FDI in Retail

[Lalmohan]

no sir, the truth is worse - rather than evil, they are incompetent

[habal]

they were never given the mandate to commercialize such an operation. They always feign incompetence, if they were so incompetent then we would have atleast one pic of Arihant by now in public . . no ? So where they desire they can also be very efficient.

[Supratik]

Heard a discussion on FDI in retail.

Two things came out

1) The small retailer association guy was asked "Why do you object to Walmart when you
compete with Reliance and Spencers, etc.?". His reply was that the domestic organized retail
does not have the capital and logistics to drive them out of business but Walmart has both.

2) The other argument against FDI was that do we really need Walmart type efficiencies
that has worked in more sparsely populated countries in the West in a highly populated
country like India where poverty and unemployment are serious issues. The guy felt that
we do not need such efficiencies at this stage of our development. He felt that FDI should
be allowed in infra, etc where locals are not hurt. About 40 million people are engaged in this
sector overall with about 200 million dependents.

I still feel that if FDI should be attempted it should be restricted to Metros to see how it
pans out as there are more other opportunities for those who go out of business in big cities than in smaller towns. However, it seems FDI in retail is not happening soon.

[harbans]

As i said before in the post last page, no one says how a 100 Billion USD infusion into so many different channels really goes into job losses. That's the equivalent of creating from Fresh infusion of capital 25 Million jobs straight up each paying 20 k/ month..within the next few years.

So why is that bad for the country?

[SBajwa]

"A person burnt by milk tries to cool down the lassi"
many Indians burnt by Britishers sees all the foreign investment or engagement as "BAD".

[harbans]

"A person burnt by milk tries to cool down the lassi"
many Indians burnt by Britishers sees all the foreign investment or engagement as "BAD".

Yes that is true. But if that is true then a few points come up.

1. The Colonial inferiority still persists and that translates to Leftist economic policy.
2. That FDI will translate to Political and Strategic domination. So isolating our nation is good.

Both are vehemently denied by those that oppose retail.

OTOH the truth is Britain and much of the West developed on Indian capital and raw resources while maintaining strategic and political Independence. So development does not come from isolating ourselves from capital infusion, but exactly the opposite. We weaken ourselves even more in the process. Without development our human indexes will always remain shallow, our investment in education, health, defense will dwindle.

That's why it should be considered treasonous to deprive the nation of capital infusion. IF the clauses for capital infusion include capitulation of Sovereign, political and strategic independence then it is a cause for concern. But that is not happening. So we have to leave the fear of that past. We understand well how that happened. That happened not because of infusion of funds, but because our feudal Nawabs sacrificed their political and strategic independence to the British. That should not and cannot be given as a rational example of why FDI in retail is being opposed.

[Lalmohan]

superstores will only work in the metros period - and that too for customers who are able to drive to them and bring back large amounts of shopping in their cars
that narrows the market down massively - and is still larger than a major european country. so the major stores are not all that interested in opening up in small towns - because the economics just will not work for them.

as for logistics and cold storage - network economics tends to favour neutral network operators or 2-3 captive ones. storage and trucks are available to be bought and leased by supermarkets. i am sure that the stats we saw for germany - of 10-12 supermarket brands are being supported by 3-4 networks of cold stores and 5-6 trucking fleets plus dedicated storage and transport for the largest ones

incidentally, imagine the number of fridges and freezers that will be bought by indian consumers over the coming decades... it will be a scary number

[shyam]

Wal-Mart reveals probe of possible overseas bribes

In a Securities and Exchange Commission filing Thursday, Wal-Mart (WMT, Fortune 500) disclosed a probe into whether its workers violated the U.S. Foreign Corrupt Practices Act that prohibits giving bribes to international officials. The retailer said the possible bribes pertained to such matters as obtaining permits and licenses, as well as to inspections.

Did INC receive a cut of that?

[chetak]

But The Forbidden Apple Doesn’t Taste Like An Apple!

Next to the motor car, nothing has so transformed the British environment over the past 40 years than the rise of the supermarket. The retail sector in the UK is controlled by four chains, with Tesco the dominant player. Between them, they sell 76 per cent of our food. When other, smaller supermarket chains are introduced to the equation, the proportion rises to 97 per cent.

