Monday, December 5, 2011

Opening FDI in Indian retail market

In year 1991 (20 years back) our home was decorated fully and we've more than 50 people wearing new clothes and in a joyous occasion. One would be dead wrong if they think it's a festival or a function. The fact was we're getting a "telephone" in our home.

We're one of the lucky guys in the town with a population of over 100,000 but with less than 100 telephones. I even remember people travelling from near by villages to my home to receive a call.

Just a month back in Nov when I visited my home town the first thing I did was to purchase a pre-paid SIM card by paying INR 50 (~ $1) and activating a data package for 1 month by paying extra INR 99 (~$2). This was the change thanks to innovations in technology and more importantly opening up the telecom sector to private sector.

There're strikes, bandhs, harthals what not done by the so called communists & BSNL (DOT) employees not to open up the telecom sector because it'd increase the prices and people will be slaves to MNC's and large private sectors. But thanks to Mr. Singh & rest we opened up. Of course there're scandals, kick backs but my point is mainly with liberalization and introducing competition moving away from license raj.

Now when I see the retail sector, I see a shop almost in every street and corner. I'm sure they are making more than what my dad or some of my friends are making by working as a employee. Understand there're 50 million people participated in last week strike. If I take the number and estimate each shop represented by 10 people then the approx number of shops will be around 5 million. My big question is how many people are even paying income tax. I'm sure none ( or a very minor %) paying sales tax or VAT because these folks are 'small time retailers'. This is the problem I see in India where people always hide behind protective covers and 'politicians' blame those in power without any logic and work for their own vote bank benefits.

I heard below lines in a movie when the Hero was asked by friend why he choose to be in India which is a poor country.

Yes, India is a poor country.
We've leaders but poor in leadership
We've resources but poor in execution
We've knowledge but poor in innovation
We've businessman but poor in business
We've long history of culture & heritage but lack of values & morals

By the way here is a great article from Swaminathan.

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