Wallmart spent a whopping fortune lobbying India entry
Exposing
the sleaze, lies and perfidy
The Walmart has spent a whopping sum
of $11 million dollar for lobbying its entry into India. The US-based Walmart
Stores, one of the world’s top revenue-grossers with over $400 billion of total
annual sales and present in 15 countries, is lobbying hard with lawmakers here
to help it expand into India, possibly through bilateral talks between the related
authorities of the two countries. As per the lobbying disclosure reports filed
by the company with the US Senate, Walmart has since then spent a staggering
amount of over $11 million (more than Rs 52 crore) on issues related to India,
as also other matters, in over two years now. In 2010 itself, the company spent
$1.37 million (over Rs six crore) on lobbying in the first quarter
This report gets well with the
reaction from the US, supporting the UPA decision to allow FDI in retail. It also exposes the fair and unfair means
employed by the MNC to expand its business.
There are also ethical issues
involved in the way the government went about introducing the proposal to allow
FDI in retail. The discussion paper by the Department of Industrial Policy and
Promotion (DIPP) quotes extensively from working paper and policy paper –
August 2011, of Indian Council for Research on International Economic Relations
(ICRIER), whose chairperson is Dr Isher Judge Ahluwalia, wife of Dr Montek Singh
Ahluwalia, Chairman Planning Commission.
This organisation has in its report recommended opening of this sector to FDI, basically focusing on the benefits to the consumer, giving them preference of choice and playing down of its adverse impact on agriculture and small and medium sector manufacturing and unorganised retail. Though, this report also mentions in its opening remarks that unorganised retailers experience a decline in sales and over time, the government has ignored this. Further, there are several documents and reports available in India and abroad which bring out the ill effects of FDI in this sector but these reports are not finding favours with the government.
If we go deeply into the matter, allowing 51
per cent foreign direct investment (FDI) in Multi Brand Retail in India is not
a good move, because the companies that we are inviting are known to monopolise
the market wherever they go. There are several reports from across the world to
prove that the major companies, like Walmart and Carrefour, use a monopolistic
approach to kill local markets. Indonesia and other countries are good examples
of the result of such monopolistic policies.
India, with its weak manufacturing base and
weak supply-side infrastructure, is not in a position to compete with many global
brands. But at the same time, our country provides such a large market that all
big names want a piece of the pie. The Indian retail market is estimated to be
around $ 400 billion with more than 120 million retailers and employing over
400 million people. On the contrary, the US-based giant Walmart, a global
leader in big retail, also has a turnover of US $400 billion and employs only
2.1 million people. Which one of these retail systems provides employment is
crystal clear. If we think Walmart is here to create employment opportunities, we must be living in a fool’s paradise. Simply put, they are investing in India
to make money. Thus, the onus of protecting our market and promoting the locals
lies with us.
When we can build our domestic
infrastructure so well (a case in point is the metro rail system and golden
quadrilateral project), why do we need outsiders to come here to build supply
chain infrastructure? There is no big technology in involved. Even our standing
committee of the parliament had rejected FDI in retail.
Besides, when foreign organisations
enter the multi-brand retail market in India, they will look to procure goods
globally. Agriculture sector in US and Europe is highly subsidised even our
pressure under the WTO could not get us any results. It is the massive farm subsidy
that supports agriculture in the US. If this subsidy, classified under Green
Box for WTO calculations, is withdrawn (as analysed by UNCTAD-India), US
agriculture collapses. A latest 2010 report by the Organisation for Economic
Cooperation and Development (OECD), a group comprising the richest 30 countries
in the world, states explicitly that farm subsidies rose by 22 per cent in
2009, up from 21 per cent in 2008. In just one year in 2009, these
industrialised countries provided a subsidy of Rs 12.60 lakh crore to
agriculture. Therefore how our agriculture sector will compete internationally.
In India, it is markets that sustain the farmers and not subsidies. More than
60 per cent of our population is engaged in this sector they will lose heavily.
Secondly, our manufacturing sector has to cope with high interest rates, our real
estate prices are skyrocketing in this context, can they compete with Chinese
manufacturing sector. These MNCs will procure internationally, then they will
flood our markets with foreign goods, and pocket fat profits, further weakening
our hold on our own market. It is important to look within and improve the
nation’s lot by focusing on agriculture and the manufacturing sector, rather
than depending on others to come and help us out.
There is also the possibility that
dealing with these foreign organisations may actually reduce our foreign
exchange coffers, which may go in the negative. Domestic report in the
manufacturing sectors points out that the net foreign exchange flow of existing
multinational manufacturing sector (MNC) is negative at present. When the rupee
is hovering at around 53 to a dollar which is strong at the time any inflow is
beneficial to the international investor.
Inviting foreign direct investment
is not simple issue; we need to look at the context of the entire move. FDI at
this juncture does not fit the bill, as India has a number of domestic issues
to tackle. We need to look deeper to understand how and when the investments
can really prove fruitful for agriculture and the manufacturing sector. The
political and economic conditions of our country in the current scenario also
need to be taken into consideration.
Economics is a complex issue, which
demands that a balance be struck between the positive and the negative and all
decisions have to be taken in the present context. Unfortunately this bill gets
weighed down by its shortcomings.
The government has launched a
campaign to show us the merits of their move, but that’s not enough because it
requires proof, which they are yet to provide. When they talk about quality
assurance in terms of consumer satisfaction, they also need to project the
cost-benefit analysis. For us, isolated product availability is not sufficient.
At the end of it, people want to know how many products really benefit them.
There are many more such questions, which have
raised doubts in the minds of all. How many companies does India open its
market to because if it is just the major ones, then it is surely going to kill
the market by shutting all doors to competition. And it would be significant to
point out that the Competition Commission of India is a new organisation which
needs more teeth and experience to deal with complicated situations. That’s the
context being spoken about.
Allowing
51 percent foreign direct investment (FDI) in Multi Brand Retail in India is
not a good move, because the companies that we are inviting are known to
monopolise the market wherever they go. There are several reports from across
the world to prove that the major companies, like Walmart and Carrefour, use a
monopolistic approach to kill local markets. Indonesia and other countries are
good examples of the result of such monopolistic policies.
Inviting
foreign direct investment is not simple issue; we need to look at the context
of the entire move. FDI at this juncture does not fit the bill, as India has a
number of domestic issues to tackle. We need to look deeper to understand how
and when the investments can really prove fruitful for agriculture and the
manufacturing sector.
Gopal Krishna Agarwal is the National spokesperson of the Bharatiya Janata Party on economic affairs.