Website for CAT preparation material.MBA, Engnieering & Medical entrance exams.GD topics.
Website for CAT preparation material.MBA, Engnieering & Medical entrance exams.GD topics.

GD TopicsCurrent Gd topics list

Foreign direct investment (FDI) in retail sector.

Background


The recent cabinet decision on FDI in retail has triggered protests by opposition and key allies of the ruling United Progressive Alliance (UPA), who are demanding a roll back of the policy. The hour-long meeting held in Parliament House failed to resolve the logjam in the two Houses as opposition parties, led by BJP and the Left, stuck to their stand and demanded rollback of the Cabinet decision to allow 51 per cent FDI in multi-brand retail. Though at present only 53 cities with population not less than 10 lakh in the country have been identified for FDI As the fourth-largest economy in the world in PPP terms, India is a preferred destination for FDI. During 2000-10, the country attracted $178 billion as FDI.


Favor


  • This will bring modern technology to the country.
  • Improve rural infrastructure. It would help build infrastructure and create a competitive market.
  • Reduce wastage of agricultural produce.
  • Enable our farmers to get better prices for their crops.
  • Consumers will get commodities of daily use at reduced prices.
  • Biggest beneficiary of this would be small farmers, who would be able to improve productivity and realize higher remuneration by selling directly to large organized players and shorten the chain from farm to consumers.
  • Government too stands to gain by this move through more transparent and accountable monitoring of goods and supply chain management systems. It can expect to receive an additional US$ 25-30 billion by way of taxes
  • Opening of retail can be seen as a solution for food inflation, which has been confounding policy-makers. FDI in retail would help in building much needed back end infrastructure. Additionally, he said, investments in cold storage chain infrastructure would reduce loss of agricultural produce and provide more options to farmers.



Against


  • Our interest rates today are as high as 14 per cent to 16 per cent how do we compete with the economies which have a 4 per cent interest rate. Our infrastructure our trade facilitations our labor laws, all these factors collectively don't make India low cost. So do you want India to become a center where we allow foreign companies to come in and set up these large chains which eventually instead of selling domestic products out sourcing internationally the cheapest sources and selling those products. Please remember domestic retail normally sources domestically, international retail sources internationally because they source from the cheapest sources.
  • Even if big retail companies help the farmers in resurrecting their economy, what plan does the government has for millions of middlemen who are part of the business process chain that ensures manufactured products reach end users.
  • We engage millions of uneducated and semi-educated people at various stages of retail business spread across towns and cities but we are afraid that Tesco and Wal-Mart will only engage smart and educated workforce in small strength, comparatively.
    Conclusion
  • Government is taking this decision in good faith. Few persons and lobbies controlling the rates of food commodities in India. And bringing more competition in market will bring better prices for buyers as well as sellers of commodities. Parties protesting against FDIs in retail have choice to not allow FDIs in the states they are ruling. Government should make a regulatory body for the commodity trade as we have for cellular services.

Contributed by: Studyfreak

GD Topics

Add your point- Write to us about your view on this topic in below box...


(Will not be shared.)

Name:
(max 100 character)

Institute:  
(Enter your school/college name.)

City:        
(Enter your city/town name.)





Points added by members


Added by: Shweta



Point: Hello,I ve no points to add, but I ve few questions regaring above points which are in favor.1) Which kind of technology will come in retail ?2) How rural infrastructure will be improved ??



Date: 2015-06-10 00:41:15