In Siem Reap, Cambodia, the spa at the Amansara property – part of Amanresorts, the hospitality chain that enjoys a global cult following – is headed by a young Indian lady from a modest background in Jaipur. She stands out, as upper management of the hospitality business in Indo-China is mostly drawn from Europe, the US, Australia or New Zealand. How did she get there? Well, she joined the first Aman property to be developed in India, in Rajasthan, as a yoga instructor, was sent overseas for training and eventually proved so efficient that she was offered a dollar-paying foreign job.
This story is exceptional enough to warrant writing about, but it does represent the potential opportunities open to India’s politically feted but economically constrained aam aadmi from global investment. Imagine how different this one story would have been if the Bharatiya Janata Party, which ruled Rajasthan around the time Aman’s Indian property was being developed, opposed foreign investment in the hotel industry on grounds that it would put home-grown hotel groups out of business. Extrapolate this on a larger scale and consider what a restrictive hospitality policy would do to the thousands of educated youth who leave the economically backward north-east, Jharkhand and Chhattisgarh for the big cities in search of a living and find gainful employment in this rapidly expanding industry.
India now has some 50 foreign hotel chains that are either already in operation or setting up shop. Their very visible presence has not seen the demise of the big Indian chains — quite the contrary. Nor has it stemmed the mushrooming of mom-and-pop hotels of the home-stay variety that service a booming domestic middle-class tourism business with all its concomitant benefits.
Given this, it is difficult to see why foreign direct investment (FDI) in retail should be any different or why any party would see fit to oppose it. Mamata Banerjee’s opposition, of course, is a different issue. She has so far displayed little knowledge of developments in her own state, let alone the rest of India. West Bengal, after all, has had a giant foreign wholesale outlet of Metro Cash & Carry since 2008. The seven outlets owned by the German wholesaler (or B2B retailer, to use the modern term) throughout India have not put anyone, let alone other domestic wholesalers, out of business.
Like hotels, retail outlets, too, are subject to the fell hand of myriad local laws, which means it is in the state government’s powers to permit or refuse any retailer, Indian or foreign, entry. Recall Metro’s bruising brush with political opposition in West Bengal when the Forward Bloc, one of the ruling parties in the then Left-ruled state, declined to renew its APMC licence, forcing Chief Minister Buddhadeb Bhattacharya to intervene and overrule.
If the energetic Ms Banerjee cared to travel from Metro’s Eastern Bypass outlet to Future Group’s Pantaloon outlet just off the bustling Gariahat market, she would see for herself that organised retail does not pose any significant threat to the small trader. The Pantaloon outlet was among the first to be set up by Biyani before he branded his retail venture Future Group. In a sense, it is no different from a deep-pocketed foreign retailer. This first outlet was so successful that Biyani decided to set up another in the city centre. Though the Gariahat unit is crowded, the throngs in the local garment stores in the famous old market haven’t diminished either.
Whether foreign retail will transform the plight of the poor farmer or contain inflation is, rightly, open to debate. So is the question of how many jobs it will create. But allowing more funds to come into the sector, irrespective of the colour of the money, will open another avenue of opportunity in a country in which stable employment is desperately hard to find. Given the huge skills gap in India, the relatively low-skill service sector provides a more reasonable prospect for jobs among the less educated than the advanced skill sets that rapid industrialisation demands.
Indeed, Ms Banerjee, who professes considerable concern for the plight of the “peoples”, as she calls them, would do well to turn her attention to the agricultural labourers in the state she rules. A 2010 study of wage trends among them by Kakali Barua* suggests that three decades of Left rule have left them worse off than before, openly discriminated against, in thrall to the middle peasantry and without too many options outside the farm sector. Industries like retail and hospitality have the potential to change that. Sure, they may not be the game-changers that FDI votaries suggest but in a near-ungovernable country like India there’s a lot to be said for incremental progress too.
*http://lsrcollege.academia.edu/KakaliBarua/Papers/392367/
