Indian Economy: News and Discussion (Jan 1 2010)

[rahulm]

Ex. Oz PM speaks his mind India will top China: Howard

[wrdos]

Ex. Oz PM speaks his mind India will top China: Howard

haha, the old song about China vs India once more.
Repeated hundreds of times by hundreds of western writers.

Compared with China,
- India is a democracy.
- India is younger.
- India can speak English better
- India has an English law system
and/or
- India has a larger share of consumption, and despising low end manufacture

Therefore, India will surpass China one day, blah blah

However, I don't know whether there was an author bothered to make a comparison between Taiwan and the Philippines in the year of 1960

Compared with Taiwan, very obviously
- Philippines is a democracy.
- Philippines is younger.
- Philippines can speak English better
- Philippines has an American law system
and/or
- Philippines has a larger share of consumption, and despising low end manufacture

Therefore, Philippines will surpass Taiwan one day, blah blah.

No, I made a mistake. In 1960, Philippines was much richer than Taiwan.

[niran]

<snipy snipped>

you have a weird sense of history, Phillipines was under Dictatorship(just like China) in the timeframe you mentioned,
Tiwan changed to Democracy mucho earlier than Phillipines, hence they are better off.

[krisna]

China vs. India: An Investment Dilemma?

When we think about the two emerging giants of the East, historically most have gravitated towards China. About a year ago I invested a sizeable sum of my investment capital in India. Many people have since asked me why, as if I’ve committed a cardinal sin by breaking from conventional wisdom or thinking, but for me that was the primary factor prompting my decision in the first place

For many people, the crisp and modern infrastructure of China, along with the countries overwhelming ability to adopt new policy and practices at break neck speed, and with seemingly little effort, have been enough for them to park their money there. It is important to point out that this is merely window dressing and hides growing internal problems which we will explore later. Furthermore, China has always pumped a lot more money into its infrastructure, 11% of its GDP as opposed to 6% for India. Last but not least, it’s important to remember that China has roughly a ten year head start on India. It began its awe inspiring growth back in the early 80’s, India began in the 90’s.

It’s very true that China’s infrastructure and cities are far more advanced than India’s, as China’s economy has seen 9% GDP growth for the past 30 years, but India has never been far behind in terms of economic growth, averaging around 6-7%, and is pumping huge sums into developing its infrastructure. For me though, the Chinese economic model has reached its pinnacle and cracks are beginning to appear.

China has a very poor democratic track record, decision making is always done by central government and passed down to its tightly regulated state owned banks and businesses, which then obediently comply. The state is huge in China, which is a reminder of its Communist past. The advantage of this has always meant that China has been able to implement policy changes and huge investment initiatiatives with extreme efficiency, but huge sums of money are wasted amongst the bureaucracy and red tape.

Damn you again the democracy issue--

India by contrast has always been deregulated with decision making taken locally and democratically. This has meant that decisions often take a long time to be made, but all of India’s financial and Commercial Institutions are managed independent of central government. India’s largest companies today started out as small independent start ups. It’s no doubt a country that fosters, values, and indeed practices entrepreneurialism with great vigor. The advantage with this is that Indian companies utilize capital with far greater efficiency, with little to no waste. In stark contrast to it’s behemoth neighbor to the north

Damn you x 2

Essentially, India’s economic model has a great deal more in common with that of the West, particularly the United States. Think about it, it was a bunch of small businesses run by energetic and innovative entrepreneurs that propelled America along a trajectory which lead it to superpower status in a relatively short period of time. No reason it can’t happen again.

Hope for the future--

Although the figures in this table favor China, I strongly believe China is in for a rude awakening, and soon. I want to draw particular attention to the recent Global financial crisis of 2008. That crisis began in the U.S. and quickly emanated outward like a blast wave, to infect the rest of the world. As a result, India has surprisingly emerged from it and indeed dealt with it much better than China. Since the crisis Chinese stocks have performed poorly.

About 35% of China’s GDP stems from exports. With the West still in trouble, China has lost much of its growth over the past 2 years. India on the other hand has for the first time seen it’s GDP overtake China’s, growing 9.2% in 2010. India exports account for only 24% of its GDP and internal consumption accounts for a massive 57%. In China, internal consumption accounts for 35%. In other words, India will continue to grow whether Western consumers tighten their spending or not.

