Letter to BS: Missing the big picture and key factors on FDI in retail

Your editorial, Realign FDI with retail (May 2) is straightforward, no-words-minced and focused on what is wrong with our policy on Foreign Direct Investments (FDI) in retail. I think, in our misconceived desire to protect the domestic industry, we are missing the big picture. The “potential multiplier effect on employment generation and re-energising the agriculture market” — as mentioned by you — is the key factor we have failed to appreciate. In addition to these, there is the opportunity for huge learning and training of personnel in logistics, quality control, customer service — areas where the West is way ahead of us.

Re-energising of the agriculture market alone should tilt the balance in favour of relaxing our rules and removing the irritants — in multi brand retail — like (i) minimum investment, (ii) half of the same to be invested in back-end infrastructure, (iii) 30 per cent local sourcing etc, which are not there if the investors find a local partner. These restrictions are mere irritants and don’t really help the Indian consumer. You have aptly defined these as “convoluted” riders. The pathetic state of our agriculture — enormous losses due to lack of storage and transportation infrastructure, low productivity, poor quality of produce et all — will automatically get addressed once players like Walmart enter the country. 

Our national gains, from this one factor alone, will offset any apprehensions of foreign companies dominating the market and repatriating big profits back home.

Fallouts or side effects on our own domestic industry, by way of learnings from the competition and improving in generic areas like product quality, handling of materials, sourcing at minimum cost, treating the customer with the respect he/she deserves would also be amazing and do a lot of good. When domestic supply improves, international players would themselves source 30 per cent — or even more — from here.

A market opportunity of $650 billion deserves a broad-minded approach by the government. In the long run it will pay us big dividends.

Krishan Kalra  Gurugram

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