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FDI in retail for Karnataka - I say NO! Can wait.
Written By silkboard - 28 November, 2011
Bangalore Retail governance Complaint Economy liberalisation FDI
Retail, FDI - don't stop reading here please, its not as geeky a topic as it sounds. Lets talk our state for a moment. Refer TimesofIndia Bangalore, page 15, "Karnataka industry mostly supports FDI in retail". Refer this, a quote by Mr J Casta:
J Crasta, co-chairman of Assocham (southern chapter), said middlemen, in the last 50 to 70 years, have taken manufacturers and consumers for a ride.says even when tur dal prices peaked at Rs 250 a kilo, farmers could get only Rs 20 a kilo. Every agriculture produce passes through 7 to 12 middlemen before it reaches the consumer, each one taking a margin, leaving hardly anything in the hands of farmers and consumers paying a huge price.
Rs 20 a kilo in the farmer's hands, to Rs 250 a kilo. No government PR, or newspaper so far has explained to us as to how 100% FDI in Retail will put more in the hands of the farmers. What exactly will the FDI in retail do?
- Raise farmer's income on Tur dal Rs 20/kg to Rs 50/kg ?
- Lower this peak price from Rs 250/kg to Rs 150/kg ?
Now, what are the safeguards to make sure that this doesn't happen
- Raise farmer's income on Tur dal Rs 20/kg to Rs 50/kg, while peak price we pay remains the same (Rs 250/kg). Meaning, that some middlemen may go away, farmer's benefit a bit, but the consumers don't.
- Lower this peak price from Rs 250/kg to Rs 150/kg, but farmer's income stays at Rs 20/kg. Meaning, consumers benefit, but farmer's don't, and half of the middlemen may go away.
- Farmers get Rs 20/kg, we pay Rs 250/kg, middlemen may go away and be replaced with the "Retail industry"!
What safeguards does the bll have to make sure that none of of these three (above) happen? Now, the final argument.
- Let's say the bill has safeguards to make sure the above three do NOT happen.
- Why do we need "foreign" money to give more to the farmers, and yet make consumers pay less? Why is it that Reliance, Titan, Big Bazaar, More, Spencer etc etc can NOT ensure that, but Wal Mart & Tesco can?
If the problem is with middlemen inflating prices, give me a bill to clean that up first. If the gap between farmer's income and consumer outgo is huge, I want a REGULATOR who would publish and keep tab on the "difference" numbers every month.
FDI in retail can WAIT!
Why shouldn't it? I don't understand.I am either too dumb to follow the debate, or the proposal is not designed to guarantee benefits to either the farmers or the consumers like me.
COMMENTS
Public Agenda - 6 December, 2011 - 05:59
These are the days of post Wikileaks.
and the sooner the way we look at information changes the better for all of us
Wikileaks this time last year mentioned how the FM of India ws chosen and the lobbies backing him? the statement was in a communique from the Secretary of state, US. It seems like the lobbies were clear now. And if there were not any then there certainly are now. They have already stood up to be counted
2 press statements from the White House during last week on FDI in retail in India.
silkboard - 28 November, 2011 - 04:48
See this for the argument (http://www.thehindubusinessline.com/industry-and-economy/article2659843.ece?homepage=true&ref=wl_home)
Opening up the retail sector to foreign direct investment is a welcome move that represents significant benefits to farmers, according to Mr Manikam Ramaswami, Chairman, Agriculture Forum, CII Southern Region. Mr Ramaswami said entry of large multinationals into food retailing will help address major concerns for the farmers — marketing, right pricing and market information. Multinationals have the capacity to provide adequate support, pricing and supply chain management, he said.
First tell me why is it that right pricing and right information can NOT be guaranteed by domestic players, or by government itself. Why not fix those hurdles first? And when our information technology companies build supply chain tech for most of the developed world, why does anyone think that we can't do it ourselves? Why?
Only argument that can be made would be about "money", that all this supply chain and tech information tech needs money. Clear the hurdles that Domestic retail players face today in connecting farmers with consumers, and then see if they can raise more money on their own.
If information tech is the problem, let there be 200% FDI in supply chain info tech area. I think the Wal Marts and Tescos can wait.
Suhas, in most states you can't
silkboard - 6 December, 2011 - 06:38
Search for APMC Act. In most states, you can't.
Most states don't want you to buy directly from Farmers mainly because they fear that you may not pay them the minimum procurement price.
Ravi_D - 28 November, 2011 - 05:36
+1 SB.
While I do love the convinience of shopping at a well planned, diversely stocked store carrying genuine products (think IKEA), I'm not sure we are informed right. It is mostly FDI for the sake of FDI.
Typical twisted argument, right? We support it - as farmers get more out of it! OTOH, multi-Brand retail is what the name suggest - multi-brand. Includes agri products, but that is not necessarily the only (or even the largest) component of retail business. Visit any big box global retailer, and you'll see first hand. Typical wallmart store in the US probaly has about a 5th of its shelf space filled with fresh produce and food articles.
kbsyed61 - 6 December, 2011 - 22:25
Source - Indian Express "FDI in practice"
Kolkata: In Mamata’s backyard, gaining ground
About a 10-minute drive from the Trinamool Congress headquarters stands Kolkata and West Bengal’s only Metro Cash and Carry — a Germany-based B2B (business to business) group. Set up under the Left Front regime and continuing under the current Trinamool government, this outlet is a success story with an increasing clientele and consumer base.
It caters to a large section, from wholesalers and petty traders to societies, neighbourhoods and distant households who find it convenient to shop in groups from here. They come to buy everything from rice to TV sets, from flour to fresh meat.
Lucknow: A world under one roof
Having come up just a month and a half ago, Best Price Modern Wholesale located on the outskirts of Lucknow already has got itself a loyal customer base. A cash-and-carry facility, it is a 50:50 joint venture between Bharti Enterprises and Walmart and is one of 14 such stores across seven states of
the country.
Spread over four acres, the B2B store caters to small retailers, offices and institutions as well as restaurants, hotels and other catering ventures and clubs. Except for
staff and registered customers, no one is allowed inside.
Bangalore: 8 years and going strong
...Initially, wholesalers reported lower sales and accused the giant of undercutting prices. Others argued that contrary to stipulation that it was a B2B arrangement, the products sold at Metro could be bought for household consumption by any businessman with a sales tax receipt.
....Eight years later, such voices seem to have ebbed. Arun K, a retailer from Marathahalli, Bangalore, who has been shopping at the Yeshwantpur outlet for three years now, says Metro has hiked his profit margins by 15-20 per cent. Arun sells groceries, hosiery and stationery out of a small shop in a residential colony. “As in any wholesale shop, you have to buy items in bulk at Metro. As long as they have this rule and insist on checking membership cards, we retailers are safe,” he says.
Delhi: Deals, deals, deals
At Carrefour SA wholesale store in Seelampur in Delhi’s underbelly, shopping carts roll out of the sliding glass doors constantly, pushed by men men and women taking away everything from coke cans and Haldiram snacks, to papayas and coffee mugs. Posters all around the store offer deals, including payment via EMI, as well as a 3 per cent cashback for shopping at the outlet six times a month and spending a minimum Rs 1,000 on each trip.
Intently looking at a chart comparing the MRPs with what Carrefour was offering, a couple said: “We just came to see if we can buy from here. But they are saying we can’t as they need a licence and other documents, proof that we own some business.”
While their experience with Carrefour has been good, the Gulatis are not too sure about FDI in retail. “If they allow FDI in retail, the kirana stores, the small shops will go away... A whole culture of neighbourhood bazaars will die,” say the couple.
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