A question that has been in the media for quite some time now. After some study and introspection, this is what I think about it:
FDI must be allowed in all forms of retail in India:
1. Single-brand retail : 51% should be hiked to 100%
2. Cash-and-carry : 100% FDI status quo be maintained
3. Multi brand retail : No FDI currently, initially 49% should be allowed. Later depending on the expansion and macro environment factors, it can gradually go up to 74% and finally 100%.
FDI in multi brand retail should be opened up gradually. The government should allow 49% initially so that large MNC retail giants can forge tie ups with big local players in India. This would help in technology transfer, strengthening of supply chain systems and bring fresh capital that is badly needed for expansion. Between 30-40% of post-harvest produce goes to waste in a country where nearly half the people are malnourished. This would help tame double-digit food inflation that pushed the central bank to raise rates five times since March. A more organised retail sector, which currently is only around 5% of total retail, would also improve tax receipts. The move could generate huge employment in the multi-brand retail sector and, while fears of job losses for smaller outlets are real, analysts have often played down the impact. Farmers may also benefit because they could sell direct rather than relying on middle men. Political unrest would be near-inevitable. Manmohan's government has grappled with huge strikes and protests over soaring food prices and fuel reforms. Even if he pushed the reform through, huge upheaval could force the government to backtrack.Like insurance, retail is a capital-intensive business and hence FDI is a must.
However, the govt. needs to realize that allowing FDI in multi brand retail is not going to be the PANACEA. The rural agricultural infrastructure is far from acceptable standards in India. Expecting retailers to turn around everything is not realistic. Hence significant investments should go into improving the rural agricultural infrastructure. Only then will the farm-to-fork model of modern retail yield its benefits fully and rein in the spectre of inflation.
A platform where I will share my views on topics and issues that interest me deeply (with a strong business bias, of course)and chronicle the major events in my life beginning 2010.
Sunday, December 26, 2010
Friday, December 17, 2010
The Big "P" and more...
Hello readers!
It has been a long time since I posted anything. The Big "P" stands for PLACEMENT in all B-schools. Thanks to Nitish who coined this term (as if we needed one more P after the 8 Ps in services marketing! ). The term-5 of PGDM (MBA) has come to an end and I am cooling off my heels for a day before the final term sessions get underway.This term has been the most eventful and exciting for me and most of my friends would concur with this as well. I have got a job offer from Pantaloon Retail India Limited, the flagship company of Future Group, India's largest retailer in terms of number of stores and revenues (over $ 2.1 billion in FY 2010). Most of my friends here at SDMIMD have bagged jobs and that's one more reason to rejoice. Very soon, India Inc. will get a new set of high potential-high performing (STAR) managers!
The whole placement process taught me that one needs to be patient, well prepared and a little lucky to get the offer from a company. The process involves multiple trade-offs between conflicting parameters like salary, profile, location, company brand, CGPA and industry dynamics. A lot depends on the schedule of companies coming to campus (as we follow rolling placement system here at SDMIMD) and the risk appetite of the student.Also a few of my batchmates are determined to start their own ventures or expand their parent's businesses which is a welcome sign as India needs such wealth creators more than corporate managers.
The whole concept of putting students on HOLD by recruiters really sucks. It puts undue pressure on the young students and speaks poorly of a company's recruitment policies.
The annual management fest of SDMIMD is going to be conducted from January 6 to 8, 2011 here at SDMIMD campus in Mysore. Loads of events are on the anvil. Preparations are on and I will update you all on this soon.
Cheers!
It has been a long time since I posted anything. The Big "P" stands for PLACEMENT in all B-schools. Thanks to Nitish who coined this term (as if we needed one more P after the 8 Ps in services marketing! ). The term-5 of PGDM (MBA) has come to an end and I am cooling off my heels for a day before the final term sessions get underway.This term has been the most eventful and exciting for me and most of my friends would concur with this as well. I have got a job offer from Pantaloon Retail India Limited, the flagship company of Future Group, India's largest retailer in terms of number of stores and revenues (over $ 2.1 billion in FY 2010). Most of my friends here at SDMIMD have bagged jobs and that's one more reason to rejoice. Very soon, India Inc. will get a new set of high potential-high performing (STAR) managers!
The whole placement process taught me that one needs to be patient, well prepared and a little lucky to get the offer from a company. The process involves multiple trade-offs between conflicting parameters like salary, profile, location, company brand, CGPA and industry dynamics. A lot depends on the schedule of companies coming to campus (as we follow rolling placement system here at SDMIMD) and the risk appetite of the student.Also a few of my batchmates are determined to start their own ventures or expand their parent's businesses which is a welcome sign as India needs such wealth creators more than corporate managers.
The whole concept of putting students on HOLD by recruiters really sucks. It puts undue pressure on the young students and speaks poorly of a company's recruitment policies.
The annual management fest of SDMIMD is going to be conducted from January 6 to 8, 2011 here at SDMIMD campus in Mysore. Loads of events are on the anvil. Preparations are on and I will update you all on this soon.
Cheers!
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