India needs massive investments in infrastructure, teaching ethical practices and a cleaner political / administrative system to combat corruption in the food distribution systems first. It does not need Jingoism, Walmarts, Selective Wisdom, Snapdeals, FlipsFlops, Smart Tax Inspectors, Alibabas + Chalish Maniacs! Economic benefits of smart commerce can be felt by few in some cities but its social effects will be a death knell to rural farmers, non-bhakts and small-town retailers which do not have a social safety net to fall back on. Infrastructure is an area where more FDI and higher foreign ownership stakes could be allowed. But it will likely be a long wait for foreign companies wanting to enter with a controlling stake in retail or legal services.
Event in its home turf (New York the Democratic city) Wal-Marts and Tech-Smarts face big challenges both from lawmakers and from unions who accuse the scaling monsters of endangering small businesses, poisoning business practices and mistreating its workers. Back in India, opposition asks government to clarify its stand on the issue by making policy announcements. Why is the government so slavishly looking at foreign investment in sector like retail for answers to problems created by its own mismanagement of the economy such as inflation price rise, corruption loot and unemployment? I would add.. why not handover even political power to these so-called well-organised western organisations if the government is so incapable of setting things right. Lets move back to western-Raj in the form of new eastern branded companies!
Weakest link in retail is the distribution system. But should every inefficiency be solved through FDI given that there are many inefficiencies across sectors - public & private. Inefficiency in our retail system seems to be the main excuse of multinational companies who dreams of making bumper profits and they all seem to be on a fishing expedition. Investors that manages to develop an approach to the complex Indian retail market meeting all requirements would demonstrate great interest and significant investment, but its long-term affects no one predicts with accuracy or responsibility, so FDI Flip-Flopping is strategic for big parties.
On the other hand one can argue that FDI in retail is not allowed because it does not serve the purpose of the corrupt bureaucrats and politicians. The Mandi Samitis or wholesale markets where farmers have to necessarily sell their produce are big money-spinners for the power gamers. Since agricultural income is not taxed people having loads of black money (mostly Govt. officials, politicians and their chelas) buy the receipts issued to farmers at a price. That then becomes a proof of their farm income even though their farm houses are merely resorts for entertaining like minded people. That is why all corrupt people in India are also farmers.
The grain procurement process is almost exclusively with the Food Corporation of India where corruption is fabled to have reached epic proportions right from under weighment to lower quality purchases and so on. The money-trail again flows to the super rich. That the aadhtees (middlemen) also get to make some money or the middle class pays through its nose for every meal are just the by-products of a corrupt and inefficient process about whom no one is really bothered. Since the coming of these retail giants will only benefit a select class of bureaucrats and politicians (whose hands these companies will grease to get in) the lower levels of that same official or political class engenders protests by retail traders and middlemen.
It will be an interesting fight between those with deep pockets and those who can create ruckus at the bottom of the pyramid for their own selfish gains. It is still unclear how will big supermarket chains such as Walmart wont affect small shop owners. Moreover unlike its various other recent confusions and disasters this time the government must put a clear plan with potential results prior to marching with such openness. Otherwise the social effects will be catastrophic with this deadly blend of corruption FDI black money inflation unemployment and more...
The system is good if you have the right person or jugaadu at the helm. We don’t need new institutions, and we have great human resources, but often, looting leaders ensure their financial backers are given high government positions and benefits, rather than well-trained clean bureaucrats. Spin of FDI: When it rains, ChorBhakts enjoy the soothing breeze until the hanging earth closes the sun to radiate hotter climate for commoners & small businesses.