BBC English – Economy – Retail FDI: weighing the arguments


Companies like American Walmart and British Tesco have wanted to do business in India for a long time.

In the country, there is a lot of controversy about FDI in retail and the debate about the benefit or harm of merchants like Walmart is on.

If foreign investment is allowed in the field of retail with 51% ownership by the Government of India, then in this field, giants like American Walmart and British Tesco will be able to come to India.

Supporters of foreign investment in retail trade describe this failure as the most important decision since economic liberalization was implemented in 1991. They believe that this decision will restart the stagnant process of making any major decision in the country.

According to India’s Commerce Minister Anand Sharma, India will bring a comprehensive development of foreign investment in the field of retail worth US$475 billion. Sharma insists it will benefit consumers and change the fortunes of farmers.

Benefits for farmers?

In this case, the numbers do not facilitate the debate. Many experts say that a third of the fruits, vegetables and food in India are wasted each year because they cannot be stored safely.

If multinational companies like Wal-Mart and Tesco come to India, they will spend three to five billion dollars every year for the next three to five years to develop storage capacity and strengthen the transportation system.


Wal-Mart’s motto is “Saving people money so they can live better lives.”

Therefore, farmers’ goods will rot less and they will be able to sell more. Foreign traders will free farmers from exploitative middlemen and buy goods directly from them.

Opponents of this proposal say that these beautiful dreams will never come true.

Opponents of this decision say that the big Indian companies working in the field of retail did not do anything like this. Large Indian retailers generally do not make any significant investment in cold storage and mostly buy from existing brokers or the wholesale market.

In his article published in ‘The Hindu’ newspaper, Devinder Sharma, an expert on agricultural affairs, says: “Even in America, the big retail companies didn’t help farmers. They just brought in a new line of middlemen who are looking for new ways to make a profit. Contenders”.

Will the consumer benefit?

Supporters of the decision on this aspect say that despite paying higher prices to farmers, large retailers are able to sell products to consumers at lower prices because they run middlemen.

Walmart whose motto is “Saving people money so they can live a better life.” Walmart does a $450 billion business through its 10,000 stores in a year. Walmart sells relatively cheap products at all of these stores.

But the maximum benefit in India will only go to the middle and upper middle class consumers.

Opponents of this decision claim that small businesses will go bankrupt because of this.

Arvind Singh of Technopark, a consultancy in the field of retail, says that the organized sector’s share of retail in India is only 4.2 per cent.

Rajeev Kumar, secretary general of industry trade body FICCI, believes that even if this share increases four times to 17 percent in the next twenty years, even then, in the year 2032, its $900 billion market share it will be only $150 billion.

Logically, foreign retail companies would initially open their stores only in big cities, since consumers in these cities have more money.

Currently, in the proposed government policy, multinational companies will be allowed to open stores only in those cities where the population is greater than one million.

retail policy

This is the second time in the last ten months that the Congress-led UPA government has attempted to implement this decision.

This decision could not be implemented in November 2011 because many of the government’s allies and opposition parties were not in favor.

Many states like Madhya Pradesh, Uttar Pradesh, Gujarat, West Bengal, Odisha, Bihar have said that they will not allow multinational retail companies to come here.

Nine big and small states like Delhi, Maharashtra, Jammu and Kashmir, Assam, Manipur and Uttarakhand are ready to implement this decision in their respective states.

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