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Oracle
I'm sceptical because he has to defend the party line. Where is the objective take here.If people would just watch the video, I would have to type a lot less.
But the supply chain, the local one becomes much more efficient. In India, 85% of plots are 5 acres or less. is there any way these farmers could join up and farm bigger plots. They'd save on resources as farm hands are difficult to come by nowadays. What is the % of people involved in agriculture in India compared to abroad ? I see figures like 50% whereas its less than 5% elsewhere. if there is a glut of produce in one part of the country then its not feasible to transport it over to another where there is a shortage. Most produce is consumed locally very little goes elsewhere.Anyways, in other countries, the middlemen has been replaced by the "super" middlemen i.e. retailers like Walmart. He gave the example of UK, where around 65% of the market is controlled by only 4 retailers. When farmers have to sell, they have no choice but to sell to them. When you have to buy, you have no choice but to buy from them. In the end, you have an oligopoly.
Its takes a lot of money to make big guys, so there will only be a few that can do it. So what if 65% is controlled by 4. That means there are 3 competitors for every transaction. Still 35% isn't controlled by them. This is not an oligopoly which would have a larger share.
For all the talk about middlemen i pay as much if not more to buy from farmer cooperatives as i do in the open market. There is no middleman involved yet the prices are still the same. And there is no quality control, the farmers sell by the crate and their stores have to buy as is.
FDI law passed stipulates that 20-30% has to be sourced locally. plus they need to invest in back end infrastructure. These are huge expenses, when do these chains actually get to see a profit. 5 years later, longer? I've read they can go ten years without a profit though i doubt it.He said how this is different from say a Reliance mart or Big Bazaar. Walmart is an international retailer with an international supply chain. Our "supermarkets" still purchase most of the stuff from Indian sellers. It will not be the same for India as it is not the same for the USA or any other developed countries.
China was able to capitalise on mass production. I don't know if its too late for us to get on this train or not. Chinese prices will not remain cheap forever, prices will rise as their standard of living improves. When that happens they are going to want to cut their costs. Are we going to welcome them or not. Will we be ready for it or not.It helped China create manufacturing as they stocked mainly Chinese goods in the Chinese Walmarts. It also helped China because they made China their global supply hub, apart from creating lot of retail jobs. All in all, a win-win situation for China.
Bottomline : In 2002 we were not ready for FDI in retail. ten years later we are still not ready. How much longer will it take. To put things in perspective its up to the states how they implement FDI in retail. Some will and others won't. Just because Delhi isn't going to have it does not mean the rest of the country will also lose out. But some states have to take the initiative and when i read about opposition i have a hunch it will be successful. There will be winners & losers as happens all the time.