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India's Retail Industry
I read and heard that there is a planned move, to
allow foreign companies to tap into the potentially
huge retail market in india.

i want to ask, why doesnt the indian government do
the needful itself?

If the market is as huge as experts predict it is,
then why doesnt GOI start public sector companies of
the nature of O.N.G.C.s and BHEL's and harness the
market itself?? That way the profits can remain in

If the GOI finds it difficult to raise the kind of
cash needed to be able to take the plunge single
handedly, then at the very least, it should try and
set up joint ventures wih foreign companies a-la

That way too, we can salvage some of the profit and
keep it in our country instead of watching MNC's come
here and make a mad loot out of INDIA, the way the
Pepsi's and the McDonalds do.

It would be a shame if such a big market was left
unexplored, and the entire future retail pie of India
got carved up by alien MNC's.

Another possible option would be to team up with some
of the bigger Indian companies, like the Tatas,
Birlas, Ambanies, Sahara's and Goenkas (the last
already have some sort of a retail chain goiing) who
could very well be interested and would be able to
afford to chip in.

The end result of both the two latter alternatives,
which try to prevent MNC's to carve it all up, is
that- India stands to have a few home grown giant
companies this way.

Else Dadabhai Naoroji's famous "Drain Theory" will
again be vindicated, and the money of the common
Indian man will end of filling pockets in foreign

I hope and trust that you will try to explore this
possibility and please take the trouble of contacting
the people who have a say in these matters.

We can ill afford to let such a huge chance go by -
afterall we didn't allow foreign companies to tap into
our Air traffic market or Petroleum market. Why then,
should we allow a complete "Coca-colonization" of our
(potentilly HUGE) retail market?

thats was a retouched version of a mail i had sent to FICCI.

what do you all think of the idea???

and do you think we could get a petition-online or something to make ourselves heard ?? do you have other options ??

oh yes... hi everyone.
no one has an opinion as to whether india should have her own retail compoanies or not <!--emo&Sad--><img src='style_emoticons/<#EMO_DIR#>/sad.gif' border='0' style='vertical-align:middle' alt='sad.gif' /><!--endemo--> ??
<b>Who's afraid of Wal-Mart?</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Open up retail

The Pioneer Edit Desk

Prime Minister Manmohan Singh's comment on the sidelines of the recent ASEAN summit in Kuala Lumpur, that he will work out the modalities for allowing foreign direct investment in the retail sector in the next six months, comes as good news for consumers.

There is absolutely no logic behind blocking FDI in retail, and as Mr Manmohan Singh had argued in his interview to McKinsey Quarterly, opening up this sector of the Indian economy would be a logical extension of the ongoing economic reforms programme.

What adds urgency to the proposal is the Prime Minister's ambitious target of setting GDP on a sustainable trajectory of 9 to 10 per cent growth per year. That target can be achieved if Mr Manmohan Singh cuts himself free from a dogmatic Left which continues to live in a world where egalitarianism equals poverty, denial and deprivation of the masses and prosperity is seen as a cardinal sin. The case for opening our doors to FDI in retail can be argued on the strength of various points.

The strongest of them is the fact that it is an infrastructure-led business that offers great potential for job creation as well as bringing in billions of dollars. Traditional retail in India has been growing at a sluggish rate - and this is probably the reason why the Left feels compelled to support it - of 6 per cent per year. In comparison, organised retail, such as it exists today in its most basic and primitive form, has been racing at a phenomenal growth rate of 30 to 40 per cent per year.

If organised retail is allowed to flourish, this sector's contribution to India's GDP, which at present averages at 10 to 11 per cent, will increase, too, and have a multiplier effect on the country's economic outlook.

The Left, of course, argues to the contrary, conveniently choosing to ignore the enormous benefits that China has been reaping from FDI in retail over the past decade. The gains should not be quantified in economic terms alone; as the Economist recently pointed out, malls, the most visible face of organised retail, also have a social impact, opening up otherwise cloistered societies to new ideas. Strangely, the BJP and the CPI(M) share a common point in blocking retail reform: Both claim it will harm small retailers and lead to loss of jobs.

That is balderdash and bad economics. The ubiquitous corner shop serves its own purpose and is unlikely to be shut down because Wal-Mart opens stores across urban India. At present, some 12 million small retailers employ 21 million people, that is, each retailer generates less than two jobs. On the other hand, a single large store generates a sizeable number of jobs and invests in employee skill acquisition and upgradation.

Consumers will be the biggest beneficiaries of organised retail because they will not only get to buy products at competitive rates much lower than those offered by traditional retailers, they can also demand and get quality goods and services, both of which are at a discount now.

India has reaped huge benefits by opening up its telecom, insurance and banking sectors. The Left had blocked FDI in all three, painting a doomsday scenario and predicting loss of jobs. We have to just look around and see how wrong the Comrades were. These three sectors alone have generated 5 million jobs. The CPI(M) may be afraid of Wal-Mart, India is not. So let's open our doors.
Firstly, the market of some $300MM or so is not unexplored as mentioned in the email that you have attached. That market is currently occupied by the indian retailers and is only an oppurtunity for Wal-mart and others to enter and is currently being served without any problems by indian shops. So letting foreign companies like wal-mart into non-tech areas is only going to be at the expense of indians. In US itself, there are many counties where Wal-mart is blocked out by the local retailers and residents as it leads to loss of jobs.

