Impact of 51% FDI in Retail

The opening up of retail trade for foreign direct investment (FDI) promises to usher in revolutionary changes to the Indian consumer market in the days to come.
Recently, in a significant step towards liberalizing India's retail trade, the government had decided to partially open the retail sector by announcing 51 percent FDI in single brand retailing - a move that should pave way for big names like Nike, Versace, Addidas, Marks & Spencer to set up their own stores in India.

This means that foreign companies willing to enter the Indian market will now be able to invest up to 51 percent in setting up production facilities, distribution network and retail shops and the rest will come from Indian investors. But at the moment, the entry of retail giants of multiple brands like Wal-Mart is not allowed. The government is yet to announce the guidelines that will make the picture more clear.

However, experts are still divided on the problems and prospects of this move. Some say it will shrink employment opportunities, completely alter the retail distributional structure and deal a death blow to the corner shop structure.

The optimists, on the other hand, see a whole range of opportunities -- from improved collection, processing and better distribution of farm products to generation of more opportunities for the rural and urban unemployed.

Until now, global retailers were required to sell their products through franchises or wholesale trading. This move will help them setting their own base in India and will attract foreign capital along with better quality products and services for the consumers.

The Indian retail market currently estimated to be worth $250 billion is presently dominated by millions of mom-and-pop stores that cater to 97 percent of the total market.

According to a recent study, the Indian retail Industry is expected to grow at about 36 percent by 2008 and with the increase in foreign investment the industry is expected to do a business of Rs. 1.60 trillion by the year 2008.

With the new regulations in place, the debate is that what will happen to these stores? Will the entry of global retailers wipe out these local stores or will it make no impact? If we take China's example, the FDI in retail has little or no impact on the local retailers and they still dominate the retail sector.

Secondly, the decision may not trigger the FDI flow as such as single brand retailers who wanted to be in India like Nike and Reebok are already here through franchise and may find it tough to find local partners willing to invest in the business.

Indian retail sector is the second largest employer after agriculture in the country and the entry of foreign companies will not only increase the number of employment opportunities but also exports.

With foreign companies setting up their own stores in India, the consumer will get access to some of the major global brands. Entry of foreign brands would also improve the quality and variety of products, increase competition and expand manufacturing.

Organised retailing holds the promise of lowering the prices of foreign goods sold through these large stores. This also means that some of these retail chains will eventually have to start manufacturing locally or outsource from domestic manufacturers in order to be in the competition.

This is more so considering the fact super and corner markets are very likely to co-exist in the Indian market and it would make the latter more competitive and skilled in terms of operations.

Also, several Indian corporates such as the Tatas, ITC, the RPG Group and the Rahejas have already established their outlet chains. Others such as Viveks in Chennai have established multi-brand stores. Mukesh Ambani's Reliance, too, is reported to be planning a major foray into retail business.

All this promises to make the Indian retail market a real happening place in the days ahead while at the same time offering immense business opportunities to the domestic entrepreneurs. In fact, this is likely to transform the whole contours of the India market, making it a part of the overall global market.

FAQ: What is Lok Pal Bill? Why the ruckus over it?

The Lok Pal (anti-corruption body) Bill has generated widespread interest in the past few days.

The Bill is an attempt by the government, under massive pressure due to corruption charges, to gain some of its lost ground. However, civil rights activists, including Anna Hazare, Swami Agnivesh, Kiran Bedi and Arvind Kejriwal, have termed the draft legislation as weak and demanded that fifty per cent of the members in the committee drafting the bill should be from the public.

But the common man appears to be in the dark about the scope of the proposed bill.

Here’s an FAQ on the controversial bill.

What is the controversy between the government and Anna Hazare about?

Anna Hazare and other civil society activists have proposed a draft Lok Pal Bill to tackle the menace of corruption. The Prime Minister formed a sub-committee of the Group of Ministers to discuss the issue with these activists. However, these two groups were unable to reach an agreement on the provisions of the Lok Pal Bill. According to the government, the activists demanded that the government should accept the Bill drafted by them without any changes.

What steps has the government taken to enact the Lok Pal Bill?

In January 2011, the government has formed a Group of Ministers chaired by Shri Pranab Mukherjee to suggest measures to tackle corruption, including examination of the proposal of a Lok Pal Bill.

What is the purpose of the office of Lok Pal?

The office of the Lok Pal is the Indian version of the office of an Ombudsman who is appointed to inquire into complaints made by citizens against public officials. The Lok Pal is a forum where the citizen can send a complaint against a public official, which would then be inquired into and the citizen would be provided some redressal.

What are issues that have generated debate on the Lok Pal Bill?

