Column: Be not afraid, for we are India, and it’s our turn to lead
(FE 14/07/2006) Mumbai - I believe in free trade and the efficiency of market forces and on these principles I’m in favour of FDI in retail for India, but with a “twist”. I’m not afraid of corporate giants overrunning the country by parachuting foreign-made formats into our towns and cities at the risk to the future livelihoods of our existing retail backbone of family-run kirana stores. Nor should we underestimate our own ability to compete with our own Indian developed world-class formats.
I think most resistance today is based on the timing issue of when would we be ready to take on well-established retailers from abroad who we fear have unlimited resources and who would not hesitate to deploy them in search of early entry market share in organised retail.
Whilst I’m generally dubious of simple comparisons of one economy with another, China has received large benefits from opening up FDI into its retail sector early on in the emergence of organised retail. Today we have attracted only a fraction of this investment into Indian retail and we could use more. FDI would encourage the deployment of contemporary retail technology, distribution channels and advanced infrastructure solutions all of which we need sooner rather than later. It would set us on our heels to step up and develop competitive businesses. Businesses that could one day compete themselves favourably on the world stage.
For retailers to cross borders is a high risk venture and there are many tombstone examples of successful and respected businesses in their domestic markets that have failed to win the hearts and minds of a consumer across the world in another culture. Look at what happened to GAP in Japan when Uniqlo stepped up to the challenge. Should we fear Wal-Mart, Tesco or Carrefour in India with companies like Raheja with their world-class HyperCity format storming Indian consumers in Mumbai since their flagship opened two months ago or with Reliance plowing their talent pool, resources and organisational skills into new formats for the whole nation. I’ve been observing India as a visitor for almost 30 years and can cite numerous examples where foreign firms have either underestimated or not understood the wants and needs of the Indian consumer to their peril. So partnerships with Indian companies will in any event surely emerge.
FDI liberalisation should ultimately be of benefit to everyone who is involved. The Indian consumer, the Indian retail industry as a whole and the foreign investor whose job is to optimise returns to their own shareholders and stakeholders at large. Only by competing on the same stage will we learn from each other and this learning accelerate India’s long-term economic and competitive benefits. For myself I’d like to see these investments benefiting the smaller towns and communities in the country through improved earnings, opportunities and higher standards of living, so let’s open the doors to FDI and require a quid pro quo in sourcing from our local industries. This sourcing stipulation could be based on their worldwide requirements and could be structured to benefit, especially the medium and smaller businesses in our towns and villages but would also spur export revenues and improve our balance of trade. With oil prices high this is going to be a burden that will likely not go away on its own any time soon.
Let’s give full FDI access to our retail market now in the faith that we will gain more knowledge and technology, employment and long-term competitive advantage than we will lose in repatriated dividends. It’s an increasingly small world. The children of the world today are more one family than ever before. Made in India is not the brand it once was. It is a respected mark thanks to the efforts of industry and government alike. The world is watching us, wants what we have and we’re on an upward trend.
Be not afraid, for we are India, we are a superpower for the next generation and it’s our turn to lead for a while now.
By Tim Eynon, chief executive officer, Prozone Enterprises (Pvt) Ltd, Mumbai
I think most resistance today is based on the timing issue of when would we be ready to take on well-established retailers from abroad who we fear have unlimited resources and who would not hesitate to deploy them in search of early entry market share in organised retail.
Whilst I’m generally dubious of simple comparisons of one economy with another, China has received large benefits from opening up FDI into its retail sector early on in the emergence of organised retail. Today we have attracted only a fraction of this investment into Indian retail and we could use more. FDI would encourage the deployment of contemporary retail technology, distribution channels and advanced infrastructure solutions all of which we need sooner rather than later. It would set us on our heels to step up and develop competitive businesses. Businesses that could one day compete themselves favourably on the world stage.
For retailers to cross borders is a high risk venture and there are many tombstone examples of successful and respected businesses in their domestic markets that have failed to win the hearts and minds of a consumer across the world in another culture. Look at what happened to GAP in Japan when Uniqlo stepped up to the challenge. Should we fear Wal-Mart, Tesco or Carrefour in India with companies like Raheja with their world-class HyperCity format storming Indian consumers in Mumbai since their flagship opened two months ago or with Reliance plowing their talent pool, resources and organisational skills into new formats for the whole nation. I’ve been observing India as a visitor for almost 30 years and can cite numerous examples where foreign firms have either underestimated or not understood the wants and needs of the Indian consumer to their peril. So partnerships with Indian companies will in any event surely emerge.
FDI liberalisation should ultimately be of benefit to everyone who is involved. The Indian consumer, the Indian retail industry as a whole and the foreign investor whose job is to optimise returns to their own shareholders and stakeholders at large. Only by competing on the same stage will we learn from each other and this learning accelerate India’s long-term economic and competitive benefits. For myself I’d like to see these investments benefiting the smaller towns and communities in the country through improved earnings, opportunities and higher standards of living, so let’s open the doors to FDI and require a quid pro quo in sourcing from our local industries. This sourcing stipulation could be based on their worldwide requirements and could be structured to benefit, especially the medium and smaller businesses in our towns and villages but would also spur export revenues and improve our balance of trade. With oil prices high this is going to be a burden that will likely not go away on its own any time soon.
Let’s give full FDI access to our retail market now in the faith that we will gain more knowledge and technology, employment and long-term competitive advantage than we will lose in repatriated dividends. It’s an increasingly small world. The children of the world today are more one family than ever before. Made in India is not the brand it once was. It is a respected mark thanks to the efforts of industry and government alike. The world is watching us, wants what we have and we’re on an upward trend.
Be not afraid, for we are India, we are a superpower for the next generation and it’s our turn to lead for a while now.
By Tim Eynon, chief executive officer, Prozone Enterprises (Pvt) Ltd, Mumbai
posted by InCar Group Press Room at 22:59
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