Article;
AAP government writes to dipp withdraws permissionfor FDI funded retail-stores.
Comment;
Why oppose FDI in multi-brand-retail when the companies have
to source goods and services locally. Demand and supply will get a boost,
income levels would improve. FDI in multi-brand retail is harmful for the
economy when there is a competition between domestic and foreign companies to
sell their products at low prices, especially in the form of ‘dumping’ which
will crowd-out income and employment in the domestic economy. Foreign companies
are generally better than their domestic counterparts in terms of investment to
produce goods at low prices, especially the mature ones. But with the above
clause (sourcing locally) we have shielded our domestic producer from
competition. Actually there is no competition, but only competition between
domestic and foreign companies to invest. Who will earn profits? Our domestic
investors are showing no interest in bridging the demand and supply gap, they
have shown no interest in opening shops (sorry malls!) and removing supply side
bottle necks that would bring inflation down and bring relief to the
“common-man”. Our economy is doing fine, but it is a developing economy and the
country has not enough companies to invest in the space (retailing), especially
food, which is important to bring prices down. I think many small shop owners
who can not invest individually should pool the money and make investments. How
many small shareholders would be able to open a mall? We needed foreign
investment when our investors shied away from investment…
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