing about their strength.

If your products and services are good, customers will surely come flocking to you.

Anonymous said...

Hindusan Lever is not a british company, UniLever is!

Balaji said...

I think my blog is not for those who can't figure that out! I refrain from explaining everything simply to avoid testing the readers patience! By the way, I guess there was a proposal to rename Hindustan Lever as Unilever India.