allowing mnc in retail market -FDI

[guruvayurappan]

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here is an read in face book
about opening of wal mart and tescooutlets
guruvayuarappan




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Dinesh Jeyaprakash

புதிய இந்தியா!

"levis jeans" ஸும்,"van heusen"ஸும்
வந்ததால் - எங்களின்
பருத்தி காதி துணிகள்
பழசாய்ப் போயின!

"நைட்டியும்","கவுனும்"
வந்ததால் - எங்களின்
தாவணிகளும்,புடவைகளும்
தரமிழந்துப் போயின!

"pizza" வும் "burger" ரும்
வந்ததால் - எங்களின்
இட்லி,சப்பாத்திக்களை
சுவை இழக்க வைத்தன!

"axe perfume" உம் "olay" க்களும்
வந்ததால் - எங்களின்
மஞ்சளும்,மருதாணிக்களும்
வாசம் இழந்துப் போயின!

"valentine's day, friendship day" க்களும்
வந்ததால் - எங்களின்
நட்புக்களும்,கல்யாணங்களும்
கோர்ட் படிகள் ஏறுகின்றன!

"cricket"டும்,"golf" பும்
வந்ததால் - எங்களின்
கபடியும்,மல்யுத்தமும்
களையிழந்துப் போயின!

"wine" னும்,"vodka" வும்
வந்ததால் - எங்களின்
கூழையும்,கள்ளையும்
குழித்தோண்டிப் புதைத்தன!

"standard charted,american express bank" கும்
வந்ததால் - எங்களின்
கூட்டுறவு வங்கிகள்
திவாலாகிப்போயின!

"dollar ,euro" க்களும்
வந்ததால் - எங்களின்
மூளைகள் வெளிநாடுகளில்
அடமானத்திற்க்கு விற்கப்பட்டன!

இதோ....
"walmart" டும்,"tesco" வும்
வருவதால் - எங்களின்,அண்ணாச்சி கடைகளும்
நாடார் அங்காடிகளும்,செட்டியார் வியாபாரங்களும்
உழைக்கும் விவசாயிகளும் கூட இனி...
அமெரிக்கர்களின் எகாதிபத்யத்தில்
மீண்டும் அடிமையாகப் போகிறார்கள்.

இருப்பதை விட்டுவிட்டு
பறப்பதற்கு ஆசைப்படும்
அரசியல் அதிகாரிகளுக்கு
மீனைவிட தூண்டில் பெரிதென்று
புரிவதெப்போது?

Share · November 30

 

[Yamaka]

Dear Guru:

What's YOUR view on allowing the FDI/MNC in the Retail Market?

My view is this -

India NEEDS massive infusion of Capital, which can come only from FDI.

But, what % of ownership FDIs get, like 49% or 51% or 100% is purely political. That can be negotiated between the National Political Parties and policy makers.

The world around us is fast changing... India should also CHANGE, which means we need to forget about the PAST practices!

That will be painful...

Growth means change, which means pain!

Cheers.

 

[guruvayurappan]

Mr.y!
you are also telling the same what our economical expert say. but ultimately who is the beneficiary ?the poor will become poorer and the rich will be richer.already in India we find it difficult to get laborers for various job in tailoring.house holds,farming etc.so many petty shops and many small road side shops has vanished. if walmart and tesco are allowed many cart wallahs selling fruits and vegetables will loose their livelihood. i also agree
"The world around us is fast changing... India should also CHANGE, which means we need to forget about the PAST practices!

That will be painful...

Growth means change, which means pain!"

but knowing fire will torch/burnt you with your past experience as a wise man you will not experiment it .is it not ?
cheers
guruvayurappan

 

[KRS]

FDI in retail is fine and needed. But for a country like India where there is a huge population that is involved in mom/pop retail, I hope the Government institutes assistance programs to re skill this population over the next several years to minimize the effects of change. Perhaps a special tax limited to 5 or 10 years on these MNCs may be a way to help these would be displaced people.

