Every foreigner residing in India discovers things don’t work the same here as they do back home, especially if “home” is America or Europe. You have to learn a new way of navigating the tasks taken for granted elsewhere: where to buy groceries or any of the things needed to furnish your home, how to get around, how to hire someone to fix things or find the basics needed to do the job yourself, how to set up telephone service and what to do when it doesn't work. For the new expat, it’s all a big hassle but also part of the adventure of living in a new country, East or West.
I asked an Indian friend who lived in the US for twenty years what he missed most about America and he answered, “Home Depot.” I laughed but after thinking about it, I saw his point. “Do it yourself” types like me are not the norm here where homeowners typically call an electrician
I mention all of the above because there is a national debate raging here about whether India should allow foreign, multi-brand retail outlets into the Indian market. This can be summed up with one word—Walmart. For now, foreign companies are not allowed to start multi-brand retail
stores in India but some in government would like to ease that restriction so that foreign companies can have a 51% ownership stake in such enterprises. The proposal has unleashed an uproar of hot debate and political maneuvers. For now, it looks like the proposal will be shelved because of the fierce opposition but my guess is that it's only a matter of time before the issue resurfaces. Will India follow the lead of most other majore Asian economies (China, Indonesia, Malaysia) who have welcomed the “big boys” into the neighborhood or will it go its own way.
A lot is at stake in the issue, whether you support or oppose the government's decision. Those against FDI (Foreign Direct Investment) in Retail represent a powerful constituency of small shop (known as kirana stores) owners and the middlemen who supply them. The retail industry is the second largest contributor, after agriculture, to the national economy with countless small shops a feature of the urban landscape. They fear supermarkets and large retail outlets will drive them out of business and completely change the commercial landscape, destroying their livelihoods and replacing them with an army of drone salesboys marching to the tune of Big Brother Walmart. The infrastructure of middlemen, traders and central markets (mandis) could be at risk and India's cultural identity might wither, or so they claim. Populists have threatened to set fire to the first such stores that dare come into their neighborhoods. Others see the “hidden hand” of neo-colonialism once again subverting the land. “The British came to India as traders two hundred years ago and look what happened. Do we want to do it again?” “Do we want to go the way of the West?”
Economists and mobile consumers are on the other side of the argument. Big retail represents
A couple of significant points are more difficult for the average citizen to understand. Multinationals such as Tesco, Carrefour and Walmart are attractive becauese they bring in huge
My opinion is that large, multi-brand retail stores are inevitable because of their economic efficiencies but there is little doubt, in my mind, that they will also be revolutionary. They will bring change. Is that good or bad? That's where the problem lies; they will upset the status quo. India must decide. The question, to my mind, is not if large retail comes to
India but when. It seems to me just a matter of timing. Indian companies can already engage in large retail if they have the will and resources to do so. Only foreign owned firms are prohibited. I expect local comglomerates will slowly expand their operations to create Indian versions of Walmart, Costco and Home Depot. Already Reliance Industries has opened grocery chains in many big cities but it will just take much, much longer for domestic companies to equal what Walmart could do in a short time. Can India afford to sit on the sidelines. (It should be noted that multi-brand outlets must also receive permission from state governments to operate. Some states prohibit even Indian companies from opening large, multi-brand stores.)
I'm reminded of when I visited India in 1995 and most of the cars where old-style, dumpy Ambassadors that hadn't changed much since the British left India in the late '40's. Foreign automobile firms weren't allowed into the country. When foreign investment was allowed a few years later, everything changed, car ownership exploded, pollution decreased, prices dropped, selection increased and almost everyone junked their Ambassadors except for government officials who can still be seen cruising around town, flags flying on the fenders of the old stand-bys.
I should mention that foreign owned "single-brand retail" is permitted even though multi-brand is not. That is why you will see a Levi's or Gap store in the local mall. All of the products in
One final consideration is a worrying phenomena I've mentioned before (The Price of Onions). Inflationary pressure is pushing food costs higher at a pace faster than in other sectors of the economy. This seriously affects the poor because they must spend a high percentage of their income (50%-75%) on food. While India modernizes right and left in the cites, agriculture lags behind because of inefficiencies, out-dated regulations, lack of infrastructure and entrenched interests. Something needs to change. Whether the answer is foreign investment or some sort of domestic initiative remains to be seen but for India's sake, I hope it addresses the problem conscoiously rather than tempting fate by waiting. Alas, I suspect nothing much will happen.