What is FDI in retail?
FDI
(Foreign Direct Investment) in retail means that foreigners will invest their
money in India;-
a) In buying property – thereby increasing
prices, leading to inflation.
b) Creating infrastructure i.e. building
modern technology Malls – which technology is not new already available in
India.
c) Sell foreign made goods in India thereby
taking away Indian money to foreign lands by way of profits.
Why FDI leads to unemployment?;
1. Because of lower needs
of employees.
A
local retailer in a shop of 8’ *10’ has 1-2 proprietors having 3-4 salesmen plus
4-5 support salesmen for packaging and delivery. Thus a space of 80-100 square
feet gives employment to at least 10 persons or one person per 10 sq feet.
Whereas
a Mall has one counter of minimum 12‘ * 15’ has only one salesman the entire
mall has an average size of 197,000 square feet.
Number of employees are 20,00,000 in total of 4723
stores. That means 423 employees per store having an average area of 197,000
square feet or one person per 465 square feet. Indian retailers in same area
employ 46-47 persons.
So unemployment has increased by whopping by almost 50
times or 47 employees per 500 square feet or in other words FDI reduces
employment by
47 employees per 500 square feet.
2. Because of lower Indian
made goods sold in India.
Today 100% products manufactured in India are
sold in Indian markets. Under FDI they will buy only 30% of their needs from
India meaning Indian factories will have to produce at only 30% levels making
them unviable. Indian factories will be forced to close and factories will open
in China making Indians unemployed and Chinese more employed. 20 crores of
Indian homes will go in darkness.
Why FDI leads to inflation?;
Automatic
increase in prices of Gas, petrol and diesel;
Previously India was importing
gold and petrol and thus price of dollar was hovering about Rs 50. Now with FDI
in retail all retail items are being imported from USA and being bought in dollars.
Thus dollar rates have gone up from 50 to Rs 60+ and even Rs 70 initially. This
has led to increase in petrol, gas, diesel which in turn leads to increase in
cost of all items due to increase in transportation costs.
Increase
in inland and transportation costs;
Previously
all goods were locally transported. Now most goods have to travel all the way
from USA to India and this is additional costs incurred for bring goods inland
to Indian ports and then to local retail malls.
Increase of cost of goods
because of increased cost of salary and materials which is paid to foreign
workers in dollars;
Now
goods are first handled by Americans in USA who are paid in dollars where
minimum wages are $9 per hour or $ 4500 per moth or Rs 3,00,000 per person. All
this salary is paid in USA to USA employees but borne by Indians buying foreign
goods in India and added to cost of goods sold in India. This leads to multiplier
effect whereby even Indian goods inch up higher to match price of foreign goods
leading higher prices / inflation.
Increased input cost;
All
foreign goods are manufactured in China which then transports to USA and than
businessman in USA exports to India or some goods are made in USA or other
countries. All there cost is incurred in Dollars which was Rs 50 per dollar so
all goods are priced much higher because of implicit cost (incurred in Dollars
whether of materials, labour, land or other inputs). This leads to cascading effect
whereby even Indian goods inch up higher to match price of foreign goods
leading higher prices / inflation.
Myths busted;
Direct Purchasing from
farmers at higher prices
Direct sales to Consumers
at cheaper rates.
There
is practically no direct purchasing from farmers. Foreigners are not coming to
India to enrich Indian farmers or Indian public but to enrich USA and
themselves at cost of Indian public. Farmer of Punjab know it by 1st
hand experience that Pepsi promised to buy Potato and tomato from them for
manufacture of potato chips and tomato sauce but after getting clearance they
said size of Indian potato is small and taste of Indian tomato is too khatta
hence they imported all their needs from abroad. Same is with MacDonald’s who
are buying shiploads of vegetables from abroad giving impetus to farmers of USA
and UK. One may compare prices of vegetables in Malls and their prices in
traditional shops which are 20-30% cheaper.
More jobs:
Congress
is calculating number of jobs on the basis of people to be employed in Foreign
Malls they are not considering reduction of jibs due to malls which is 50 times
more. For every one person employed in a mall about 50 will loose jobs leading
to millions of homes going in darkness in India.
More income by more taxes;
Because
of higher price there is higher sales tax, central tax, Octroi and also in some cases there is custom duty
and import duty. All these taxes and duties will be added in prices. Who will
pay it- The Indian consumer by its hard earned money.
Kapil Dev Aggarwal
Top ranked economist
Yahoo.answers india economics. 2011