No wonder wen jiabo was heard saying if changes to remnibi occur it will increase social unrest indirectly hinting loss of CCP power. Also CCP trying to increase internal consumption to offset the export driven growth.

Furthermore, China has pumped huge sums of money into its economy, with it’s stimulus package constituting 6% of GDP, and India only 3%.

It should be noted also that China is facing an impending financial crisis of it’s own. During the past year or so, while the rest of the world has been tenderly licking it’s wounds from the great recession, Chinese banks have been loaning vast sums of money to Chinese consumers in an attempt to compensate for sluggish export sales. The Chinese government recently announced that 20% of all loans made will likely be non-performing. A more realistic number of 30% of loans turning sour could well bankrupt the entire banking system. Even conservative estimates have put bad loans at a staggering 8% of GDP, more than double what the savings and loan crisis amounted to in the United States. Food for thought indeed.

Authors crystal ball gazing into the future--

My money will be in India for the long term. I also believe, further to the observations above, China will cease to become an attractive destination for Western corporations looking for cheap labor, which has been the magnet for so long. I believe that China will be unable to keep its currency from appreciating for much longer and will see more internal pressure from unions for higher wages and better working conditions, as seen earlier this year. China is about to sail through some very choppy water.

Can this really occur??

[Suraj]

That table lists Indian absolute $ GDP against Chinese PPP GDP.

[Hitesh]

And that absolute GDP figure was accurate two years ago but the absolute GDP is now above $2 trillion dollars.

[Prem]

Even though it cathces the different dynamics of these 2 different economies, its Very poorly researched article. The guy might be doing favour to China .

[abhishek_sharma]

Thomas Friedman on India

Do Believe the Hype

http://www.nytimes.com/2010/11/03/opini ... edman.html

[A_Gupta]

The 2010 UNDP Human Development Report has been released.
Statistical tables (PDF)
http://hdr.undp.org/en/media/HDR_2010_EN_Tables.pdf

[abhishek_sharma]

Blue-chip cos may have evaded Rs 27,000cr in taxes

http://timesofindia.indiatimes.com/busi ... 874601.cms

[A_Gupta]

Don't get caught up in the Western India vs. China stuff. To the West it is an ideological belief that capitalism and democracy/free-market go together, and therefore, whatever the evidence might be, India must overtake China.

To me, the real challenge for India is not to overtake China as a goal. It is to improve the life of its people (in terms of the Human Development Indices, I want (unrealistically) for India to advance the equivalent of 50 places in the next 15 years). If that means also overtaking China, that's fine. If it doesn't mean overtaking China, that's fine, too. It is possible to have a huge economy that doesn't cater well to human welfare - a thousand billionaires, and hundreds of millions in poverty, there is no point in that.

The other thought is that while India and China may compete in some markets, the overall effect of two rapidly expanding economies trading with each other should be to boost the growth of both.

Lastly, the relevant metrics IMO are:
1. Is India doing better (in all relevant indices) than last year?
2. Is India doing better at removing the constraints to growth?

[Rahul Mehta]

Lastly, the relevant metrics IMO are:
1. Is India doing better (in all relevant indices) than last year?
2. Is India doing better at removing the constraints to growth?

Answer-1 : NO. Indian Military Industrial Complex is limping poorly. The 3 importantest ratios are

Ratio1 = (Strength of Indian Military) / (Strength of USUK Military)
Ratio2 = (Strength of Indian Military) / (Strength of Chinese Military)
Ratio3 = (Strength of Chinese Military) / (Strength of USUK Military)

Military = Soldiers + Weapon Manufacturing Capabilities

Both Ratio1 and Ratio2 are worsening day by day. As a result we may collapse. The exact trajectory of collapse is matter of forecasting and speculation, and depends on how Ratio3 moves in future.

Possibility-1 : Ratio1 and Ratio3 both decrease, i.e. if Chinese Military and Indian Military go weak and USUK Military becomes strong, then USUK may "liberate" India after it has digested Iran.