Independent retailers of food have nearly gone extinct. Butchers, fishmongers, greengrocers and independent bakeries have seen a 90 per cent decline in their numbers since the 1950s. There are fewer than 4,000 greengrocers left in the whole of Britain. The small town where I live on the fringes of London now has no independent butcher. When I moved there in the 1970s, it had six. The big chains have moved beyond foodstuff, beverages and household goods into clothing, medicines, petrol, banking, newspapers, magazines and insurance. In doing so, they have become threats to small shops and service outlets of all kinds. In many areas, the only surviving small shops are run by people of Asian origin who, as well as having strong family support structures that allow them to compete with the supermarkets’ long hours and low costs, can supply the specialised needs of minority communities. The New Economics Foundation think-tank has described the decline of the independent retailer as “something equivalent to a mass extinction in nature”.

The author is former editor of the Independent on Sunday and New Statesman, and a columnist with New Statesman and the Guardian).

[chetak]

Wal-Mart reveals probe of possible overseas bribes

In a Securities and Exchange Commission filing Thursday, Wal-Mart (WMT, Fortune 500) disclosed a probe into whether its workers violated the U.S. Foreign Corrupt Practices Act that prohibits giving bribes to international officials. The retailer said the possible bribes pertained to such matters as obtaining permits and licenses, as well as to inspections.

Did INC receive a cut of that?

All the political parties know that the kangress is trying to desperately build a war chest for the forth coming elections.

They have squeezed out what ever they could from the artist by providing comfortable accomodations for his greedy daugter at the tihar jail and using the CBI to browbeat the marans.

The objections by so many political parties to FDI is not just ideology but plain survival techniques to prevent the filling of the war chest.

[Singha]

http://online.wsj.com/article/SB1000142 ... dealsindia

Indian Retailers to Pitch for Non-Food Multi-Brand Retail

By RUMMAN AHMED

BANGALORE -- Indian retailers plan to make a fresh pitch to the federal government to ease foreign investment rules in the multi-brand retail business by initially opening up only non-food segments such as electronic appliances and home furniture.

The Indian government Wednesday shelved its plan to permit 51% foreign direct investment in multi-brand retail in the face of stiff opposition from political parties, which claimed that the entry of foreign retailers would hurt farmers and put small traders and neighborhood stores out of business.

Kishore Biyani, founder and group chief executive of India's largest retailer Future Group, said a relaxation of foreign investment rules in segments such as electronics, apparel and home furnishings won't be politically contentious as they weren't food-related, and thus not perceived to be harmful to farmers.

Mr. Biyani had predicted $8 billion-$10 billion of foreign investment over the next six to eight years due to the easing of retail foreign investment rules.

Opening up the non-food retail business could still ensure that at least 25%-30% of the funds estimated initially could come in, said Bijou Kurien, who heads the lifestyle division of Reliance Retail Ltd.

The threat perception is likely to be less as big organized retail chains are already present in segments such as consumer durables, he added.

Spencer's Retail Ltd. President Vineet Kapila said this could be a good "starting point." Spencer's Retail is part of the diversified RPG Group.

The retailers are probably taking heart from the fact that India is going ahead with allowing single-brand retailers to own 100% of their Indian businesses, up from 51% previously. The move, which will allow companies like Swedish furniture giant IKEA an entry into India, hasn't met with the kind of political hostility that multi-brand retail has encountered.

Since food represents just half of India's consumption basket, the other half could be opened up to foreign investment, Shoppers Stop Ltd. Vice Chairman B.S. Nagesh said. Such a "step-by-step" opening up of the multi-brand retail sector will be "very good," he added.

Future Group's Pantaloon Retail (India) Ltd., which needs funds to pare its debt of more than 40 billion rupees ($775 million) and keep its stores expansion going, is likely to be the hardest hit by the government's volte-face.

Mr. Biyani said the company is continuing to look at raising funds via the sale of its non-core businesses like financial services.

[chetak]

The world of lobbyists

The world of lobbyists
Devinder Sharma

The top 10 MNC retail companies eyeing the Indian market have reportedly sunk in several hundred crores of rupees.

The storm over the entry of big retail seems to have blown over for the time being. As the dust settles down, and parliament returns to its normal chores, the battleground shifts to the media. Suddenly newspapers are flooded with articles and interviews that decry the political ‘blackmail’ putting the controversial decision on hold. Screaming headlines and full page reports somehow gives an impression as if holding back the approval for FDI in retail is the ‘greatest blunder’ since Independence. India Inc. expresses its ‘displeasure’ calling it a set back for economic growth.

Well, hold your breath. The orchestrated media campaign, which may only be visible to a discerning eye, is actually the handiwork of what is called the corporate lobbyists. Sharp, aggressive and of course always carrying bags of money, they move in the corridors of power. They hobnob with ministers, politicians, economists, and media personalities, ‘educating’ them for instance on how and why India needs to invite big retail to tide over its unemployment and agrarian crisis. They plan diplomatic evenings, organise industry conclaves and summits, plan seminars and conferences, and also demarcate media strategies.

