DI of FDI (Foreign direct investment)

Data-driven analysis of FDI's impact on India's retail sector, examining effects on farmers, small businesses, and employment opportunities.

7 min read 1,356 words

It has been a week or so, every day newspapers and news channels are full with news of FDI in India. Even Facebook is not taking a step back and speaking in favor of both sides. FDI in retail—should it be allowed or not?

I am not a politician, so as an engineer I will do data analysis of FDI in India. Now, for the sake of example, we consider that FDI is allowed in the retail market (PS: I personally think that it is going to be allowed). And great retail players are welcomed in India. Just like the East India Company. Now, dollars come in and they directly go to farmers to take products. Okay… now here farmers get a BIT more price as they skip mediators. Now, they are the immediate victims of FDI.

We have around 125 crore people and also have internal dependencies in chain management systems. Now, for the sake of two end users, big brother will eliminate small chains and put one big heavy chain. Here, we can advocate that even one big chain needs many persons to work properly. So, we can say that it will generate more employment. We WILL discuss this specific topic afterwards: service v/s self-employment.

Now, after the first victim is down, we have a classic competition of dollars v/s rupees. It's just like David v/s Goliath.

They come with dollar backup, give best employment, buy land at high price. Market goes boom. And smiles on the faces of everyone, at least for a while. Yeah, some brokers and independent businessmen who were in the chain will not be happy. But who cares? Even from the era of non-violence and [Gandhiji][5], we also learned one more thing: to serve others. Specially [British culture][6] and foreigners. Sorry to some die-hard fans of [Gandhiji][5], but it's true. He is there, directly or indirectly, as a reason for our slavery even after our so-called freedom.

Now back to FDI.

We are getting things at low price. But we're missing one basic element of our shopping: relationship with our merchant. So, here we are losing the personal guarantee of the shopkeeper. We have professional warranty of the brand, but what about grains???!!!! No one is saving seasonal vegetables for you. If you are lucky, you get your favorite vegetables, or if not, you have to go with whatever is left there. But who cares!!! You are getting vegetables at lower price.

So, as an engineer and a little bit selfish person, I should be happy???????

Nope!!!

Why??? Now, consider a case of my favorite fruit: mango. And I love a specific type of [mango called Kesar][7] **and that also specifically from [Talala Gir area][8]. Now, big brother is going to buy in bulk from farmers and sell at a lower price. I don't think so. They sell poor and small pieces of mangos in India, and the better ones will go outside to be sold for foreign currency. I don't think there's a problem in this either, as we also get used to that. Just like we get used to poor quality from every international brand. We are so good and non-violent people after all. We are from the country of Great Mahatma Gandhiji. (PS: yes, we are from the country of Gandhiji, but still Gujarat is the only dry state???!!!! Why don't other states follow our great leader???!!!)

So, now it's time for us to suffer. Poor quality food, grains, and vegetables. No problem at all—most of the metros are not getting good quality food even now.

So, time passes and we survive and life goes on. All the small businessmen are vanished, cleared, wiped out. No competition at all. Now, big brother can increase price. And yet again we don't mind. Yaar, we are good people na—at the most we will do some rally, and that also non-violently. And our minister comments that "[I am not an astrologer, how can I say what will happen in the future][9]?" And some remember [Bhagat Singh][10] and [hit a slap][11]. But that also ended with BANDH in opposition to that slap. It is fine—we are in India…

Now, only one person is laughing and laughing loud: our own big brother. But still we are going to celebrate, as big brother will be in the list of Forbes richest persons, give lectures at IIMs, and comment that India is his favorite market. Why not??? He is selling every good product at a high rate in foreign countries and getting the price of garbage in India. Double profit.

Next big step: investment in farming. If everything is his, then why not farms? And the government also welcomes that, as they bring new technology to India (PS: what the hell—as if they know anything about farming???!!!!) Obviously, this will increase more employment. Now farmers are employees too. And banned chemicals are welcomed to India, which increases growth for at least two years. So, time for some smiles now. But then farms are gone, quality goods are gone. And we are left with dry land.

No problem—we will import. And the government will give subsidies for that. So, now India is back to square one. Just as it was at the time of 1857 (PS: Many so-called urban and modern people don't know this number—please [google][12] it.)

Still we have one smiling face of big brother. And books of his "How to Become a Millionaire" for future management students.

