The idea of allowing FDI in multi-brand retailing has been kicked around for a long time in India. With the high food inflation lately,it seems to have gained new found importance.
There are have been arguments along these lines:
And then there are attitudes of middle class Indian households towards big retail shops. From anecdotes i have heard from folks, there is still considerable reluctance on the part of people to shop for food in these stores. There is a belief that the cost of food items are higher in these stores as compared to the local kirana shops. Given all the infrastructure hurdles that are in the way of modern retailing, the higher prices are not very surprising.
Unless there is widespread streamlining of the infrastructure, there is scant hope of bringing the fruits of efficient retail to bear. Reforms need to be rolled out across the complete spectrum of industries. Anything short of it, would just not do.
There are have been arguments along these lines:
" If FDI is going to happen anyway, why is there so much excitement about it now? The reason is that this is an opportunity to push it through. India, like many other parts of the world, is suffering from high food inflation; at its peak earlier this year, it crossed 18%. India, unlike other parts of the world, suffers from huge wastage in the food chain. "Researchers estimate avoidable supply chain costs (wastage, excess inventory and excess transportation costs) in Indian food and grocery sales to be about US$24 billion," says the PwC-CII report. "One of the arguments in favor of FDI is that it will bring with it the technologies and expertise required to build robust food supply chains." "Reforms to allow FDI in multi-brand retailing are urgently needed. However, even if FDI norms were loosened tomorrow, there are some formidable challenges.Laws governing land allocation to industry need reform, without which cost of land would remain exorbitant. Reliable supply of electricity is still a long way off. Roads and other means of transport infrastructure is yet to catch up with the growth in demand.There is also the chronic shortage of skilled professionals who can be employed in the industry.
And then there are attitudes of middle class Indian households towards big retail shops. From anecdotes i have heard from folks, there is still considerable reluctance on the part of people to shop for food in these stores. There is a belief that the cost of food items are higher in these stores as compared to the local kirana shops. Given all the infrastructure hurdles that are in the way of modern retailing, the higher prices are not very surprising.
Unless there is widespread streamlining of the infrastructure, there is scant hope of bringing the fruits of efficient retail to bear. Reforms need to be rolled out across the complete spectrum of industries. Anything short of it, would just not do.
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