uddu wrote:It's not in India's interest to allow FDI in retail in the Present form. Even with 100 percent sourcing from India, I don't think any Walmart will source from ordinary farmer who makes 10 kg of Banana, das kilo of tomato.
I guess it's too much to ask for data to back up this assertion.
However, I would like to leave you with a thought. India has become the world's largest producer of milk within a decade without having huge and highly automated dairy farms that abound in the US, Europe and Australasia. You know why? That's because many small producers of milk - you know guys who have a couple of milch cows that produce less than 20 litres of milk - band together and provide their supply to cooperatives all over the country.
Why is this relevant here? That's because if you keep this model in mind and then look up how models such as ITC's e-Choupal works or even look at the annectode about Reliance and Arambarg (in West Bengal) potato farmers in my last post you'll understand what I mean. Walmart (gosh Sam Walton is a much remembered man, even though his company's international operations' performance has been under whelming to say the least!) or any other international and national organised retailer is not going to knocking on the doors of every marginal farmer who produces 10 kg of bananas or 10 kg of tomato. What they would probably do - and this is a model used all around the world - is link up a 100 (or more) of such farmers and tell them that they would buy their entire produce for, say three years. That then comes to 1,000 kg of bananas and 1,000 kg of tomatoes.
And you know what is happening now? Out of these hypothetical 100 farmers, maybe 50 are able to sell their entire produce with a marginal profit and maybe another 40 is able to sell a part of their produce while the rest 10 can't sell at all for various reasons like being too far from the mandi or not having the money to go all the way to the mandi etc. And the produce that can't be sold within a few days of being produced is thrown away because there is no cold storage facilities or if there are these small farmers don't have the money to store the produce. [That IMO is the main reason we have a criminal 30 per cent wastage in our agri sector]. OTOH, a three year contract (again see the Reliance example in Ashok Mallik's article, to see that this is standard) would in effect allow them to sell their produce even before its grown and it would become the responsibility of the organised retailer to pick up the produce, store it and ensure smooth delivery to the shop front.
Sorry boss, you can't be convince me that organised retail is NOT the way to go in India, unless you can provide empirical evidence to the contrary. I've said this to other posters here as well. I'm too cynical to take anyone's word for it. Organised retail is a must and FDI in retail is a logical step forward.
It's useful to remember that India's favourite car, Maruti, is made by a 100 per cent owned multinational, which effectively put out of business a 100 per cent Indian owned company Hindustan Motors. Now has that been a bad deal for Indians and the auto industry in general? Do Indian consumers get shortchanged because HM no longer has monopoly to build a tin can of a car whose price is fixed by the government? Are workers in the auto industry worse off, with less pay? Has the total employment in the industry slumped?
Or is it that FDI in auto brought about a transformational change which broke the cornyism and businessmen-political nexus and turned the industry into a worldclass sector and a major export earner.
What makes you and other think the same thing wouldn't happen in our retail sector which contributes 33 per cent to our GDP?
So it's loss loss of the nation and win win for corporates and the one who is investing.
I hope you realise how this point of yours contradicts your previous point. Given that a majority of Indian farmers fall in the 10 kg banana, 10 kg tomato producing category, if the corporates don't buy from them, just who would they buy from? I hope you're not scared that big brand retail is going to import veggies from China while incurring the transportation cost, while the same veggies rot in fields within a 100 km radius of the shops? That would take conspiracy theories to a new level.
it's jut the companies and the politicians who are into agri business. That's all. No one else will gain.
In a way you're partly right about the political angle. The rich (I mean stinking rich) but minuscule trader class which controls agri distribution in India (I call them mandi thekedars) are a smart bunch and politically very well connected. Which is why you see such diverse groups joining together to kill the proposal. Even BJP which proposed FDI in retail in 2004 is now voting against it. The same trader class is behind the opposition to GST. They protect their turf very efficiently.
We'll just be opening up another way to import while killing the Indian economy.
I call this East India Company syndrome.