Now, one topic I left at the start: service v/s self-employment. Now, first thing—I am doing a job and I am not opposing it. But self-employment is also just like that. You are employed if you are earning enough as per your requirement and caliber. Serving some big brother will never make you a jolly good fellow. In a simple situation, if some person is earning 3 Rs as profit, he will give 1 Rs as salary. Now, this 2 Rs will make him more rich every time he earns.

If we take the retail sector as an example, a person in transport is earning 12,000 Rs per month. Now, there are 10 persons for a specific city. So, total earning goes to 1,20,000. Now, big brother hires some around 5 persons and gives 15,000 Rs salary. So, total earning goes to 75,000 Rs. Now, whose salary is higher—those who got the job. But for 5 persons who got the job, 10 persons lose their job and employment. And there is movement of only 75,000 Rs instead of 1,20,000 Rs. Now, a person from a commerce background can explain the importance of the "movement of money."

And one more thing to consider here: if you or I go to some other country and earn some money, the first thing we will do is send money to our country. The same will be done by big brother. Profit will be sent to his country. In history, we were not poor, but now we are still a developing country. Even at this stage, can we afford to send profit to some other country???? I don't think so. I guess.

At the end, still we have some happiness left. Big Brother is smiling, and yes, we have a few more to join the party. Our minister, AKA, sultan, Prince of country, and his mom… who are getting money for welcoming big brother and also taking a part of profit as tax. And everyone knows now to which country our tax is going???!!!! (PS: As per [Chanakya][13], tax should be taken in a way a honey bee takes honey from flowers.)

I was so proud of my analytical and mathematical skills, but I don't have an answer to this. If you have, please share… Do comment.

(PS: Are we going to be enslaved again??? Is this the time where we should start asking questions of ourselves and our beliefs??? Is this the time for change from the root, from the start???!!!!)

[]: https://lh5.googleusercontent.com/-UOYX0j4d74Y/URHJr5nw2nI/AAAAAAAAAqg/bmKB4tSWmoY/s144/david-and-goliath-sumo-version_thumb_2456faf3-4b48-4d31-8a4d-440692818ef1.jpg [5]: http://en.wikipedia.org/wiki/Mohandas_Karamchand_Gandhi [6]: http://en.wikipedia.org/wiki/Culture_of_the_United_Kingdom [7]: http://en.wikipedia.org/wiki/Mango [8]: http://meet-kesarmango.blogspot.com/ [9]: http://www.dnaindia.com/india/report_i-m-no-astrologer-can-t-predict-fall-in-prices-says-sharad-pawar_1333724 [10]: http://en.wikipedia.org/wiki/Bhagat_Singh [11]: http://articles.timesofindia.indiatimes.com/2011-11-25/india/30440409_1_anti-graft-protester-sharad-pawar [12]: http://bit.ly/vhOUwG [13]: http://en.wikipedia.org/wiki/Chanakya

Frequently Asked Questions

What are the main negative impacts of FDI in retail on small businesses?

FDI in retail eliminates small intermediaries and independent businessmen from the supply chain by consolidating distribution through large corporations. This creates a 'David vs Goliath' scenario where foreign companies with dollar backing can undercut local merchants who operate on rupees, forcing many small retailers and mediators out of business.

How does FDI in retail affect farmers in India?

While farmers initially benefit by skipping mediators and getting slightly better prices when foreign retailers buy directly from them, this advantage is temporary. Once large retail chains eliminate smaller intermediaries, they gain monopolistic control over bulk purchasing, potentially suppressing farmer prices in the long run.

Will FDI in retail create more employment opportunities?

While large retail chains do require many workers to operate, they typically create employment in lower-wage service roles rather than self-employment opportunities. This represents a shift from independent business ownership to dependent wage labor, which changes the nature of employment in the retail sector.

What quality and variety issues emerge from allowing FDI in retail?

Large foreign retailers prioritize bulk sales of mass-produced items and lower-grade products, often reserving premium items like quality mangoes for export markets to earn foreign currency. This means Indian consumers lose access to specialized regional products, seasonal vegetables, and the personal guarantees that local shopkeepers traditionally provided.

How does FDI in retail impact the relationship between consumers and local merchants?

Consumers lose the personal relationship and trust-based shopping experience they had with local shopkeepers who provided personal guarantees on product quality. In exchange, they get corporate warranties and lower prices, but sacrifice the customized service and knowledge of local merchants who understood individual customer preferences.

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