In the United States, corporate lobbying is legalised. In India, it operates undercover and under different names. But both perform the same job – influencing public policy and crucial economic decisions – and in turn undermine democracy. Crucial decisions in agribusiness, fertiliser, seed, farm machinery, animal husbandry, dairy, energy, science and technology, and retail – areas that affect country’s food security – are also influenced by corporate lobbying. Crores of rupees have been spent over the past few years by some of the big multinational corporations to seek an entry into India. What may appear to be economic decisions taken by the government often turn out to be the result of intense lobbying by foreign companies.

It is much worse in America. According to Transparency International, an average of Rs 1,234-crore are spent by US corporations for lobbying activities every month. In case you missed it, I said every month. Such heavy investment brings them rich returns.

Researching the US database for lobbying, and scanning the lobbying disclosure statements that the companies have made before the US Senate, I find almost each of the top 100 fortune companies investing heavily in lobbying, and this includes even IT giants like Intel, Yahoo, Google, Facebook, Microsoft and IBM. Agribusiness, pharmaceuticals, energy, aviation companies are on the top. Indian companies too are employing lobbyists for entering into America.

Cost-benefit analysis

To the question how does lobbying benefit the companies? The answer is provided by a research study conduced by University of Kansas. It pertains to tax concessions wrested by corporations. The report works out the cost-benefit analysis of lobbying expenditure, and interestingly concludes that 93 major corporations, including Hewlett-Packard, IBM, Pfizer among others, had spent Rs 1,456 crore on lobbying, which eventually won them tax breaks to the tune of a whopping Rs 3.2 lakh crore. At such a high rate of return, companies realise the importance of lobbyists.

No wonder, currently around 15,000 Brussels-based lobbyists (consultants, lawyers, associations, corporations, NGOs etc.) seek to influence the European Union’s legislative process. Wikipedia reports that some 2,600 special interest groups have permanent offices in Brussels. In America, lobbyists mainly target the US Senate, US House of Representative and the State legislatures. In 2011, there were 12,220 lobbyists registered.

This clearly tells us how corporate lobbying is writing the economic policies of the American and European governments. The economic decisions are in reality not based on what the people require, but how much the business houses can invest in influencing policy decisions.

Compared to this, Rs 52 crore that Wal-Mart acknowledged to have spent in India between 2007 and 2009 appear peanuts. But collectively the top 10 multinational retail companies eyeing the Indian market have reportedly sunk in several hundred crores in the past few years. According to media reports, the coffee shop giant Starbucks, had also been lobbying in India seeking 100 per cent FDI in single brand retail. As per a disclosure statement it made before the American Senate, the company had spent more than Rs 1 crore in the first 6 months of 2011 for ‘market opening initiatives in India.’

Not only Wal-Mart and Starbucks, a number of foreign companies are lobbying hard to find a foot-hold in the Indian market. These include financial services major Morgan Stanley, New York Life Insurance and Prudential Financial. The financial services companies have already gained with the approval granted to 100 per cent FDI in single-brand retail. In addition, technology companies Intel, chemical giant Dow Chemical, pharmaceutical major Pfizer, telecom companies AT&T, Alcatel-Lucent are also engaged in intense lobbying.

There are a number of other furniture brands like Ikea and garment retailers like GAP which would benefit from the decision to open up for single-brand retail.

In other words, crores of rupees are being spent by foreign companies to influence public policy and the decision making process. Not many of us realise that the debate we see on the television or the articles we see in support of the foreign companies are often supported with lobbying money. In fact, lobbying is also influencing academic research, which is a very sophisticated way of influencing public policies.

[harbans]

Swaminomics: A good insight by Swamy, makes complete sense.

In the US, small booksellers were decimated in the last two decades of the 20th century by large book chains like Borders and Barnes and Noble. But these chains in turn are now threatened by Amazon, the giant internet book-seller. Amazon offers the lowest prices, and also offers second-hand books at steep discounts. Borders has gone bust and Barnes and Noble is desperately seeking a saviour.

