Politics & Religion Society

FOREIGN DIRECT INVESTMENT: A boon or a bane?

fdi-in-indian-retail
Written by Apoorva Rajhans

While the Congress led UPA government had initiated to bring in FDI in retail sector, the BJP led NDA government has clearly put on hold any such step in Indian retail market. FDI’s arrival in India, caused by the New Economic Policy of 1991, was not much celebrated even then. However, the effects brought in by such foreign companies has clearly changed the face of Indian market in absolute terms during the last 23 years.
After Mr. Narendra Modi’s swearing-in, major steps have been taken in the field of Defence and Insurance regarding FDI. BJP had stated in its election manifesto that FDI in retail will not be introduced in its rule. On the other hand, the changing market conditions are forcing the thinkers and economists to have a look again at India’s marketing policies.
With the whole world walking on the path of globalisation, it is going to be a tough task for India to babycare its retail sector. Every coin has two aspects and so has FDI. The challenge that India is facing right now, is to choose the better one.
Opponents of FDI had put forward the points regarding the death of small businesses and the perils associated with the withdrawal of business from the Indian market at the time of recession. However, the supporters debate that Indian economy has got different income levels and only high income or upper middle class income level groups will be foreign investor’s target and only big retail giants like Reliance Fresh, Big Bazaar and 6 Ten will be facing tough competition from foreign companies. And this competition will make them more productive and technology centric and not kill them. The fall in sales of the small retailers can in no way be the issue because the effect will be only on the big companies. So, small business is safe.
Moreover, the physical capital will be introduced by the foreign investors and that cannot be so easily withdrawn from any host market. The supporters also claim that the market will become more consumer friendly as the consumer will have a wide variety to choose from and because of the fact that foreign companies will be purchasing directly from the producer, it may even reduce prices and benefit the farmers and small scale producers as product will be directly purchased and the supply chain will be shortened and the amount paid to them will be higher than what was paid to them by local wholesalers. The government can also look into it’s functioning and safeguard the farmer’s interests easily.The question still lingers as to how long will India be able to close her eyes and turn our faces away from the reality and say no to FDI in retail? FDI has become inevitable for a clearly globalised market like India’s. India needs to frame up its economic policies in a way that such foreign business contribute to our wealth and prosperity and not turn into a bane for us.
Its our policies and not FDI that will frame the market future.

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About the author

Apoorva Rajhans

Studying b.com hons, at shaheed bhagat singh college, I am a simple person but with wide futuristic views... I firmly believe that the youth is powerful enough to drive the change. However serious enough I may sound like, I am a fun loving person too and love to hangout with my friends and to explore the world and its people...

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