Kudos to Dilip James for his balanced prognosis of foreign direct investment (FDI) in organised multi-brand retail (“No retail therapy in sight,” December 3). As the writer points out, it is unlikely that the move will generate 10 million jobs in three years or strengthen back-end infrastructure. But at the same time, in my opinion, the move cannot be dubbed an unmitigated disaster. Just as multiplexes eliminated single-screen theatres only from their vicinity, multi-brand malls will displace the small shops close to them. However, the behavioural propensities of Indian consumers — home delivery, credit (not credit-card) purchases, pride in price bargaining and close relationships built with shopkeepers over a period of time – will enable the Davids of retail to live with the Goliaths. Also, those talking about the survival of neighbourhood shops should think of the quality and price of their supplies.
The experiment of foreign investment could be tried on a smaller scale and redefined conditions — such as limiting the penetration of big retail stores to cities with a population of three million or more (insteadof one million), enhancing minimum capital to Rs 500 million (against Rs 100 million) to provide sufficient funds for back-end systems (at 30 per cent) and making indigenous sourcing mandatory. Besides, suitable measures of checks and audits have to be incorporated so that they do not create monopolistic conditions and exploit customers or suppliers.
Finally, if the ruling party (the Congress) is serious about winning acceptance from all political parties, it will have to give up its exclusivist attitude and the belief that it alone knows what is good for the nation. Its current attempt to win back the supporting parties is like closing the stables after the horse has been stolen. Let the prime minister come down from his ivory tower, talk to the opposition directly (not through emissaries like Pranab Mukherjee) and with an open mind, develop consensus for a revised policy. Meanwhile, it is fair to add that those who are heralding the government’s FDI proposal as a master antidote to inflation and farmer suicides are no different from those members of civil society who believe that the Jan Lok Pal Bill will root out corruption.
Y G Chouksey, Pune
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