Online Shopping is real threat to Small Shopkeepers

[harbans]

Gurcharan Das making some of the same points made here:

Indians today are victims of the primitive “mandi system” which escalates food prices by 1:2:3:4, resulting in the world’s highest gap between the price a housewife pays and what the farmer receives. What a farmer sells for 1 is sold at the mandi for 2, which becomes 3 at the kirana store and 4 to the consumer. When you pay Rs 20 per kilo for tomatoes, the farmer gets only Rs 5. As tomatoes travel from the farm to the mandi to the bania, each middleman gets his cut. The price spread varies by commodity and season, but studies show that the gap is less in countries with modern retail. This is because large foreign retailers usually buy directly from farmers without middlemen. Thus, they can pay Rs 8-10 to farmers for the same tomatoes and sell them for Rs 15-17 to consumers, and still make a profit. Some middlemen will lose out but P Chengal Reddy, secretary-general of Consortium of Indian Farmers Associations says, "India has 60 crore farmers, 120 crore consumers and half a crore traders. Obviously, government should support farmers and consumers. FDI in retail will bring down inflation.”

It will also save food from rotting. Global retailers have perfected a cold distribution system. By investing in thousands of cold storages and air-conditioned trucks, they will reduce farm wastage, and bring a revolution in transport, warehousing, and logistics, as they have done in major countries like Argentina, Brazil, Chile, China, Indonesia, Malaysia, Russia, and Thailand, which have allowed 100% FDI in multi-brand retail since the 1990s.

The kirana lobby created an atmosphere of fear. The same fears were expressed during the 1991 reforms. If the government had given in then, India would not have lifted 200 million people out of poverty; not raised 300 million into the middle class and not made India the second fastest growing major economy.

http://blogs.timesofindia.indiatimes.co ... eople-lost

[Kakkaji]

FDI in retail: Relief for Walmarts, cap on group sales may go

NEW DELHI: The industry ministry is looking to allow foreign retailers a bigger play in their wholesale ventures after the government backtracked from opening the $450 billion supermarket sector.

The department of industrial policy and promotion (DIPP), a government department that frames policy on foreign direct investment (FDI), has proposed that only wholly owned subsidiaries be treated as group companies in the FDI policy.

This will allow the foreign retailers to sell more to organised multi-brand retailers with whom they have a tie-up.

At present, foreign retailers cannot have more than 25% of their sales coming from group companies, the definition of which is not clear in the policy.

The DIPP has proposed to treat only those entities as group companies in which the company has more than 51% stake, the official said. However, the definition will be finalised only after inter-ministerial consultations.

With FDI in retail on the backburner, the industry ministry is keen to incentivise wholesale cash-and-carry to attract investments in backend infrastructure and cold chains.

The government allows 100% FDI in wholesale cash-and-carry. After years of consultations it agreed to allow 51% FDI in multi-brand retail but backed down after facing stiff opposition from political parties, including allies, and traders.

A liberal definition of group company would have implications for wholesale cash-and-carry ventures such as Bharti Wal-Mart, Tata-Tesco and Future group-Carrefour.

Experts say the current framework imposes significant restrictions on conducting wholesale trading business. "This move will provide the much-needed clarity and promote FDI in the sector," said Punit Shah, partner, tax and regulatory services, KPMG.

[Upendra]

FDI in retail: Relief for Walmarts, cap on group sales may go

NEW DELHI: The industry ministry is looking to allow foreign retailers a bigger play in their wholesale ventures after the government backtracked from opening the $450 billion supermarket sector.

The department of industrial policy and promotion (DIPP), a government department that frames policy on foreign direct investment (FDI), has proposed that only wholly owned subsidiaries be treated as group companies in the FDI policy.

Cabal of unelected babus decide to twist rules to favor their paymasters while bypassing the parliament.

This is the same thing they did in real estate sector. SEZ rules tweaked to allow real estate stakes for foreigners

This is the reason these babus are afraid of anna and idea of jan lokpal. Babus who are part of this economic subversion plan should be afraid, that bag of money wont save you against corruption charges, be prepared to spend time in jail like kani raja and balwa.

[Upendra]

Swaminomics: A good insight by Swamy, makes complete sense.

In the US, small booksellers were decimated in the last two decades of the 20th century by large book chains like Borders and Barnes and Noble. But these chains in turn are now threatened by Amazon, the giant internet book-seller. Amazon offers the lowest prices, and also offers second-hand books at steep discounts. Borders has gone bust and Barnes and Noble is desperately seeking a saviour.

Online Shopping is real threat to Small Shopkeepers

kirana stores dont sell books..... swami takes an example from britain and tries to fit it in indian context while subtly passing on accusations against the small retailers... swami should stop churning out paid news reports at such a fast rate.... everyone can see who he is batting for.... go back to singing praises of manmohan to get a padma bhushan

[Upendra]

Gurcharan Das making some of the same points made here:

The price spread varies by commodity and season, but studies show that the gap is less in countries with modern retail.