Regards,
KRS

 

[sangom]

I feel there is sufficient resource base within India and Indian banks to finance retail trade of the walmart/tesco type to the extent at present required in India, in metro cities mainly.

But MMS/SG/PC coterie is hell-bent in allowing FDI under some guise or another (PC's efforts for investing PF and pension funds in share market was a strategy in the reverse way, imo.) so that the foreign remittances into India are repatriated as much as possible and as quickly as possible to the countries of origin. This is the mischief and one plausible reason could be US is helping people to safely hide the funds in the Swiss bank of powers that be.

 

[KRS]

Dear Sri Sangom Ji,

You said:
"This is the mischief and one plausible reason could be US is helping people to safely hide the funds in the Swiss bank of powers that be."

How would this machination work exactly?

American companies in India are taxed twice, by India and USA if they repatriate money to the parent companies in US. This is why there are trillion dollars of American Corporate profit money floating outside of USA. Usually part of the money is reinvested in the countries where these companies make the profit.

I don't exactly understand what you are saying.

Regards,
KRS

 

[Yamaka]

Mr.y!
you are also telling the same what our economical expert say. but ultimately who is the beneficiary ?the poor will become poorer and the rich will be richer.already in India we find it difficult to get laborers for various job in tailoring.house holds,farming etc.so many petty shops and many small road side shops has vanished. if walmart and tesco are allowed many cart wallahs selling fruits and vegetables will loose their livelihood. i also agree
"The world around us is fast changing... India should also CHANGE, which means we need to forget about the PAST practices!

That will be painful...

Growth means change, which means pain!"

but knowing fire will torch/burnt you with your past experience as a wise man you will not experiment it .is it not ?
cheers
guruvayurappan

Dear Guru:

1. Your assumption that FDI/MNC in Retail will make poor poorer and rich richer is not correct..I believe it is not a zero sum game that one gains and one loses:

For example, most of Japan, Germany and rest of Europe was in total ruins soon after WW II. America devised a Marshall Plan to rebuild Europe and a Master Plan to bring back Japan - an idea that was anathema in earlier period, that the Victor will never help the Vanquished to come up in life.

You know the history: All three players immensely benefited: US, Germany and most of Europe and Japan are all in the forefront of world economy.

This is the Positive Sum Game, which could very well happen in India with FDIs in Retail.

As I said FDIs/MNCs need not be given major share - they can be given safely the 49%.

2. Can you be very sure (like burning your hand if you touch fire) that FDIs will be "burning your economy down"?

Empirical data from China, across the NE border says that FDIs were prime reason for the Roaring China!

Don't you believe it?

Please don't confuse FDIs with FIIs (this is the hot money in the Stock Market, which is very transient). FDIs are long term commitment to start big Retail that would create enormous jobs at all levels. Farmers will benefit immensely, and the mom & pop store owners may get a job in the local Retail chain as managers etc.

High Tides Will Lift ALL Boats. I strongly believe.

Cheers.

 

[Yamaka]

Dear Sri Sangom Ji,

You said:
"This is the mischief and one plausible reason could be US is helping people to safely hide the funds in the Swiss bank of powers that be."

How would this machination work exactly?

American companies in India are taxed twice, by India and USA if they repatriate money to the parent companies in US. This is why there are trillion dollars of American Corporate profit money floating outside of USA. Usually part of the money is reinvested in the countries where these companies make the profit.

I don't exactly understand what you are saying.

Regards,
KRS

Dear KRS:

I want to clarify one point here.

I know that in US and India, the companies must declare their Worldwide income in their Balance Sheet.

If they have paid tax in Foreign countries for the portion of income earned in that country then they get a deduction for that income in the parent country.

This means the income is not taxed twice. All incomes get taxed only once in the foreign country or in the parent country.

If this is true, where is the "taxing twice" issue here?

