Sunday, 22 April 2012

Foreign Direct Investment - A Nonsensicality ?

17:45 hrs
Today I went to Gandhi Nagar market to check out newly arrived stuff at Duke, Koutons and Daisley  Collections.There is a big hype associated with these brands  because they feature top clothing  retail not only in India but all around the globe . Because of the eminent  quality of products that these stores offer they impose high price rate on all products associated with them .Though I am completely  moderate still I prefer to purchase my wears from these high - profilic outlets because the quality of cloth is optimum and the conceptualization of design is truly artistic and genuine.I guarantee, you buy any garment from any of these retail stores and wear it even after a half a decade or so it would still relish on you and give you a classic look.The design outlook of garments manufactured by these foreign outlets is so much alluring and unique which is also the main reason for high price index of the garments.

The optimum quality of the garments produced by these outlets can be attributed to the highly mechanized machinery that these firms employ for the manufacturing.These are foreign firms and apply foreign concept in their production.They have established themselves in India on account of the Foreign Direct Investment (FDI) .Foreign traders avail the opportunity of buisnesss transaction in our nation through this process. Raising its level by the Central Government tends to alleviate the mood of the foreign investors but at the same time causes depression to DESI organizations.At every instance  whenever the  Central Government has signaled the raise   in FDI , severe protests has been conducted all over the nation by the DESI associations.They have always expressed dismay and anguish over this move of the Central Government which has ultimately generated a deep conflict between both of them.

But is this anguish is really justifiable...? The government who is working for the concerns of its citizens possess what kind of strategy in its mind...? Can it really justify its cause...?

Actually there is NO PROBLEM in the concept of FDI.The Government has just failed to counter the hysteria created by a select few trader's associations.I present you a bigger picture which I have comprehensively analyzed and it would remove every element of doubt  in your mind regarding the role of FDI in various fields.Here I am exploring all the myths which gives false impression about FDI.

MYTH  Kirana Stores will be wiped out.
REALITY  Kirana stores have beaten back competition from Indian-owned organized retailers by improving their own standards,Their unique buisness models,offering sales on credit and free home delivery will keep them on buisness.

MYTH  Farmers will not have any bargaining power with large retailers.
REALITY  Farmers have no bargaining power at government regulated mandis.Improvements in the supply chain that follow FDI in retail will give farmers access to more markets,increasing their bargaining power.

MYTH  Supermarkets will lead to an increase in prices because they will limit                    competition.       
REALITY  Prices,particularly of agricultural produce,will see fall because intermediaries in the supply chain will be cut out.

MYTH  Small and medium enterprises will suffer as foreign retailers will source overseas.                                        
REALITY  The Government has imposed a condition requiring 30 percent of procurement from local SME's.The experience will help Indian SME's in finding markets abroad.

MYTH  Millions of job will be lost in unorganized sector.
REALITY  Millions of jobs will be created in the organized sector offering people better working conditions.Since kirana stores will survive,additional employment will be created.

Foreign Direct Investment  increases efficiency,provides wide range of choices and enhances growth in socio - economic field.The associations that are protesting the FDI  are expressing concern only for kirana store owners.No one seems concerned about the benefits that farmers will get if their produce is purchased directly by big retailers.I agree that kirana store owners in the immediate vicinity of big retailer has suffered a loss in revenue but that is for a short term only,the long term impact is negligible.The deep penetration of FDI concept into our nation would enable unorganized sector turn into organized one and thus ensuring  qualitative change in employment , better facilities for the employees and ultimately rise in the national economy.