Wal-Mart or Not

Hi people, it’s been quite some time I wrote a blog. This time I am not writing any travel journal. Here I am discussing the much debated topic “Multi brand FDI” that has been going on in India for quite some time.

Multi brand Retail refers to stores like Big Bazaar, Spencer’s, More etc that sells almost everything from soap to sofa under one roof. They have been in India for some time and we already know how they have changed the way we buy groceries. Another type of store that have become common these days are single brand retail stores like Marks & Spencer’s, Zara, Globus, Pantaloons etc. They sell stuffs under their own brand.

Now the point of discussion is should the foreign Multi brand stores come to India and open stores like Big Bazaar. I would like to point out some details of this new regulation from Indian government. It states that the foreign retail store can only own 51% of the joint ventures with an Indian firm. It clearly removes some stupid allegations that they are here to suck our money. Secondly and the major remark from the political parties is that these stores will eat up millions of jobs. It saddens me that Indian leaders are so naïve and stupid to bring the LICENSE RAJ principle that pulled Indian economy backward for the first 4 decades of independence. For those who don’t know about LICENSE RAJ, it’s explained below.

During the decade of 60s, 70s and 80s our leaders had a belief that Indian industries should not have competition as competition kills the weak. As a result all the companies across sectors were regulated to produce goods in limited numbers e.g. Bajaj could produce say only 5K scooters in a month for whole India. This stalled the industrial output and resulted in very few companies in the business as nobody was interested to do business as there was no growth. So the concept of saving the weak by controlling the Mighty ones not only killed the big but only disinterested the new entrepreneurs.

Back to discussion topic, according to our politicians Big Multi Brand Stores will kill small Kirana stores in our colony. They are following the protectionist principles of the failed License Raj. What I feel is bringing the big players will not only increase the competition and will drive innovation. Competition from big players will force the small Kirana stores to improve and expand their stores to retain customers. It will make them innovate new ways of retaining customers. It will not only help the customers but the whole retail industry of India which is pegged to become one of the largest in the world in some years.

Another positive aspect of Multi Brand Retail is they invest a lot in Supply Chain and Logistics. This is very important for today as food inflation in hitting sky high. The main cause of food inflation is improper supply chain and plagued middlemen business who decides the true prices of food items. It’s not that India is not producing enough food for its people, the grains and vegetables generally rots due to improper storing and movement of items from place of produce to where its required. So ultimately the farmers don’t get what high prices we are paying for. Investment by big stores in improving logistics and storing of food will definitely cool inflation and remove middlemen business.

I would like to end this writing by ancient Persian saying “Fortune favors the Bold”. If our Indian leaders are not bold enough to take strong decision for the betterment of our society we will continue to suffer under age old system.