Government acceptance on FDI in Retail Industry.

Well as known over the recent years, FDI has been the most sought news widely researched, read, published in the media or public forums. Now recently with the Indian Government's decision to give its nod in favour of bringing FDI to the retail fortress has evoked a mixed bag of response from a wide variety of people across the country as well as across the globe. There has been a lot of section from the global community who have voted for the FDI in retail Industry and as usual there has also been a lot of objections, opposition,  severe criticism as well as widespread protest in fear of FDI as an entrant in retail Industry in India. However as usual government's nod to help foreign companies getting their foothold in India has not surprised anyone as its a usual fact of succumbing to the mounting pressures which is usually associated with our government. In fact as an avid reader and writer on various topics, even I do welcome this decision from our government as it'll not only help us to revive the economic crisis, build new job opportunities thereby eradicating cause of unemployment, manage the depreciating revenue reserves and many such global issues at a stretch. However the most surprise element about government decision is regarding the direct nod for 30 % FDI participation in retail industry, in fact being the epitome of the news facts from the dailies published across the globe that this is the highest percentage of FDI contribution sanctioned by any government till now in retail. This in the rake of moolah that there's very less cap/margin allotted for the FDI participation in other industries which also means in one way neglecting their valuable contributions to Indian Infra and growth. As per the recent trends, India's lifeline-Agriculture has just got 10-15 % stake of FDI and even the India's rise as a full fledged developing economic superpower with the Infra and IT boom has also received a paltry stake of just 20-25 % hike thus staging as most surprised element amongst the decision. So is this just the correct or a usual invasive decision? Notwithstanding with the governmental decision, time only would tell the way whether the decision would be a fruitful one or would it be act as big headache for them?.

This has now paved way for foreign retail players like Walmart Inc, Sweepstakes Inc as well as other foreign retail marketers to ply their business in India. Why is there a lot of opposition, widespread criticism coupled with protest in wake of this move if all is well as staged by our government?. Any guesses? Bingo! We all have got the thick of the issue. However just before starting a new pinnacle study on the strength, weakness this can cause, let us have a serious look on the route adopted by FDI in Indian Inc. Their are two modes/routes of receiving FDI by any firm in India. They are:

A) Automatic Route:
FDI is allowed under the automatic route without prior approval either of the Government or the Reserve Bank of India in all activities/sectors as specified in the consolidated FDI Policy, issued by the Government of India from time to time.

B) Government/Indigenous/Indirect Route:
Totally opposite the way automatic route works. FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.

Let us now just have a go-how or a peep into the advantage/disadvantage caused by such huge cap/limit of 30% set by Indian Government in Retail Industry. Needless to point that retail industry is measured by the FMCG (Fast moving consumer goods) industry which is the main foray for sweeping major chunk of profit in any trade and which in turn strengthens economic condition as almost 100% population across globe use different consumable products for daily use. So let us now start our proceedings on how FDI limit of 30% set by Indian government can set positive vibe in the retail industry.

Advantages:

• Involvement of more foreign retailers, manufacturers, retail companies allows quality products made available at competitive price, with discounts, flexible and attractive options never-ever heard before.
• Relaxation of trade norms, bilateral talks on various trade summits between top companies etc brings not only dearth, flexibility etc in maintaining liquid, foreign exchange reserves, but it also helps to phase out issues pertaining to employability, curbs falling revenue and stabilise it. It also helps in establishing trade ties within two countries, maintain liquid reserves through strong foreign exchange market etc.
• Helps in transfer of new technologies, management skills, intellectual property rights, growth of infrastructure and information sector within retail industry for creating flexible, dynamic environment globally.
• Increases competition within the local market and this brings higher efficiencies, increase in overall productivity, brings quality stuff at convenient, flexible price range.
• Increased product range offers consumers to be the king and hence increases the decision making power to choose from wide variety of products or types at par with their convenience viz increases purchasing power and attitude association with particular brand.

Disadvantages:

• Fear of losing out the market competency,leadership to a newer or even just established brand due to increased,stiffer competition and thus being lastly eliminated completely from the business.
• Development of Monopolistic giants across the world and domination of one entity over the other cannot just be ruled out. This in turn leads to unhealthy retail tactics, out-pour of  just a particular kind of product of a particular nation, least to say quality products being not readily available, tough competition even whilst entering a particular market etc.
• Such foreign companies invest more in machinery and intellectual property than in wages of the local people, misconception of people being termed as substitutes to cheap labour as though about Asian and African nations including ours amongst west and European community.
• In the initial stages although the government has got powers, however in later stages they lose the control over the functioning of such companies as they usually work as wholly owned subsidiary of an overseas company thus mushrooming the start of monopolistic culture, hoarding of costly as well as edible and other precious commodities thus at times destabilising economy and in turn laying begin of era marred by global issues like recession, inflation, deflation and hoards of other related terms.
• Opening of floodgates, easy dumping ground for all kinds of products not so popular amongst local crowd, thus turning global market as a complete product battleground. Thus a huge plus for consumers, but it also influences the general buying ideology of the consumers making way for even sometimes unethical strategy,policies to win in the race of survival of fittest.

So just like any debatable/controversial topic, providing such huge margin of (30%) of FDI participation in retail sector has already begun an allegation, objection war from political mainframe to global trade association mainframe to even consumer mainframe and also leading to widespread protest as counts of traders,middlemen, brokers and other marketing channels gets completely wiped out and also in certain cases leading to shutting up of small shops for our basic needs. Though FDI participation is also a necessary, fundamental stuff for a developing economy like India and even other nations to not only sustain, but to show our strength globally. 

The only way government can survive in FDI race is to have stringent, yet win-win ideological business or other mainframes putting all parties to trade at a much better position.  Otherwise it would phase out entire nation stake/pride associated with any product. So the epicentre just not lies in debating of what is FDI, advantage,disadvantage, but to utilise it as a powerful medium backed with good managing tactics for attaining indomitable market supermacy and provide win-win situation in wake of cross-border trade between countries.

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