Time to give full details of such studies and who funded it, because in other studies only the big retailer gains while both producer and consumers are net losers in such a scheme of things.

[VinayB]

Gurcharan Das making some of the same points made here:

Indians today are victims of the primitive “mandi system” which escalates food prices by 1:2:3:4, resulting in the world’s highest gap between the price a housewife pays and what the farmer receives. What a farmer sells for 1 is sold at the mandi for 2, which becomes 3 at the kirana store and 4 to the consumer. When you pay Rs 20 per kilo for tomatoes, the farmer gets only Rs 5. As tomatoes travel from the farm to the mandi to the bania, each middleman gets his cut.

Why is it ok to use a caste name in this discussion? Are Banias the only retailers in india? in bangalore most retail shops are owned by either Malayali christians or Malayali muslims. Is it ok to use those identifiers?

The price spread varies by commodity and season, but studies show that the gap is less in countries with modern retail. This is because large foreign retailers usually buy directly from farmers without middlemen. Thus, they can pay Rs 8-10 to farmers for the same tomatoes and sell them for Rs 15-17 to consumers, and still make a profit. Some middlemen will lose out but P Chengal Reddy, secretary-general of Consortium of Indian Farmers Associations says, "India has 60 crore farmers, 120 crore consumers and half a crore traders. Obviously, government should support farmers and consumers. FDI in retail will bring down inflation.”
It will also save food from rotting. Global retailers have perfected a cold distribution system. By investing in thousands of cold storages and air-conditioned trucks, they will reduce farm wastage, and bring a revolution in transport, warehousing, and logistics, as they have done in major countries like Argentina, Brazil, Chile, China, Indonesia, Malaysia, Russia, and Thailand, which have allowed 100% FDI in multi-brand retail since the 1990s.

Yes, FDI in retail will also make cold fusion work in India, find the Higgs boson, and make your u-know-what grow another 2 inches

Why is it not possible to solve the problem of farmers not getting higher prices without FDI? State governments can implement that. A few years back there was news of ITC setting up direct procurement from farmers in Madhya Pradesh. before that TN DMK government had created farmers markets for farmers to sell both retail/wholesale themselves.

[habal]

kirana stores dont sell books..... swami takes an example from britain and tries to fit it in indian context while subtly passing on accusations against the small retailers... swami should stop churning out paid news reports at such a fast rate.... everyone can see who he is batting for.... go back to singing praises of manmohan to get a padma bhushan

Why are so many people interested in selling India, this is the main question ? This seems to be the only Indian constant that hasn't changed over time. IIRC there is the Indian finance ministry which takes key decisions on monetary policy but all the senior babus who spend time in the finance ministry seem to exist only to get posted via deputation to WB or IMF. This is the one goal in their life. India be damned. Just look who in RBI or finance ministry isn't a lumiary of the WB or IMF. All the top guys are connected to these 2 shady organizations in some way or another or they are angling for some WB or IMF opportunity. Is it a great surprise then that journalists and sundry economists have caught on.

We have a whole sub-culture of elites where it's cool to sell-off their country for personal interest.

[Lalmohan]

leave FDI in retail to one side... what has prevented Tata, Reliance, etc., from creating large scale economic food distribution systems that do away with 1-2-3-4 type of markups between farmer and consumer?

[habal]

Reliance has not been prevented.

[Lalmohan]

why have they not succeeded?

[habal]

Consumers accused them of hoarding and manipulating market prices, vegetable vendors accused them of snatching their business and attacked vandalised their stores. In some areas entire traders associations were against any kind of presence by retail grocery chains.

[Virupaksha]

why have they not succeeded?

As of today, the quality of vegetables at Reliance fresh in hyderabad does not light a candle either in quality or price or variety to the local sabzi mandi.

[chetak]

kirana stores dont sell books..... swami takes an example from britain and tries to fit it in indian context while subtly passing on accusations against the small retailers... swami should stop churning out paid news reports at such a fast rate.... everyone can see who he is batting for.... go back to singing praises of manmohan to get a padma bhushan

Why are so many people interested in selling India, this is the main question ? This seems to be the only Indian constant that hasn't changed over time. IIRC there is the Indian finance ministry which takes key decisions on monetary policy but all the senior babus who spend time in the finance ministry seem to exist only to get posted via deputation to WB or IMF. This is the one goal in their life. India be damned. Just look who in RBI or finance ministry isn't a lumiary of the WB or IMF. All the top guys are connected to these 2 shady organizations in some way or another or they are angling for some WB or IMF opportunity. Is it a great surprise then that journalists and sundry economists have caught on.

