FDI in retail trade- Do we need?

Regarding the allowing of big foreign companies to do retail business in our country, it is prudent for our leaders to do a little bit re-thinking in the interest of our nation and its people.

It is no doubt a fact that if the foreign multinationals start doing  retail trade here, the local retail traders of any commodity will be affected and will have to close their shops. Of course the wholesalers have to follow them because there will not be any retailers to buy from them. The big chain stores will directly buy from the manufacturers and so the local small or big traders will have no chance to survive. This does not mean that the prices of the products will be very less as they buy the products directly from the manufacturers. These stores will need sufficient margin to maintain huge establishment charges and also to pay for the dividends to foreign and Indian investors.

One important aspect is regarding unemployment. However huge their employment potential is, they still fall short because of the large number of independent traders who lose their profession. Besides that, because of latest mechanization the companies prefer to get maximum work with minimum workers.

The present age old system has provided scope for hereditary profession or trade.  And even if the organized sector cannot provide employment to all, there are self employment opportunities in the retail trade which help to earn their living depending on their capacity. In the 1960’s and 80’s when the unemployment was very high, even many educated people took up small trades which survived them in the time of their need. Now, where as the unemployment rate in India is 3.8%  the unemployment rate in U.S.A. is 7%. This is because, once the bigger companies take up the retail trade, small retailer cannot survive and will have to take up the job in such big companies. Supposing all the people are provided jobs in the big companies, as at present, in the time of economic crises or when the population increases, the people will be in distress. They will have no jobs and neither can they survive with some independent trade.

This is so not only in U.S. but also in many European countries.

About a few decades back, in order to encourage small scale industries, many bigger companies in India were not allowed to produce and market the products that can be produced by small scale sector.

Take the example of Mahatma Gandhiji who advocated against the importing of cloth from U.K. because it will hamper the progress of Indian weavers and make them unemployed. This has been the policy of any country, including U.S. to ban or put additional tax on imports of certain commodities, importing of which will work against the interest of their citizens.

In India, most of the people prefer to have independent establishments than working in other’s companies. The retail trade can be carried out with whatever little investment the retailer can afford. But once, the bigger retailer takes hold, the small retailer will have no chance to maintain his presence.

Considering the situation existing in our country, allowing foreign direct investment in the retail trade will be suicidal.

At present, it seems, in every field, bigger companies take hold of smaller companies and grow bigger. They will also, thus, avoid competition. We are observing this bigger fish swallowing smaller ones, even in health care. Now, health care is not a service, but business. The big international companies expand buy buying smaller, other-wise doing good work, nursing homes. This is taking place in every field, and all the citizens of the world will be dependent on the jobs provided by only a few surviving companies.