and Shri Arun Jaitley, Leader of Opposition (Rajya Sabha)
On Government’s proposal to introduce FDI in retail sector
The Bharatiya Janata Party is opposed to the Foreign Direct Investment (FDI) being introduced in the Retail sector. The Indian economy, at present, is dominated by the Services sector. The Services sector account for 58 percent of India’s GDP. The retail chains in India, both small and big, account for a major segment of the Services sector. Self-employment in India is the single largest source of jobs. An overwhelming section of India’s population is self-employed. Foreign Direct Investment with deep pockets entering this segment will have an adverse impact on our domestic retail sector, which is growing.
The consumer choices require markets to be fragmented rather than consolidated. Fragmented markets give larger options to the consumers. Consolidated markets make the consumer captive. No one player should be allowed to dominate the market. Allowing foreign players, with deep pockets, enable such a consolidation. It will sweep aside competition and involve a loss of jobs, both in the manufacturing and services sector. These jobs will be lost in the name of eliminating middlemen. Jobs in the retail sector will obviously be lost. Jobs in the manufacturing sector will be lost because structured international retail makes purchases internationally and not from domestic sources. This experience has been felt in most countries which have allowed FDI in retail. International retail players operate on buying at the lowest and selling at the highest prices. They indulge in predatory pricing, which initially eliminates competition and eventually creates monopolies. This can result food chains of large nations being controlled foreign organizations. The number of retail establishments as at present gets substantially reduced in favour of large establishments. International retail does not create additional markets, it merely displaces existing market.
The argument that India needs a supply chain in order to help the farm sector and only foreign players can supply the same is to be rejected. India needs infrastructure for carrying farmers’ produce to the consumers. This has to be done in the most efficient and cheapest manner. International retail players have no role in the building of roads, both rural and urban or generating power. They are required to create storage facilities and cold chains. Why can’t the same be done by the governments in India, both central and states. Are you going to handover our food supplies to foreign hands merely because governments have failed to create cold chains?
The comparison between India and China in allowing international retails players is misplaced. China is predominantly a manufacturing economy. It is the largest supplier to Walmart and other international majors. It generates huge number of manufacturing jobs by being such a supplier. It obviously cannot say ‘No’ to these chains to open stores in China when it is global supplier to them. India on the contrary will lose both manufacturing and service sector jobs.
(Ram Kripal Sinha)
Secretary, BJP Parliamentary Party
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