Now, to the question of how Wal-mart does its business. Wal-mart is a supply chain optimizer. Say a product cost Rs 10 to manufacture and and sells for Rs 40. The supply chain cost is Rs 30. wal-mart optimises the supply chain and reduces their costs to say Rs 15 and would sell the same product for Rs 30. They are able to cut down costs by automating and by high-tech inventory management (UPC bar codes and RFIs and warehouse managing). As wal-mart gains more market share, it would start squeezing the manufacturer to reduce their cost price for Rs 10 to say Rs 8 and pass on Re 1 to customer and pocket the rest.

For the indian customer, it is all upside, but what about the indian retailers and indian manufacturers? Both would go out of business. The indian retailers because they would not be able to match wal-mart prices and indian manufacurers because they would not sell anymore. Wal-mart buys 90% of their goods from china where the labor cost are so low as compared to india that the manufacturing cost is 1/2 of india. So where do u think Wal-mart would buy from? (It is another matter why chinese cost are so low. Did u guys read the book "Animal farm" by George Orwell? How the pigs management can get better productivity from animals than the human management becos the animals think they are ruled by one of the animals, not humans. That is the case in china)

As for the job generation, in the US, whereever walmart has setup stores, for every 10 jobs lost in the neighorhood, only 1 job has been created. Not to mention the fact that walmart underpays (actually they do not allow their employees to work full time of 40 hrs as then they would have to pay health insurance. So most of the walmart employees end up without insurance with the US govt footing the bill). So the job generation is also a hoax.

On the whole, this is a horrible idea. I hate to say it, but the commies are right on this one.

for once the commies are right.

but there is another thingie here -

say walmart has an outlet in india and one in usa.

cotton shirts are the rage in usa.
cotton shirts are expensive in usa
cotton shirts are cheap in india.

walmart sources 10000 pieces from india an sells them in usa, obviously at a profit.
indian manufacturer of cotton shirts now has acces to usa, using walmart as a conduit.
that indian manufacturer by himself would most likely never have been able to penetrate the american market, cos that'd take serious financial muscle. so this dude gained from malmart's presence in india, and his profit ofcourse got spread over india.

do you think the disadvantage of walmart's comming to india would outweigh the advantage i pointed out??

if so, we dont need walmart and should not allow them to come.
if yes, we should allow them to come.

and even if we are not in a position to allow them to come just right now, we should try to attract them to india later, when our products become good enough to impress the amerian buying public.
no more opinions about this ??

this is a hot topic in parliament - so how come such a luke warm response here ?
a mail forward -

>>>Joe Smith started the day early having set his alarm clock ( MADE IN
>>>for 6am. While his coffeepot (MADE IN CHINA) was perking, he shaved
>>>with his electric razor ( MADE IN HONG KONG). He put on a dress shirt

>>>(MADE IN SRI LANKA), designer jeans ( MADE IN SINGAPORE) and tennis
>>>shoes (MADE IN KOREA). After cooking his breakfast in his new
>>>electric skillet (MADE IN
>>>INDIA) he sat down with his calculator (MADE IN MEXICO ) to see how
>>>much he could spend today. After setting his watch (MADE IN TAIWAN)
>>>to the radio (MADE IN INDIA ) he got in his car (MADE IN GERMANY) and

>>>continued his search for a good paying CANADIAN JOB. At the end of
>>>yet another discouraging and fruitless day, Joe decided to relax for
>>>a while. He put on his sandals (MADE IN BRAZIL) poured himself a
>>>glass of wine (MADE IN
>>>and turned on his TV ( MADE IN INDONESIA), and then wondered why he
>>>can't find a good paying job in CANADA....

so can walmart's comming to india help us do more of the above??
<!--emo&Smile--><img src='style_emoticons/<#EMO_DIR#>/smile.gif' border='0' style='vertical-align:middle' alt='smile.gif' /><!--endemo--> i think it all depends on the timing and the balance of advantages and disadvantages .

1.Maybe right now since manufacturing still provides thousands of jobs for the lower wage workers of india , the arrival of Walmart might kill the local job creation.

2.Maybe in the future if the education ratio is raised and indian economy transitions towards more a service oriented economy and there are lot of young professionals , it might be a good thing since ultimately the profits will go to the consumer also.