Possibility-2 : If Ratio1 , Ratio2 decrease and Ratio-3 remains same, i.e. Chinese Military goes stronger, then one possibility is that we may have to become a TOTAL slave of USUK to save ourselves from Chinese Military, and then USUK will chew us just as they chewed Pakistan.

So there are 27 possibilities, and detailed discussion on them is OST. But suffices to say that as of strength of Indian Military Complex is weakening and it is a bad bad bad omen.

I am still hopeful of the possibility that sanity will come to growth rate gloaters, they will realize that Military is important and they will also realize that well drafted Executive Notifications are necessary for improving Military, and so they will focus on drafts of Executive Notifications, and thus Military will improve. If that doesnt happen, India may become Iraq.

==

Answer-2 : NO. The key obstacle in real growth was corruption. And corruption has been increasing day by day. And as corruption increases, faith citizens and lower cadre of officers, constables, soldiers have in higher officials is decreasing. The rampant distrust will reduce ability to face crisis when crisis comes.

.

[rohiths]

USA spends 15 times of India's defence budget and China spends 5 times India's defence budget. Obviously they will have more advanced technology and more equipment than us.
India should only focus in the near term on defending the homeland from all threats. We cannot get into the arms race with the biggies.

[ss_roy]

An interesting and very relevant article.
--------------------
Guest Post: Corruption as a Barrier to Entry
http://www.nakedcapitalism.com/2010/11/ ... entry.html

Conventional wisdom says that corruption hurts the economy because it taxes investment and weakens public services. This column presents evidence from interviews with CEOs in Brazil. It argues that corruption acts as a barrier to entry, with potential entrants put off by the uncertainty over what bribes to pay and when to pay them.

Corruption is often viewed as having a negative effect on economic performance. Mauro (1995) considers it as a tax on investment while Goulder, Parry and Burtraw (1997) suggest bribes may reduce public service provision because they substitute for taxation. While some argue that corruption can “grease the wheels of growth” by addressing inefficiencies created by government intervention (Méon and Sekkat 2005), the econometric evidence supporting a negative effect is overwhelming (see Bardham, 1997, and Pande, 2008, for authoritative surveys).

It is worth comparing the weight incumbent firms attach to corruption as a barrier to entry with the weight they attach to it as a barrier to firm growth. About 70% of respondents report that corruption is a major obstacle to firm entry while only about 30% report that corruption is a major obstacle to firm growth. This suggests a stark distinction between how incumbent firms view the role of corruption with respect to growth and entry. Corruption seems crucial as a mechanism to deter entry of new competitors but of less significance with respect to the operation and growth of incumbent firms.

[Bharath.Subramanyam]

x-posting...

Two interesting articles from M.R.Venkatesh:

http://www.vijayvaani.com/FrmPublicDisp ... px?id=1479

http://www.vijayvaani.com/FrmPublicDisp ... px?id=1480

the Indian Ambassador to the US, Ms Meera Shankar and Mr. Vinay Kwatra (an officer in our embassy) reportedly made a (secret?) visit to the Wal-Mart Headquarters, Bentonville, Arkansas on 23 July 2010. One is not certain whether service rules permit such visits, especially when the company in question is at the centre of a policy conundrum back home in India.

It seems entry of US retail companies into India is already decided. May be MEA officials are already becoming 'fixers' for Indian political side.

[shyam]

India must protect its retail sector. Powerful retailors have the power to squeeze both vendors/suppliers and customers over a period of time.

[Neshant]

India must protect its retail sector. Powerful retailors have the power to squeeze both vendors/suppliers and customers over a period of time.

I agree.

The only way is to have a number of smaller retailors (as opposed to Walmart type monopolies) each competing against each other giving the supplier some pricing power and choice while still keeping prices relatively low.

[abhishek_sharma]

http://thepage.time.com/2010/11/06/in-i ... ore-185538

James McNerney, Boeing chairman of the board, is in Mumbai to participate in the US-India Business Council sessions today. This morning he had a brief conversation with the pool, in which he said the company's negotiations to sell C-17 transport planes to the Indian government were not done yet (though the White House advised of a deal closure a couple of hours later).

Speaking before the announcement, McNerney said the president's advocacy on behalf of his and other US companies was helpful in moving along commercial contracts.

