1. FDI in Retail
Alka Parikh

2. Allegations against Walmart
Predatory Pricing – selling goods at very low costs
Using monopsony powers to force suppliers to provide large discounts
Very low wages
Only part time workers
Making full time workers to become hourly workers at will

3. Allegations contd
Working conditions: No lunch breaks or rests were allowed in some branches
Using child labor and illegal migrant laborers
Walmart imports most of its products. It is a bigger trade partner of China than Russia, Australia and Canada!

4. Criticisms of FDI in retail
4 crores employed in kirana shops
Can FDI actually create 1 lakh or more jobs directly a year? (2000 workers per store)
And many more jobs created indirectly. But then jobs will be lost also. Jobs created for the young and the middle aged would lose out
49% stake will still be Indian. But the Law does not say for how long. The share can eventually be bought off

5. Criticisms contd
Farmers might not benefit. Monopsony powers can actually make them lose out
The stores might not buy directly from farmers but from wholesalers
With its deep pockets, Walmart can sustain losses for many years till immediate competition is wiped out. It will buy big from India and mainly abraod and sell low

6. Criticisms contd
Preadatory pricing will not allow small kirana shops to stand in the market
Why do we need foreign companies in retail? We are taking care of our markets well ourselves with the domestic organized chains like Reliance Fresh and big Bazaar and with our kirana shops and vegetable vendors
It is reported (though not conclusively proved) that kirana stores in the vicinity of such large stores have suffered losses

7. Positives
Inflation can be tamed because wastage would reduce – provided they control a large share of the market
Creating effective supply chain
100% FDI in wholesale and 51% in single brand retail already exists, not much of an impact felt
Once they come here, stores like Walmart can start sourcing their supplies from local manufacturers thus increasing employment and exports and national income
We will learn about quality standards and cost competitiveness
It actually might create jobs for the youth, thus increasing employment opportunities

8. Positives
Today Walmart and Bharati Enterprises have a wholesale outlet and that stocks 95% of products that are Indian

9. Pressures
FDI inflows were declining in 2009 and Recovered a bit in Again by May 2012, decline of about 50%, further decline of 78% in June. Rupee was depreciating. Deficit increasing to more than 5% of GDP
TIME magazine cover: The Underachiever
Obama talks about India needing reforms, specifically FDI in retail

10. Regulations of FDI in retail
30% has to go the medium and small businesses
At least 50% has to go to backend infrastructure including cold storage and safe transportation
Only one store per city and that too not in an area of certain density of structures
49% stake should belong to an Indian company

11. Regulations
Calculated risk: We allowed investment in wholesale, partially in single brand retail and only after tasting waters we are going for multi-brand retail