* FDI will lead to job losses. Small retailers and other small ‘Kirana store owners’ will suffer a large loss. Giant retailers and Supermarkets like Walmart, Carrefour, etc. will displace small retailers. * Supermarkets will establish their monopoly in the Indian market. Because of supermarket’s fine tuning, they will get goods on low price and they will sell it on low price than small retailers, it will decrease the sell of small retailers. * Jobs in the manufacturing sector will be lost because foreign giants will purchase their goods from the international market and not from domestic sources. This has been the experience of most countries which have allowed FDI in retail. Although, our country had made a condition that they must source a minimum of 30% of their goods from Indian micro and small industries, we can’t stop them from purchasing goods from international markets as per WTO law. So after coming to India, they can reduce this 30% by litigating at the WTO.
So far India has not allowed FDI in retail and allows these giants to operate stores which can deal only with registered business. For e.g., Metro, a well known retailing giant of Germany is allowed to sell only to businesses which serve the front end customers like us. The retail industry can be divided into organized and unorganized sector. The organized retailing is which are backed by corporate giants like Reliance, Future etc. Unorganized retailing refers to the traditional shops which are basically no frills business. Organized sector can be compared to premium airlines whereas unorganized sector can be compared to low cost ones. However like in airline industry the unorganized sector contributes 98% of the total trade.
However inspite of being well served by our home grown retailers, the government is toying up with the idea of opening retail for foreign companies. That brings us to the question on what exactly do they bring to the table. The answer is a lot of heartburns and a...
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