"Having the president here, it helps," McNerney said. "Ever since the civil nuclear deal which really brought closer ties between India and the United States in a lot of areas, I think the follow-on impact of that has been closer military ties. For the president to state as a priority, by his presence that closer cooperation, sharing technology across the two countries, can only help. And in this case, it has."

He also talked briefly about outsourcing by American companies, suggesting that it may have gone too far.
"Big companies like Boeing have gone through a period of making their business models very horizontal … a lot of global cooperation, a lot of outsourcing … I think we’re all wrestling with that model. It’s become overextended in some cases … My guess is you'll see more investment ... You’ll still see a lot of global cooeratpion … but somewhat less outsourcing. That's just my take."

[Abhijeet]

India must protect its retail sector. Powerful retailors have the power to squeeze both vendors/suppliers and customers over a period of time.

Can you provide any examples from across the world where powerful retailers have squeezed customers? A reasonable level of competition is all that's needed to prevent this. Not hundreds of thousands of small, uneducated shopkeepers who would be better off -- and happier -- working as a salesperson in a retail chain.

Small retailers in India are some of the poorest at inventory management and customer service that I've seen anywhere ("No refund no exchange", "goods once sold will not be taken back" etc).

What evidence exists that large organized retailers will NOT use their investments in technology and economies of scale to improve the lives of Indian consumers?

[SaiK]

http://www.hindu.com/2010/11/07/stories ... 641100.htm
oh no! telcordia! sheesh. God bless India.

[Rishirishi]

India must protect its retail sector. Powerful retailors have the power to squeeze both vendors/suppliers and customers over a period of time.

large vendors are more efficient and remove many steps in the supply chain. This reduces costs and prices for consumers.

The large retailers are popular, because the provide a better service and offer better quality control.

[Pranay]

http://www.economist.com/node/17414206? ... erelephant

For decades America has gorged itself on a seemingly limitless supply of brilliant Indian PhD students and entrepreneurs. Half of Silicon Valley’s start-ups were either founded or co-founded by Indians. But these paragons are now returning en masse to the mother country (just as America makes life more difficult for immigrants). Why work for a sluggardly American firm when Infosys is growing at double digits? Why live in a flimsy bungalow in the Valley when an Indian company will provide you with a villa in a gated community, membership of a country club and a chauffeur-driven car?

There is an upside to these downsides. Frugal products will be a godsend for America’s pinched consumers. They may even prevent the American economy from being crushed by the health-care Godzilla. But Americans need to get back on the treadmill. In a recent speech Mr Obama told schoolchildren in Philadelphia that: “When students around the world in Bangalore or Beijing are working harder than ever, and doing better than ever, your success in school is not just going to determine your success, it is going to determine America’s success in the 21st century."

[vera_k]

Default swaps tumbling as Subbarao tackles housing bubble

When it comes to the housing bubble, ICICI Bank has a big bullseye painted on it.

[shyam]

Can you provide any examples from across the world where powerful retailers have squeezed customers?

What would you conclude when you see that Macy's, JC Penny etc. continuously give 60% sale for the whole year and are still profitable? During normal years they had been ripping off the consumers.

It has been observed that small scale Indian grocery stores in Bay Area sell items cheaper than big chains like Safeway and Lucky. These days we see more Americans and Chinese shopping at Indian grocery stores.

large vendors are more efficient and remove many steps in the supply chain. This reduces costs and prices for consumers.

Who has the upper hand? A big vendor who says "you need keep my product at your store at this price" or the big retailer who says "You need to give your product at a price x% less than what you charge others if you want to keep your item in my store".

[svinayak]

It has been observed that small scale Indian grocery stores in Bay Area sell items cheaper than big chains like Safeway and Lucky. These days we see more Americans and Chinese shopping at Indian grocery stores.

We see more Americans and Chinese in Bharat Bazaar nowadays and loading up the cart to full.

[darshan]

^^ To add more, I highly doubt that local shopkeepers want to work at retail chains. I do not know about other but I do not see that happening with Gujaratis. If I told that to even some street food vendor in decent city in Gujarat, he would laugh at me.

