Comments on: FDI Controls in India - what are they really about?

By: deepak

deepak — Sun, 21 Jan 2007 05:39:13 +0000

Regarding FDI restrictions. Have mixed feelings about this one. Why is it important???
You have indicated (and some people do agree) there should be some sectors which needs to be insulated defence, sattelites, atomic engergy, which are suppose to be self-gaurding national intersts.
Most of the sectors have restrictions keeping the same in mind - national interests. Imagine if the oil sector was not protected.. there would have been no ONGC, BPCL, HPCL .. and indeed no subsidies.. probably we would be paying Rs 100/ litre of petrol ..which for most of citizens in India is unaffordable .. (not that Rs55 is affordable)..
Now coming to media… Media is one of the most influential mediums and having a totally autonomous foriegn body controlling the management will have a major impact in a country like ours, as people are not mature enough to assimilate information, analyze and judge. It is just mass histeria which guides their decisons and hence it would be goo d to impose restrictions to FDI. I also am totally against politicians having huge stakes in Media companies and influencing people.
Retail - This is very much clear that the protection is for the ambanis, the ruias, the mittals rahter than the Kirana stores, which is just a face-saving tactic.

In short, restrictions have both helped and marred Indian economy. Now that we have real economists at the helm of affairs we can hope things will improve.

By: Krish

Krish — Sun, 31 Dec 2006 20:06:31 +0000

Brinda,

It’s not the poor Kirana storewallas who are against FDI in retail, it’s the Indian Retail giants like Big Bazaar, Rahejas, Nirmal etc who are frowning. Their outwardly bravado aside, ( based on their knowledge of local ethos, logistics and their homegrown buying efficiencies in keeping the prices low - which cannot be threatened by Wal-Mart ) all of them squirm at the hint of FDI in retail. As for the poor kiranawallah, organized retail by itself is competition, since he does not know the difference between local money and FDI.

In fact, Indian retailers are not so much worried about a Wal-Mart snatching their market share. They are worried about their perceived loss of pricing power later (as the fad catches on) between a few big players.

The kiranawallah’s doesn’t deserve your mercy either -up until now he used to harm your health by mixing inferior quality anything-that-looked-like with all that you bought from him at seemingly affordable prices. He did it with grains, lentils, edible oils and even milk that you fed to your children. You had your share of ill-health thanks to his `strategies’ of unjust enrichment.

If you had noticed, it happened across Cement industry during 2004-05, when the Commerce ministry had to intervene to break the Cement Cartel ramping up prices to very high levels.

By: Basab

Basab — Tue, 07 Nov 2006 14:52:41 +0000

Radha, you are correct. TV seems to receive less skepticism compared to newspapers. Perhaps a combination of seeing pictures vs. just words, and the fact that newspapers are generally read by the well educated and well informed, around the world.

Brinda, I heartily disagree with your pov. Dislocation of jobs is not the same as net job loss. Many technological advancements come at the cost of dislocation of jobs (powerlooms). But to bar the progress of technology or business models because of short-term dislocations is short-sighted. Your second point about pricing power shifting to large retailers is plausible but would be truer if marginal farmers today had any pricing power in the first place.

By: radhakrishnan c nair

radhakrishnan c nair — Mon, 06 Nov 2006 17:55:50 +0000

I won’t quite agree with you on this one Basab. Taking the same example as yours, I know how much SunTV was able to sway its voters for the recent elections by their campaign of highlighting free goodies. In fact, Dayanidhi Maran appears on Sun News every day for some reason or the other. Your point of people coming to know of bias can only be said of educated indians. An a majority of the people read local language newspapers and get easily influenced by the topics. A writer can twist or turn facts as and when he wants

By: Brinda Adige

Brinda Adige — Mon, 06 Nov 2006 11:58:45 +0000

FDI in retail market especially in a country like ours, will wipe out small shops and kirana owners say in about 10 years time (maybe sooner). At the most how many jobs will such giants create and for what category of people? The giants will then have no competition at all and can name the price they want to buy a product from either the producer or even the farmer (or even become the producers indirectly). Why do we not press for “good goverance” from our elected representatives? intelligent debates on economics or rather the politics of economics alone will not ensure fair livelihood for all.

By: Dheeraj

Dheeraj — Mon, 06 Nov 2006 07:08:08 +0000

On the magic numbers :

49% is, as you rightly say, to prevent majority control.

26% and 74% are the threshold numbers (above or below which) that enable you to approve or prevent “special resolutions” - the really meaty ones - at company AGMs. I speak on this from what is commonly known.

Which clause of the Companies Act deals with this? I don’t know. I’m not a legal person. Maybe somebody can elaborate.

By: A.Ramanathan

A.Ramanathan — Mon, 06 Nov 2006 03:40:19 +0000

I agree with you that Cap of FDI limit is ridiculous.
If foreign MNC would like to Invest in India,except in Sectors like Defense,Atomic Energy,then why not.
After all they are going to ultimately create jobs for Indians only.You may have a few expats here and there in the Management level.Even the Co doing Gargage clearance in Chennai is part of a European MNC Vivendi and employs couple of thousand Chennaiites.
The funny thing is that with all this bro ha about FDI,even today the GOI does not know who are the real owners of Jet Airways.This was clearly stated by Arun Shourie in Parliament during the NDA govt.

By: Blogbharti » Why should newspapers be protected in any way?

Blogbharti » Why should newspapers be protected in any way? — Sun, 05 Nov 2006 14:25:13 +0000

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