We have a whole sub-culture of elites where it's cool to sell-off their country for personal interest.

And why not??

Even a short posting to the world bank fetches one a very very handsome lifelong pension in dollars weighted for inflation.

Some of these "gentlemen" are drawing more than 3 lakhs per month after having sold the country down the river. Whole families in the planning commission are involved. Husband and wife would draw close to 8-10lakhs post retirement.

Some of our prime ministers are also among the pension drawing tribes.

[harbans]

Recap from the Bizarre to the hilarious here we go are the reasons here why FDI in retail is such a bad thing:

1. The Free Mason Agenda
2. The evil NASA Agenda
3. Evil hoarding and trading practices.
4. Elite subculture traits in selling off the country.
5. FDI will not bring cold fusion
6. Won't find the Higgs Boson.
7. Won't make my that thing 2 " longer

and so on..fear mongering being turned all the possible notches without reason or logic.

Now the question is whether Reliance be next in the line? For years all its formats are in pilot mode. It seems to be actually in an auto-pilot mode. In response to a story in Commodity Online (Why all Reliance companies doom?), Rick Boozell, who worked as a Retail Consultant, hired to help establish retail operation from inception, wrote that after he had the insiders look at Reliance, the company organization itself is the failure.

“When the Store Operations vertical is not at the center of a retail company, the venture is doomed. For two years, I tried to convey this, but the other "Powerful" vertical heads -EPC, D&L, HR, FMCG, Marketing, Reliance One, etc,. all dictated to the store operations team,” he further added.

The Store Operations vertical needs to care directly for the customer, listen to their daily needs and requests, and develop the personal relationships required for long-term business. This never existed due to the organizational structure of the company.

He further added. “I have never seen such a dysfunctional company structure, and at least 75% of all resources expended were battling internally, versus trying to take care of the customer. The truth is, retailing is a simple business, and India is aware of this, Reliance wanted to make it a grand business venture, where all the retail leaders sit in nice offices, looking at reports - while rarely even entering a store. Reliance really never did enter into the retailing business - at least not a retailing business that the rest of the world would recognize as a modern retailer.”

http://www.commodityonline.com/news/sub ... 6-3-1.html

Rocketing onion prices are hogging policymakers’ attention as it has kept food inflation stubbornly high at over 15 per cent (for the week ended 8 January). Even big organised retailers such as Future Group’s Food Bazaar, Reliance Fresh and Aditya Birla Retail’s More are not equipped to offer the staple vegetable at much lower price than the neighbourhood vegetable vendors.

Most organised retailers are selling onions only a tad lower — at Rs 45-60 per kg, depending on the quality — than the market prices. The reason: retailers continue to source onions from the wholesale mandis rather than from farmers directly.

The retail chains work in a multi-layered format. Middlemen pick stock from the mandis at farm-gate price and then send it to aggregators, who then sell it to wholesalers and from there it shows up at organised retailers’ stores. Onion prices rose as high as Rs 75-80 per kg in December.

Industry executives argue that it is the shortage of cheap funds that is preventing organised retailers from offering competitive prices. “Modern trade allows retailers the ability to buy directly from farmers and pass on the benefits to the final customer through competitive pricing and promotions,” says Thomas Varghese, CEO of More, a brand of Aditya Birla Retail.

He says permitting more foreign direct investment (FDI) in the retail sector will give companies access to cheaper funds, which will allow them to invest in back-end infrastructure — aggregating the fresh produce, grading, packaging and storing in cold storage — required to source directly from farmers.

Investment in better handling and storage capabilities will help reduce wastage and, hence, shortage of articles such as onions. This bodes well for the industry in the long term considering a multitude of retailers will compete to attract customers, creating a natural hedge against any abrupt escalation in prices.

Analysts say that if companies are able to source fresh produce directly from farmers, they should be able to sell vegetables at just 10 per cent more than the farm-gate prices. Currently, the price increases by 100 per cent by the time it reaches the consumers.

However, experts reckon allowing more foreign investment is not the sole solution. “FDI by itself will not solve the problem. The government should pave the way for farmers to work with organised retailers,” says Pinakiranjan Mishra, national leader of consumer practice at global advisory firm Ernst & Young.

http://www.businessworld.in/businesswor ... Chain.html

With politicians stalling Retail in Jharkand, UP, Orissa it has not been an easy road for retailers who lack traditional expertize in the field to take root.