There are diverging views on issues such as the inclusion of the office of the Prime Minister, Ministers and Members of Parliament, inclusion of judges, and powers of the Lok Pal. Some experts contend that all public officials should be accountable while others feel that the autonomy and privilege of Parliament require the Prime Minister, Ministers, and Members of Parliament to be accountable only to Parliament.

Have there been other attempts to establish the institution of Lok Pal at the central level?

Yes. The Lok Pal Bill has been introduced eight times in the Lok Sabha (1968, 1971, 1977, 1985, 1989, 1996, 1998 and 2001). However, each time the Lok Sabha was dissolved before the Bill could be passed, except in 1985 when it was withdrawn.

Have any expert commissions made recommendations on the office of Lok Pal?

Yes, a number of commissions have made various recommendations regarding the necessity of the office of the Lok Pal, its composition, powers and functions, and jurisdiction. The commissions, which dealt with the Lok Pal include the First Administrative Reforms Commission of 1966, the National Commission to Review the Working of the Constitution of 2002 and the Second Administrative Reforms Commission of 2007. The Lok Pal Bills that were introduced were referred to various Parliamentary committees (the last three Bills were referred to the Standing Committee on Home Affairs).

What are the present laws that deal with corruption of public officials in India?

Public servants (such as government employees, judges, armed forces, and Members of Parliament) can be prosecuted for corruption under the Indian Penal Code, 1860 and the Prevention of Corruption Act, 1988. However, the Code of Criminal Procedure and the 1988 Act require the investigating agency (such as the CBI) to get prior sanction of the central or state government before it can initiate the prosecution process in a court.

Have the state governments been more successful in setting up bodies to redress public grievances against administrative acts?

So far 18 state governments have enacted legislation to set up the office of Lokayukta and Uplokayukta (deputy Lokayukta). The 18 states are: Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Gujarat, Jharkhand, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Uttarakhand, and Uttar Pradesh.

Which other countries have the office of the Ombudsman for grievances?

Sweden, Finland, Denmark, the Netherlands, Austria, Portugal, Spain, New Zealand, Burkina Faso and the United Kingdom are some of the countries which have the office of an Ombudsman.

The article was published on rediff.com on April 5, 2011

Zindagi Na Milegi Dobara Movie Preview

Eros International and Excel Entertainment jointly present ZINDAGI NA MILEGI DOBARA, which is all set to hit the screens on July 15, 2011. Produced by Ritesh Sidhwani and Farhan Akhtar, directed by Zoya Akhtar, ZINDAGI NA MILEGI DOBARA stars Hrithik Roshan, Farhan Akhtar, Abhay Deol,Katrina Kaif and Kalki Koechlin in lead roles. The music of the film is given by trio - Shankar Mahadevan, Ehsaan Noorani and Loy Mendonca. While lyrics are penned by Javed Akhtar. Synopsis: 3 young man take a holiday that changes their lives forever Kabir (Abhay Deol) has just met Natasha. 6 months later they are engaged. ;1 He wants to go on an extended bachelor party1 A 3 week road trip with Imraan (Farhan Akhtar) and Arjun (Hrlttiik Roshan)- his 2 best friends since school. The only problem is Arjun Is too tied up with work. After much emotional blackmail and cajoling the boys set off on a journey they were meaut to take 4 years ago. A fantas holiday they had planned to take after college but never happened. A road trip where each one gets to do the ultimate sport of his choice and the other 2 just have to do it with him. Whether they want to or not! Kabir Imraan and Arjun meet up In Barcelona and set off on an adventure lt will not only make them iron out their differences but also face their , alter their perception, unravel their fabric, force them to break out wx and teach them to seize the day. In other words a holiday that will change their lives forever. Character Sketch: Abhay Deol aa Kabir - A wealthy, young man who works with his father's construction company in Mumbai. Kabir is bright,, articulate and polite. Engaged to Natasha and off on his bachelor trip. Hrithik Roshan as Arjun - A financial trader who works at a huge firm in London. Arjun grew up without a father and seen tough life, his entire focus is to get bigger, better, faster. Reluctant to leave work. He agrees to go on this holiday. Katrina Kaif as Laila - A bohemian fashion student from London. She takes time off to teach diving every year. This year in Spain. She meets up with three young men from India. Kalki Koechlin as Natasha - A filthy rich daughter of a hotelier. She is an interior designer and in love with Kabir. She is slightly nervous about this bachelor trip. Farhan Akhtar as Imraan - A copy writer who works at an advertising agency at Delhi. Imraan is the bohemian, a closet poet. He is looking forward to Spain.