FDI in Multi-Brand Retail Sector
The stakeholders in this case are:
- The government
- Foreign retail companies
- Domestic retailers
- Farmers
- Consumers
- Intermediaries
PROS for the various stakeholders:
The government:
- Economic benefits, increase exports and imports.
- Lead to greater sourcing from India.
- Make organized retail more efficient.
- Infrastructure standard rises.
- Competition will improve the competitors know how and technology further, increasing national standards.
- Will help meet the growing demand of high class products from income level increasing groups of India.
- Increase employment, spur growth in GDP.
- Reduce wastage.
- India will become global shopping destination, increasing economic benefits more.
Foreign retail companies:
- Invest more and make use of the untapped organized retail sector in India.
- Provides more opportunities to step into one of the biggest retail markets in the globe.
- Will get more support and resources from the government once they step in.
Domestic retailers:
- Will be able to develop their technology by joint ventures with MNC’s.
- Will get know how’s and understand various key strategies to compete globally.
- Will raise their standards.
- Would help develop backward linkages to sources of supply.
Farmers:
- Foreign retail chains, with their huge cash resources, could benefit farmers by buying their perishables at their doorstep at harvest time.
- The several layers of middle men would be cut out.
- Farm productivity, manufacturing, processing will develop with better infrastructure.
Consumers:
- Reduced prices, as the middle men will be cut out.
- Reap the benefits of global industries.
- Quality of the perishables will improve due to better storage and handling.
- Will get wide quality assortments.
- Will be able to buy best brands.
- Better customer service.
CONS for the various stakeholders:
The government:
- Organized retail in India is not yet grown or consolidated.
- Implications to manage mom and pop stores will increase.
- Around 30 million people are depending on the retail sector in India, so government must be very cautious.
- Create monopolistic market.
Foreign retail companies:
- There isn't much space available for large retailers to enter the most crowded areas within most of the big cities.
- Difficult to measure up on the home delivery services and personalized services.
Domestic retailers:
- Small family owned outlets may suffer.
- Domestic players, as they are still not to international standards may loose to MNC’s.
- If small family stores are not modernized then the impact on employment will be large.
- This unique model of retailing in our country may not survive.
- Government may stop thinking much about small outlets.
Farmers:
- As time passes, big retailers may become dominate and will have more bargaining power. So the prices gained by the farmers initially will be no more.
- Farmers will be treated as mere employees of the retail houses.
Consumers:
- Customers will have to travel more, as the big retail shops may be located at the outskirts of the city.
Intermediaries:
- It’s actually a big problem for intermediaries, as they maybe cut out due to direct procurement of MNC’s from farmers.
- The intermediaries like bullock carts, agents, small traders and transporters will lose employment.
Like it on Facebook, Tweet it or share this article on other bookmarking websites.