FDI BUZZ ....

One fine day my granny asked me a question what is FDI ? What is  FDI in retail ? Suddenly I looked back .I can figure out minutely the curiosity she has to know about FDI  ...Yes of course she has the right to know about FDI which is flooded over each and every news channel ,newspaper and radio every fraction of second... With the age of seventy her regular news reading habit compelled her to ask  me such a responsible question which I do appreciate. This is not only  a question from my granny’s side but also  a question from millions of Indian who does not have sound basics of Indian Economy. My article is a small step to literate them regarding the country’s present hot cake FDI and FDI in retail.

What  Is FDI ?

Foreign direct investment (FDI) is direct investment into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

Benefits Of FDI :

·         Getting Tax exemption

·         Enjoy Preferential Tariff

·         Increase revenue

·         Increase profit

·         Cheaper labour cost

·         Gain the expert  technology and knowledge

·         Increase International business accessibility

·         Expansion of business channel

·         Enhance the  Job Opportunities

·         Modernisation of supply chain, advertisement ,technology ,inventory management

·         Introduction of more and more SEZ(Special Economic Zone) and EPZ(Export Processing Zones) in country

·         Increase subsidies

Types Of FDI :

·         Inward FDI

·         Outward FDI

·         Horizontal FDI 

·         Platform FDI

·         Vertical FDI

Various possible Investment sector Of FDI :

·         FDI - inbound and outbound retail

·         FDI in Retail

·         FDI in Single brand

·         FDI in Multi brand

·         FDI in Civil aviation

·         FDI in Airlines

·         FDI in Real Estate

·         FDI  in Insurance

·         FDI in Power Trading

·         FDI in Broadcasting

Bold Economic Announcement:

Union Government has made some notable announcement on FDI to quicken economic progress of India.

·         Investment in Multi brand retail 51%

·         Investment in Single brand retail 100%

·         Investment in Communication and Broadcasting 74%

·         Investment in Power trading & Exchange 49%

·         Investment in Civil aviation 49%

Now there is a question in the mind of millions of “aam aadmi” or general public “Is FDI in retail good for India ? “Will it solve all the crux of various problems? Will it provide rural infrastructure, better price to farmers ,better employment  opportunities n piles of unsolved problem which India has today??? Investment in FDI is a suicidal decision for 1.21billions Indian.

After the announcement there is a mixed response among the elite , middle class educated Indian ...What about lower middle class, farmers  ,artisans and people below poverty line ?

What is the impact of FDI in retail on them ? Will they suffer or enjoy the cake of FDI in retail? Why cost cutting began at lower level? Why policy makers want to squeeze the last drop of blood out of the aam aadmi? Will FDI in retail add benchmark to economic progress of agrarian country like India where more than 70 % of  people depends on agriculture ..Will FDI  in retail be a boon for India? Lets have a discussion...

A weeks ago we found all the below mentioned points in a whole single page of every newspaper published by Ministry of Commerce and Industry Government of India with the tagline of “Another Revolutionary leap of Indian Economy”.....Lets have a look  some favourable points regarding FDI in retail which the policy maker has ... :

·         FDI in retail boon for agriculture  ( Prime Minister Manmohan Singh

·         It will give better price to farmers.

·         It will create more than one crore job for India.

·         It will relief to consumers.

·         Atleast 50% of total FDI will be in villages.

·         Chananges of opening more and more number of MSME

·         Modernisation Of agriculture

·         Modernisation Inventory management,supplychain,marketing,storage,advertisement

·         FDI backend retailer will source 30% of all their product  from small scale sector

·         Transform rural India through improved agro processing and cold chain.

·         Farm produce will reach store directly thereby reducing wastage

·         High Yield Variety of seeds and better technology for farmer

·         Squeeze out the middle man in the retail chain.

Conditions for FDI in Retail in India :

·         Minimum investment of $100 million.

·         50% of the investment is to be in backend infrastructure development.

·         30% of all raw material has be procured from India's small and medium industries.

·         Permission to set up big retail chain only in cities with a minimum population of 10 lakh.

·         Products should be sold under the same brand internationally.

·         Foreign investor should be the owner of the brand

·         Government has the first right to procure material from the farmers.

·         Smaller states have the right to take the decisions

Cities and Union Territories In India agreed to allow FDI (population more than 10 lakhs)

·         Delhi

·         Maharashtra

·         Assam

·         Andhra Pradesh

·         Rajasthan

·         Uttarkhand

·         Haryana

·         Manipur

·         Jammu & Kashmir

·         Daman & n Diu

·         Dadra Nagar Haveli

Factual  Presentaion of Indian Foreign direct investment :

·         Starting from a baseline of less than $1 billion in 1990, a recent UNCTAD survey projected India as the second most important FDI destination (after China) for transnational corporations during 2010–2012. As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, US and UK were among the leading sources of FDI. According to Ernst and Young, foreign direct investment in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 13% to $50.8 billion.^[9] India has seen an eightfold increase in its FDI in March 2012.

·         India disallowed OCB's i.e. Overseas Corporate Bodies to invest in India .
On 14 September 2012, Government of India allowed FDI; in aviation upto 49%, in Broadcast sector upto 74%, in multi-brand retail upto 51% and in single-brand retail upto 100%.

List of big giant retailers  knocking the door of Indian retail :

 Wal-Mart

Tesco

Carrefour

What worries me for aam aadmi ?

Mostly India has self organised and small format retail trade . Indian retail is the major growth driver for the country. Modern retail contribute just 5% in  total retail sector .Wholesale and retail trade employed 44 millions of Indian.We the poor Indian does not have sufficient money to visit the hyper market n buy loads loads of  branded product for weekly and monthly basis....We the poor household has to suffer for every single economic burden of the country whether it may be hike in fuel charges, limit the number of subsidised of LPG cylinder.We still struggling to get basic amenities. Studies in ultra modern public school for our child is still dream for us...America is a good friend and useful partner for us. Companies like Wal-Mart and countries like America is knocking the door to enter into our market to leverage their profitability. What about the next door Kirana shop ? what about the beauty of our Reliance Fresh and Big Bazar ? Will it be washed away from social landscape ? Wal mart is not totally successful in USA. what it will contribute for Indian economy ?Wal-Mart having a turnover of $420bn employing 2.1 bn labour force what it will contribute for Indian retail having turnover of $400bn and 40 mn of workforce.

Future of Indian Retail and future of aam Aadmi :

·         Our shopping mall will be flooded with Indian goods.

·         Increase in monopoly practice

·         Foreign retail will control Indian retail Industry.

·         Modernisation of agriculture will help to loose the real charm of tradinitional agriculture

·         Technically non skilled farmer loose their job due to lack of expertise

·         Millions of Indian loose their livelihoods.

·         Foreign retailer will exploit more and more to Indian consumers through well advanced and costly retail chain and branded product.

·         Indian co-operative societies and Kirana stores will perish

·         Local brand and home brand product will be washed away from market

·         Foreign economy will interfere in our internal trade practices

·         Our foreign exchange will diminish and our BOP (Balance Of Payment) will more more stringent...

                                       

                I explained everything to granny...I took a deep breath ...Then I saw the seriousness on her face...She said I think its not good sign for India again we are going to sell our country to foreigner. Whether its British or American Whether its East India Company or Wal-mart...Everything was same for her...She compelled me to think that again we are going to loose our independence through the modern day BUZZ FDI and FDI in retail.....

Vande Mataram.....