Root causes for retail in this sector not flourishing are the following:

1. Lack of management expertize.
2. Farmers not being encouraged to be more involved with organized retail.
3. Lack of technological expertize.
4. Lack of access to cheaper funds
5. Lack of political will/ support, entrenched lobbies.
6. Lack of peer competition

All the above lead to middle men still running the 1:2:3:4 ladder and retail being unable to plug in largely from farmers directly.

FDI will help eliminate many of the above problems that Reliance and other Indian retailers have faced.

But then what's common sense when nonsense is so readily available to spout. Let's fear monger nonsense than apply some simple common sense.

[kumarn]

^^^Most of these objections are based on lack of conviction in oneself and one's fellow countrymen.

[member_20292]

"A person burnt by milk tries to cool down the lassi"
many Indians burnt by Britishers sees all the foreign investment or engagement as "BAD".

quoted for being the truth and nothing but the truth.

thats what got nehru going, on socialism.

South Korea's gdp per capita, like india's in 1950, was around 500 $ per person per year.

Imagine.............

[Upendra]

Root causes for retail in this sector not flourishing are the following:

1. Lack of management expertize.
2. Farmers not being encouraged to be more involved with organized retail.
3. Lack of technological expertize.
4. Lack of access to cheaper funds
5. Lack of political will/ support, entrenched lobbies.
6. Lack of peer competition

You fail to understand the gnana that was in the news item you posted

He further added. “I have never seen such a dysfunctional company structure, and at least 75% of all resources expended were battling internally, versus trying to take care of the customer. The truth is, retailing is a simple business, and India is aware of this, Reliance wanted to make it a grand business venture, where all the retail leaders sit in nice offices, looking at reports - while rarely even entering a store. Reliance really never did enter into the retailing business - at least not a retailing business that the rest of the world would recognize as a modern retailer.”

http://www.commodityonline.com/news/sub ... 6-3-1.html

reliance is badly run company, i hope and pray it dies, sooner the better.

But then what's common sense when nonsense is so readily available to spout. Let's fear monger nonsense than apply some simple common sense.

How about acting on your own advice first? common sense says read and understand the article you post. i guess you are so busy selling common sense you forgot to use some of it.

[Upendra]

"A person burnt by milk tries to cool down the lassi"
many Indians burnt by Britishers sees all the foreign investment or engagement as "BAD".

quoted for being the truth and nothing but the truth.

thats what got nehru going, on socialism.

South Korea's gdp per capita, like india's in 1950, was around 500 $ per person per year.

Imagine.............

Korea was invaded and conquered and still under foreign military occupation with half the country divided between warring factions

Imagine............

[Lalmohan]

but south korea's development has interesting lessons for india - particularly about focus on education and infrastructure...
they are however a much more disciplined society than us... that also makes a big difference

[Upendra]

but south korea's development has interesting lessons for india - particularly about focus on education and infrastructure...
they are however a much more disciplined society than us... that also makes a big difference

is making money more important than independence?

once independence is lost that money can be snatched anytime the ruler wants.

[Lalmohan]

making money is important if that money pays for a basic level of civic infrastructure and societal well being -which the s. koreans starting from behind us have now left us way behind in
i wasn't talking about politics anywhere in my post
and within the constraints of living sandwiched between greater powers through most of their history, the s. koreans are living relatively free lives...

[VinayB]

Recap from the Bizarre to the hilarious here we go are the reasons here why FDI in retail is such a bad thing:

5. FDI will not bring cold fusion
6. Won't find the Higgs Boson.
7. Won't make my that thing 2 " longer

and so on..fear mongering being turned all the possible notches without reason or logic.

we dont recognize sarcasm, do we?

So if reliance is a f*cked up company today, FDI will fix that too, in addition to that thing of all reliance employees grow 2 inches?

Most organised retailers are selling onions only a tad lower — at Rs 45-60 per kg, depending on the quality — than the market prices. The reason: retailers continue to source onions from the wholesale mandis rather than from farmers directly.

Why cant this be fixed without FDI?
The government of Madhya Pradesh allowed ITC to procure from farmers directly in 2004, and it turns out now the government of MP is competing with private players in streamlining its procurement process. Link - http://business.in.com/printcontent/782

can we read that and explain how that was possible without FDI? That ofcourse is not a you-pee-yay government.

[harbans]

Why cant this be fixed without FDI?

Your won article clearly points to the points i have made. Peer competition stirs up things a bit. It also acknowledges weaknesses. How competition improved things:

But farmers could only sell at the government mandis till the Madhya Pradesh government changed regulations and allowed ITC to procure farm produce in 2004. This cut out middle men, and gave better service and prices to farmers. Little wonder that big farmers like Bishnoi migrated to ITC.