3.In a kind of way i support it since protectionism might now always do good , first of all why should only some of the indian companies (the birlas , tatas , reliance not exactly role models of taxation and social responsibility) get a share of the pie , maybe it will do good to throw it open .

and if you have a big bully in the neighbourhood who is big , maybe it will force the smaller bacchas to improve their game <!--emo&Smile--><img src='style_emoticons/<#EMO_DIR#>/smile.gif' border='0' style='vertical-align:middle' alt='smile.gif' /><!--endemo--> who knows.

my two cents
I cannot make up my mind on this actually. In Ahmedabad there are 4-5 big stores but that has still not killed the mom and pop stores yet. Hard to predict whether these retail chains will work or not and how big a mkt share they will be able to grab. Situation will be drastically different in the heartland.
thr reason the mom and pop stores havent been killed is cos the other companies have only 5-6 outlets.

i mean since their chain is so small, their price is higher the pop and mom shop.

if walmart comes and prices their stuff at higher than the cornershops, then their clientle will be restricted to only the upper middle class and above - so the corner shops can continue.

the bad news starts only when walmart becomes the cheaper alternative - which is what i think they will become.

but then i dont see why the ahmedabad chain cant have 25 outlets in each big city - and thus become cheaper than the corner shops.

remember the cornershops dont pay taxes while the chain does.

its in india's interest to have a retail-chain industry. india's is the biggest market in the world and totally untapped.

catch is that it should be indian, the chain(s).
maybe he bigges of indian industry should pitch in. or maybe the govt should make it conducive for the home grown chains to expand.

but the present situation cant continue - sooner or later something will give.

either we will somehow have a big retail chain or 2 -
or walmarts will come.

and once they come the only alternative left for us will be to turn the disadvantag into an adv by using walmart as a conduit for foreign markets.

the other thing (best of both worlds) the govt can do is deny walmart a level playing field totally - so that they remain priced in such a way that only the rich indians can afford it.

which will mean the indian chains can target the general middle class whilst the foreign brands will be a premium thingie. like in the automobile sector.

but walmart will still buy cheap stuff in india and sell in usa.
so - best of both worlds.

what do you think??
Now that I think about it there is one big chain (must have around 25 outlets) called Adani in Ahmedabad. But its not like walmart. Its much smaller in terms of shelf space. Then there is Star Bazaar, Big Bazaar, V-Mart, piramid etc where you can find all that you want including Ragu and Prego spaghetti sauce and basmati rice.. Gujjus flock to these places on weekends to spend time in AC market in ahmedabadi heat but not many actually buy much. Still I am sure they survive and do good profit too but havent seen a killer difference.

But its still too early to say whether this is actually going to kill the smaller stores. The overheads of maintaining these stores seemed big to me atleast.

Some consolidation might be good but we have to take care of mom and pop stores. We still dont have an economy which can support too many good quality jobs. One solution that I can think of is to make it compulsory for big companies too outsource lots of its services to support local business.
One of the most important aids to the mom&pop stores is the small-scale industry status and the advantages that come with this status. To level the playing field, the multinationals will target this subsidy. Given the corruptability of our political parties, this should be easy.

Another thing to watch out for is how well Wal-mart was able to adopt to the china market. Wal-mart thinks it has been successful in china, which is why it think it is ready for india but what regions (urban or rural) of china in particular was it good at?
the best idea would be this.

we prevent the walmarts from comming to india.
some of the top players - tata, ambani, birla or sahara go and open a dozen outlets in usa and start funneling stuff from indian sme players.
<b>BJP opposed to FDI in retail sector </b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Mumbai, Dec 29 (PTI): The BJP today said it was opposed to any moves to allow foreign direct investment (FDI) in retail sector and favoured a farmer-centric approach of economic growth.

"We strongly oppose FDI in retail sector of the country, which is a source of livelihood for over four crore people in the country. We are against the idea of a few multinationals ruling the vast retail market here and regulating our needs," party spokesman Vijay Kumar Malhotra said while presenting the draft economic resolution, which was later adopted unanimously at the BJP National Convention.

He said the UPA government has messed up the economic policies of the country, saying "policies are prepared under pressure of the Left parties and as a result, development is stalled."

The resolution, following an amendment moved by a member, also included party's demand for a ban on cow slaughter and also encouragement to cow rearing.

<b>Senior party leader Murli Manohar Joshi said the Government was excessively focussed on introducing more and more investment in service sector. However, this development is not worth until such growth is balanced by manufacturing sector. </b>

<b>Only opening of call centers will not reflect development of the country. Manufacturing activities are also required for it. Most of the infrastructure projects are delayed, as a result production sector is also hampered in a major way,"</b> he said.
<b>The Man Who Said No to Wal-Mart</b>

Very interesting article -
the ambanis are plaiinnig to invest about 1 billion usd in a retail chain.

which should be enough cbm for the goi to ask the walmarts to stay away.
<!--QuoteBegin-ben_ami+Jan 21 2006, 10:28 PM-->QUOTE(ben_ami @ Jan 21 2006, 10:28 PM)<!--QuoteEBegin-->the ambanis are plaiinnig to invest about 1 billion usd in a retail chain.

which should be enough cbm for the goi to ask the walmarts to stay away.

What happened to the Management mantra of finding and concentrating on your core-competency?

Ambanis' core competency seems to be to have a finger in every pie.

The tremendous clout they have in India will help them zip through the Indian beaucracy.

After Petrochemicals, Telecom, Gas stations, Power, now retail..............

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