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Fdi in retail (negative impacts)

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Kirtan Pandya
Kirtan Pandya

The document outlines several reasons for opposing foreign direct investment (FDI) in India's retail sector: 1. It would further skew the real estate market in favor of large developments, making housing less affordable. 2. Manufacturing jobs, which account for 30% of India's economy, would be negatively impacted as foreign companies outsource production. 3. Domestic unorganized retailers would struggle to compete and many could go out of business, leading to unemployment, as seen in Southeast Asian countries. 4. Allowing FDI in retail would not create as many jobs as claimed and could hurt entrepreneurship and disrupt existing supply chains and trade relationships.

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Prepared by: Kirtan Pandya
Why No To FDI? Real estate will win: Big Retail loves Big Development and vice versa. The upshot is that the already skewed real estate market will only get more out of control and housing for middle classes and the ordinary folks that much farther. Job losses (Especially in mfg.): Manufacturing sector accounts for 30% of India. So if the big foreign giants start out sourcing the goods from their own countries, then manufacturing sector of India will be affected adversely.
Why No To FDI? More middlemen: The modern intermidediators like Quality controller, Certification agencies, Packaging adviser etc are the important organ of Retail Industry and participants in farmers incomes. Unorganised retailers: The examples of south East Asian countries show that after allowing FDI, the domestic retailers failed to achieve profitable margins and this led to unemployment.
Why No To FDI? False claims of unemployment: The most favoring point in multibrand retailing that it will produce employment for 1 crore people by 2020. There is no ultimate evidence behind disclaim. In America, there is no competent of Wal-Mart in retail and as that its annual turnover is approximately 20 lac crore although only 21 lac people are employed. The irony is that Indias total retail industry worth 20 lac crore and is employed with 4.40 crore it clear from this perspective that Indias retail sector is much promising employment provider.
Why No To FDI? Entrepreneurial talent: As these big retail giants are very particular and predefined about their operations, they would require very less amount of creativity form the franchisees side which can hurt countrys entrepreneurial skill. Law breakers: Wal-Mart has a record of violating laws protecting workers rights and aggressive anti- union conduct in the United States and elsewhere.
Why No To FDI? Exports & imports: It can upset the import balance, as large international retailers may prefer to source majority of their products globally rather than investing in local products. Initially, they often sell below cost in the new markets. Once the domestic players are wiped out of the market foreign players enjoy a monopoly position which allows them to increase prices and earn profits.
Why No To FDI? Disintermediation: Global retailers in recent years have increased the percentage of goods sourced directly, rather than through suppliers or wholesalers. This process is often referred to as disintermediation. It has happened in SA n 2011 and in Japan in 2008. Loose control: Not only these multinational Retailers pay less than prevailing market price, the example is that Tesco is paying lesser price to farmers in UK.
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Fdi in retail (negative impacts)

  • 2. Why No To FDI? Real estate will win: Big Retail loves Big Development and vice versa. The upshot is that the already skewed real estate market will only get more out of control and housing for middle classes and the ordinary folks that much farther. Job losses (Especially in mfg.): Manufacturing sector accounts for 30% of India. So if the big foreign giants start out sourcing the goods from their own countries, then manufacturing sector of India will be affected adversely.
  • 3. Why No To FDI? More middlemen: The modern intermidediators like Quality controller, Certification agencies, Packaging adviser etc are the important organ of Retail Industry and participants in farmers incomes. Unorganised retailers: The examples of south East Asian countries show that after allowing FDI, the domestic retailers failed to achieve profitable margins and this led to unemployment.
  • 4. Why No To FDI? False claims of unemployment: The most favoring point in multibrand retailing that it will produce employment for 1 crore people by 2020. There is no ultimate evidence behind disclaim. In America, there is no competent of Wal-Mart in retail and as that its annual turnover is approximately 20 lac crore although only 21 lac people are employed. The irony is that Indias total retail industry worth 20 lac crore and is employed with 4.40 crore it clear from this perspective that Indias retail sector is much promising employment provider.
  • 5. Why No To FDI? Entrepreneurial talent: As these big retail giants are very particular and predefined about their operations, they would require very less amount of creativity form the franchisees side which can hurt countrys entrepreneurial skill. Law breakers: Wal-Mart has a record of violating laws protecting workers rights and aggressive anti- union conduct in the United States and elsewhere.
  • 6. Why No To FDI? Exports & imports: It can upset the import balance, as large international retailers may prefer to source majority of their products globally rather than investing in local products. Initially, they often sell below cost in the new markets. Once the domestic players are wiped out of the market foreign players enjoy a monopoly position which allows them to increase prices and earn profits.
  • 7. Why No To FDI? Disintermediation: Global retailers in recent years have increased the percentage of goods sourced directly, rather than through suppliers or wholesalers. This process is often referred to as disintermediation. It has happened in SA n 2011 and in Japan in 2008. Loose control: Not only these multinational Retailers pay less than prevailing market price, the example is that Tesco is paying lesser price to farmers in UK.