Added later:
My immediate family is no longer in India, but from my recent trip to India I distinctly remember local shopkeeper taking stuff back because my family shopped there for long time. And matter of fact it was some franchised shop market where I felt humiliated as it was treating everybody that entered into that shop as a potential thief.

[abhischekcc]

India must protect its retail sector. Powerful retailors have the power to squeeze both vendors/suppliers and customers over a period of time.

Can you provide any examples from across the world where powerful retailers have squeezed customers? A reasonable level of competition is all that's needed to prevent this. Not hundreds of thousands of small, uneducated shopkeepers who would be better off -- and happier -- working as a salesperson in a retail chain.

Small retailers in India are some of the poorest at inventory management and customer service that I've seen anywhere ("No refund no exchange", "goods once sold will not be taken back" etc).

What evidence exists that large organized retailers will NOT use their investments in technology and economies of scale to improve the lives of Indian consumers?

Walmart does thuis all the time. It has higher prices in those areas where it has decimated the competition than in those areas where there are other viable retailers still active.

[Abhijeet]

shyam, certain retailers may give large discounts to encourage sales in down times, it doesn't mean that their profit margins are that high -- otherwise other companies could undercut them in a market as competitive as American retail. Are you saying that all large retailers are in some sort of cartel?

Macy's also has a brand premium which it can give away in lean times.

Indian stores in the Bay Area sell things cheaper than Safeway because they dispense with niceties like keeping vegetables in temperature controlled environments, keeping the store air-conditioned etc. Ultimately, customers who don't mind wilted vegetables and uncomfortable temperatures shop there, as they should. Basic market segmentation. So why does the Indian retail industry need protecting? They can compete using the same strategies.

darshan, in certain communities like Gujaratis where running a store has been the family business for generations -- and there is a certain amount of success in doing that -- there will be reluctance to abandon it. However, most shopkeepers are not in that category. They do subsistence retailing with low margins and high income variability, working in a 50 sq ft shop in uncomfortable outdoor environments. My guess is that most of them would happily abandon that to work in a job with decent working conditions and a predictable income.

abhischekcc, that's news to me. My impression was that Walmart was successful at decimating small businesses precisely because it ruthlessly drives down prices below levels that small retailers can attain. Do you have a reference?

Ultimately, small retailers have very little control over most parts of the supply chain that affects their final prices. Their control extends only to their wholesaler. They also simply lack the capital to invest in technology that could help them run their stores more efficiently. And they also lack the cashflow breathing room to allow product returns or good customer service.

Large retailers can aggressively optimize all parts of their supply chain and lower costs through technology. Your neighborhood kirana store simply cannot.

All countries that have risen up the economic ladder have seen a transition from unorganized to organized retail. Large retail does not mean "no competition" -- it only means competition between large, well-capitalized companies rather than small shopkeepers.

Ultimately, the small shop will not disappear because Indian cities are simply too crowded for large format stores to come up everywhere. But more and more of weekend shopping will be done at such stores rather than small shops, and it's a change to welcome, not resist.

[svinayak]

Large retailers can aggressively optimize all parts of their supply chain and lower costs through technology. Your neighborhood kirana store simply cannot.

All countries that have risen up the economic ladder have seen a transition from unorganized to organized retail. Large retail does not mean "no competition" -- it only means competition between large, well-capitalized companies rather than small shopkeepers.

Ultimately, the small shop will not disappear because Indian cities are simply too crowded for large format stores to come up everywhere. But more and more of weekend shopping will be done at such stores rather than small shops, and it's a change to welcome, not resist.

Organic farming and local farming disappeared in US due to large retailers and their sourcing which crowds out the small producers. It is about the sustaining long term livlihood.

[Theo_Fidel]

Organic farming and local farming disappeared in US due to large retailers and their sourcing which crowds out the small producers. It is about the sustaining long term livlihood.

This is not correct at all.

The US and UK have something called winter. You may have heard of it. Without very very expensive green houses most local producers can not provide fresh produce for 8 months of the year. This is why 2/3's of the fresh produce in the US is grown in California with much of the rest in Florida.

India does not suffer from this problem, similar to France and Italy.

[shyam]

Are you saying that all large retailers are in some sort of cartel?

