The FDI in Multi Brand retailing has generated a lot of interest of late. So what is this MBR? Why the fuss about MBR? Why are some people pushing it so fiercely and at the same time there is an opposing faction which is equally fierce? What does this all mean to us?
Well MBR is something very similar to a super market where all the retail products are available under one roof. The only difference with the familiar big bazaars is that the FDI in MBR would bring in the foreign players like walmart, Carrefour (France ), Metro (Germany) . Currently India offers FDI up to 100% only in the SBR- Single brand retail wherein only a single brand could be sold under one roof- like adidas, reebok, puma, etc.
The entry of foreign players in the retail sector would mean access to the most basic items and the most common necessities like our spices or vegetables. For now we allow that only in the wholesale or the cash and carry business only. The entry of FDI into MBR would mean a little more competition to the local small stores called the mom and pop stores / Kirana stores!
Looking at the reasons as to why I would support it, I could enumerate a few
- Introduction of better technology and better storage facilities for the fresh produce like vegetables, fruits, etc
- Competition in the existing market which would mean the quality would have to be on the dot. In other words, quality would take a greater precedence.
- Competitive pricing! Now that there would be many players offering the products, businesses will be forced to compete at the price and the quality arena to attract the customers.
- A good sign for the farmers is that their produce can find a competitive market as well and translate that to meaning that their produce would be better stored, thanks to the refrigeration and preservatives.
- Generation of local employment, a big company coming in and setting themselves here would need man force and thus generate employment to the locals which would answer a lot of the money woes.
Coming to the negative list:
- The presence of big companies pose a threat to the small mom and pop stores which can’t easily compete with the big brands
- It would drive out the small businesses out of the jobs
- Farmers would come under the mercy of the big companies eventually cos the big companies are driven by profit and not a social idea
- Small and medium enterprises would have to close down since they cannot face the competition.
Trying to analyse things,
I can see that the role of the mom and pop stores may change but given the fact that these huge stores would be located far off and the amount of time involved in billing, I would still prefer the small stores. Also talking about the fears of people going out of jobs, I think it would generate more jobs than those that would be lost. Also most mom and pop stores run on the concept of light loans, no wonder it would be a hard bargain to move from them to the big chains at ease. From my side I would really vote a go ahead for the FDI, maybe not the total 100% but atleast 51%. Every policy has an opposition, the NEP of 1991 also did but it turned out to be a great decision.
Maybe it is another one of those tough decisions. But from where I see it, I don’t see many complaints against FDI in MBR. What about you?