Tag Archives: foreign retail

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Most of the debate in FDI in retail is focused on how it will affect the small retailers, and this criticism is easily deflected.

It is important to understand that the entry of foreign retail means the entry of global supply chain in India. Inspite of the misinformation being spread by  Ashok Mallick here http://timesofindia.indiatimes.com/home/opinion/edit-page/Retail-FDI-will-transform-agriculture-by-integrating-Indian-farmers-in-the-global-supply-chain/articleshow/16532051.cms?utm_source=twitter&utm_medium=tweets.

Global retailers will not help farmers or manufacturers to adapt to global supply chains. They won’t help an Indian apple producer in Himachal Pradesh to adapt to the requirements of European consumer or the regulations for exporting there. Indian agri exports do not succeed as farmers use too many pesticides and banned fertilizers. Moreover over a period of time the ground water itself has so much banned chemicals that it is difficult for Indian agriculture produce to get approval from US or European food authorities. So its a myth that Indian agri produce will get a global market.

Similarly Indian manufacturers whether they are cutlery makers or hand tools manufacturers will not be able to compete against Chinese manufacturers on pricing. And this is what global FDI chain will bring into India. Yes there will be come manufacturers who will adapt and become better at pricing.  The small manufacturers do not have the capacities or the resources to cut prices. They will slowly go out of business as even small retailers will prefer to buy from the whole sale cash and carry outlets of foreign retailers. Large manufacturers who can be globally price competitive are more likely to adapt and price competitive. The flow of cheap Chinese imports and the resulting death of manufacturing was given a boost by  organized retail and will further accelerate with Foreign retail. 

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