I don't have data back it up. I'll be surprised if they are not. If they could get US president to lobby inside India, it only indicates the power they have.

So why does the Indian retail industry need protecting? They can compete using the same strategies.

The global retail giants have deep pockets to take losses for years till all Indian domestic competitions are killed. We don't have comparable sized player to compete with them. Secondly with tremendous power they enjoy as key player who takes products from producer to consumer, they are likely to have huge grip on Indian economy. They can eventually milk the government for their benefits, just like Walmart does (underpaid Walmart staff is a big drag on the government). People will indirectly pay for the costs they gain from the retailer.

Large retailers can aggressively optimize all parts of their supply chain and lower costs through technology. Your neighborhood kirana store simply cannot.

By doing this they will definitely increase profits for the investors. Consumers will also benefit in the beginning. However, they will eventually go broke just like American consumers are going broke. They won't be able to consume more without taking more debt because the jobs that gave employment opportunities for vast majority of population would have disappeared.

[Gus]

The American retail business is a produce of its environment huge spaces, lots of cheap credit and capital, high manpower costs, need to transport and store more tonnage due to both climate and affluent nature (transporting huge quantities of water all across the country, when it is locally available) and also policy environment in currency and NAFTA etc.

Undoubtedly, there are many good things the Indian retail industry can learn from American and for that matter, any other country. We should apply those principles and evolve our own solutions instead of trying to force fit something else.

What is the scene in high density countries like Japan, SoKo etc?

[Prem]

Organic farming and local farming disappeared in US due to large retailers and their sourcing which crowds out the small producers. It is about the sustaining long term livlihood.

This is not correct at all.
The US and UK have something called winter. You may have heard of it. Without very very expensive green houses most local producers can not provide fresh produce for 8 months of the year. This is why 2/3's of the fresh produce in the US is grown in California with much of the rest in Florida.

One unkown fact is Desi logs are big in produce market in CA. Not onlee in production but also in wholesale distribution.

[Sudip]

State Bank of India Wants a Second Indonesian Bank

India’s top lender, State Bank of India, is looking to acquire a bank in Indonesia, and has set aside more than $100 million for the purchase, the Financial Express reported on Monday, citing a senior company executive.

“We have short-listed the names of two or three banks and will zero in on one of them soon.

The bank has a budget of over $100 million for buying a bank in Indonesia,” said Pratip Chaudhuri, deputy managing director at SBI.

Officials at the bank were not immediately available to comment on the story.

SBI’s acquisition plan would be its second purchase of an Indonesian bank after it bought a stake in Bank Indomonex four years ago. It converted the bank into Bank SBI Indonesia.

SBI Indonesia has several branches in Jakarta, Bandung, Surabaya and Medan, according to its Web site.

Indonesia’s accelerating economy, which grew 5.8 percent in the third quarter of this year from a year earlier, is forecast to expand by 6 percent this year and 6.2 percent next year, according to data from the government.

The growth is thanks to a boom in consumer spending and a higher lending growth target, which is forecast to increase by 22 percent this year, Bank Indonesia, the country’s central bank, has said.

There are 121 commercial banks currently operating in Indonesia. Bankers and analysts want the number reduced to make supervision more efficient.

Indonesia’s central bank has encouraged banks in Southeast Asia’s largest economy to merge in order to improve efficiency after it spent more than Rp 450 trillion ($50.4 billion) to bail out lenders during the 1998 Asian financial crisis.

Joni Swastanto, the director of banking supervision at Bank Indonesia, was not available for comment on this story.

Malaysia combined its 54 banks into 10 and Thailand cut the number of financial service companies to 12 from 16 several years ago.

[Neshant]

Can you provide any examples from across the world where powerful retailers have squeezed customers?

Shell and Total in Africa. Looting the people & their resources blind in collaboration with the IMF keeping the continent in a debt trap.

Now I'm sure in their home countries, Shell & Total would never do that. But obviously once they go overseas, the gloves come off and they are doing everything from bribery & corruption to assasinations for all we know. Australia even flew in a bunch of mercenaries to take control of New Guinea's resources and kill the natives obstructing the mining of their land.