But now he is back at the government mandi, with 26 quintals of soybean. When Bishnoi drives in with his produce now, there are electronic weighing scales that cut down the time taken to measure grain as it comes in. Newly constructed sheds protect grain-filled trolleys from the weather and pests. The modern technology centre records all transactions and smart cards ensure that payments are smooth.

Irrespective of the source of funding FDI or Pvt sector this is the result:

The biggest change from the competition between the mandi and the Choupals has been the shift of power away from traders to farmers.

And this is exactly what the article says:

An experiment in Madhya Pradesh shows farm procurement mandis can be as efficient as their private competitors

The government is now working to set up infrastructure needed for this, including warehouses and cold storage facilities, says Aggarwal.

Basically Article summary here:

1. Govt allowed Pvt producers to procure directly.
2. Pvt producers like ITC did a good job.
3. Govt then revamped and took back the market from Pvt to Govt (7.5 to 4.5% share)
4. Infrastructure and Cold storage facilities are still not up to the mark.

What the article does not address:

Where does it disprove anywhere that introducing FDI will get worse prices or farmers get a bad deal?

What it does show, that massive funds and investments are needed still. Reminds me of IA trying to fight back offering better services than Pvt airlines, while still retaining massive monopolies in scale.

Every thing in the experiment you posted points to betterment if FDI enters the foray.

1. Better expertize.
2. More funds (Govt funds can be diverted to Infra etc)
3. Cold Storage and warehousing expertize still floundering.

So how does your article prove anything you wanted to prove?

[harbans]

common sense says read and understand the article you post

Yes. Retailing is a 'Simple' business. Depends upon who says it.

Yes also sending a man into space is a Simple business. Depends upon who says it. Russians, Evil NASA or the Iranians or Timbuktans.

Yes a Heart Bypass surgery is a simple business today. Again depends who says it.

Yes flying a Modern Jetliner is a Simple business. Again depends on who says it.


So who are the best in the field to remove inefficiencies that cause the following:

1. Low farmer prices.
2. Higher consumer prices.
3. Middle men eating into profits.
4. Wastage of grain, fruits and vegetables

Yes exactly the people who can make it simple, those who have the capability to do the following:

1. Have deep pockets. Funds.
2. Have expertize on how to go about it.
3. Have Cold storage and warehousing skills and organizational capability.

FDI in that field brings all the above. It helps Indian Pvt players improve, move into partnerships, gain expertize.

All very simple indeed. If people like you can get rid of the Demons inside you.

[harbans]

Lalmohan Ji, Upendra wants to say South Korea is the occupied country and North Korea is the free one really.

Upendra, have you ever been to South Korea? Have you heard of Companies like Samsung and Hyundai? Do you have a clue what sort of life indices people in the South have.

[Upendra]

common sense says read and understand the article you post

Yes. Retailing is a 'Simple' business. Depends upon who says it.

Yes also sending a man into space is a Simple business. Depends upon who says it. Russians, Evil NASA or the Iranians or Timbuktans.

Yes a Heart Bypass surgery is a simple business today. Again depends who says it.

Yes flying a Modern Jetliner is a Simple business. Again depends on who says it.

Bunch of meaningless one-liners to fill empty space and make it look like you are making some major point. Nothing in it, better come with some meaningful retort next time.

1. Have deep pockets. Funds.
2. Have expertize on how to go about it.
3. Have Cold storage and warehousing skills and organizational capability.

FDI in that field brings all the above. It helps Indian Pvt players improve, move into partnerships, gain expertize.

All very simple indeed. If people like you can get rid of the Demons inside you.

So we allow money magicians who create money out of thin air, which has no real asset backing it, to buy valuable assests in name of FDI. How about selling your house and business to me in exchange of paper money printed by me. I promise to renovate your home and diversify your business.

[Upendra]

Lalmohan Ji, Upendra wants to say South Korea is the occupied country and North Korea is the free one really.

really does it sound like that to you?

Korea was invaded and conquered and still under foreign military occupation with half the country divided between warring factions

Upendra, have you ever been to South Korea? Have you heard of Companies like Samsung and Hyundai? Do you have a clue what sort of life indices people in the South have.

Which is important for you? Independence or your indices?

You never reacted to corrupt babus changing FDI rules to help their paymasters. I think you missed them, here read them again and let me know your opinion.

http://www.firstpost.com/blogs/sez-rule ... 46248.html

http://economictimes.indiatimes.com/new ... 075973.cms