IMO India should strive to create 7-11 type small grocery franchieses all over the country. It will allow these small shop keepers to migrate from their mom & pop style business to something more organized rather than cut them out alltogether. Since there are many more 7-11 type operations than there are mega Walmart types, it will provide stiff competition and keep prices low. Let the free market determine whether the mom & pop shop is irrelavant in today's context instead of some fancy pants CEO talking financing & high rolling out the azz. Those kinds have already led the US economy off a cliff.

[Rahul M]

IMHO large MNC retailers should primarily be used to improve storage and bulk handling of farm produce where there is a huge scope for improvement.
at the direct consumer level there should be a limit on holdings by large retailers (in terms of floor space and probably also number of holdings) at least in the near term. for one the retail model employs far lesser number of people than kiranas do and it is not even likely that the same group of people would be employed. a sudden lifting of the barriers have the possibility of putting thousands of people jobless overnight which would very destabilising. any opening up of retail sector must happen at a slow and steady space so as to give the small players a chance to consolidate and scale up if they want.

[Ambar]

Rahulji, in late 90s/early 2000 when Germany's retail/wholesale giant,Metro,opened its store in Bangalore there were riots across the state. Farmers,small retailers and wholesalers took to the street (agreed with a backing from opposition parties) in protest against Metro's operations.This forced the government to 'fix' prices so that METRO would not undercut the producers/suppliers. Unfortunately, this to me sounds like vote bank protection at the cost of regular joe who looks for quality products at affordable prices.

If the economy had not opened in 1991, HM and PAL would still be peddling 1950s era automobiles calling them 'State of the art'. Similarly, i would prefer to feed my kids with quality food instead of adulterated ,overpriced,products with pebbles and sand to add 'bulk'. In my opinion, large international retailers should be welcomed as long as they buy products from local producers.The reason why we should not compare Walmart or Tesco' operations in US/UK to their operation in India is because of product pricing.Walmart finds it cheaper to order shoes/electrical goods from China than to source it within US because of the huge price gap.They have no reason to pursue such a model in India where both quality and price are highly competitive compared to China's.

Neshant, atleast in Soutern India we have 7-11 kind of retailer by name 'Food World',albeit atleast 3 times the size of a regular 7-11.I have not seen an adverse affect on small retailers because of this,if anything,the small retailers no longer fleece customers by charging above the marked MRP.While we are at it,why no hue and cry over Reliance supermarket ?

[vic]

People who lament failuer of Pvt Sector to innovate in license raj arena have ZERO understanding of the restrictions. During hey day of license raj, the Babu controlled the input, output, type and capacity of machinery, the nation of import and sometimes even the companies with which you can enter into JV plus income tax was around 105% (yes no typo)

[Theo_Fidel]

People who lament failuer of Pvt Sector to innovate in license raj arena have ZERO understanding of the restrictions. During hey day of license raj, the Babu controlled the input, output, type and capacity of machinery, the nation of import and sometimes even the companies with which you can enter into JV plus income tax was around 105% (yes no typo)

Hmm! I'll bite.

So what exactly is preventing them from beating the world right now. They are still around right.

How come SAIL is not the lowest cost or highest quality producer in India. How about ONGC, etc.

[Nihat]

In my opinion, large international retailers should be welcomed as long as they buy products from local producers.The reason why we should not compare Walmart or Tesco' operations in US/UK to their operation in India is because of product pricing.Walmart finds it cheaper to order shoes/electrical goods from China than to source it within US because of the huge price gap.They have no reason to pursue such a model in India where both quality and price are highly competitive compared to China's.

Absolutly, taking an example of farm products. If the likes of Walmart establish their own logistics chain and source directly from Indian farmers then its a win-win situation for everybody. the farmer is freed of the Wholesaler- Retailer nexus and stands to be paid much more by selling to an MNC and Walmart reduces their prices and secures supply for basic products.

Just taking the example of Walmart again. If they source products from their home nation i.e. USA to sell in India , thats their legitimate right to do so but bringing in Chinese stuff in India is just unacceptable. This will is no way lead to clousure of mom n Pop stores but will certainly reduce black marketing, hoarding and may even help keep Inflation in check by rapid expansion of the supply side.