I know reports say that MNCs have parked $1-2 trillions outside the US. This I believe is already taxed once where that income was earned. They CAN bring that money home if they WANT to... but the Govt can't force them to act, as I understand.

Also, I understand that if US gives a lower corporate tax than the foreign countries, then the MNCs have an incentive to pay tax at the lower rate in the US and take a credit for the tax paid elsewhere.

I am not a corporate tax attorney.. I may be totally wrong here.

Please enlighten me.

Regards

Y

 

[guruvayurappan]

thanks Mr.Yamaka for your encouraging picture of FDI/MNC. i will be very much delighted if it is happening. as said the FDI is to be limited to 49% and local market procurement has to ensured (it is proposed 30%). if all the are implemented in letter and spirit ,definitely there will be change. but in India the politician are always have their own hidden agenda (which you may be aware)
cheers,
guruvayurappan

 

[vsubbu48]

-There is a paradox in the Indian economy. While the government is actively seeking FDI, news paper reports indicate that Indian businessmen are frustrated with the government's policies or lack thereof and are seeking investment opportunities outside the country. This is like putting the cart before the horse. When Indian entrepreneurs have enough resources no enabling environment is being created and we beg foreign entrepreneurs to come in.

-Policies are made without proper application of mind. Sanction for a number SEZs were given without realising whether enough land is available. With farmers refusing to part with their arable lands for SEZs, the whole scheme ended in a fiasco.

- When KFC, Kellogs entered India it was tomtomed that their entry would help farmers to realise better farmgate prices. Nothing of the sort has happened.

- Is inviting big retail chains from abroad the only way to attract FDI? Are there not other areas? Can Walmart create enough cold storages in India without necessary power? Most of India is without electricity for six hours or more! Will it take so much interest when it can only invest upto 50%?

These are the points that require to debated to allow FDI in retail or not. Despite the entry of Big Bazar, Spencers, Nilgiris and other major retail outlets, the small merchants continue to flourish.

 

[Nara]

..... Farmers will benefit immensely, and the mom & pop store owners may get a job in the local Retail chain as managers etc.

This is what those moms & pops are afraid of, these mega retail giants will wipe the smaller stores out and they will have to go work for those who caused their demise. They may get fancy titles like "specialist", "manager", etc., but they will amount to nothing more than machines in flesh and blood from whom labor must be extracted at the cheapest possible cost. This is what Walmart does in the U.S.A. I don't know why they will be any different in India.

These mega chains accumulate such enormous buying power that even large corporations like Rubbermaid and P & G will have to bow to the demands of Bentonville, Arkansas. So, to expect Indian farmers to benefit, that too enormously, is a pipe dream. Those who want to buy this dream better beware.

The global free trade mania is all about the rich and powerful making huge profits at the expense of the poor and the working class. This is not a case of rising tide -- which BTW also means low tide is never too far off -- it is a case of race to the bottom, least common denominator, of wages, environmental protection, laws protecting labor rights, etc. These are designed to make capital, which is what the rich have, move anywhere easily, but labor, which is what the poor working class have, restricted and exploited.

The Congress government is cunning, it has put this issue in the back burner to let the heat dissipate. Their hope is to bring it back and pass it when people are not paying attention. The opponents must be vigilant and not let Congress do this.

Cheers!

p.s. A trivia, the six members of the Walton family who owns WalMart have more wealth than 100 million Americans.

 

[kunjuppu]

a few days ago it was my hero, P. Ramamurthi, another tambram, death anniversary.

p.r. was born in a well to do landowning family of thanjavur. on his inheritance, he gave away the land to the tillers. that act alone made
him my hero.

had p.r. been alive, he would have been 103 years and probably sad at the way the communist movement now is.

and would be perplexed by the 'communism' of that economic giant china, on whose behalf pr/ems/basu/sundrayya split the cpi and
formed cpi(m).

P.Ramamurthi

 

[sangom]

Dear Sri Sangom Ji,

You said:
"This is the mischief and one plausible reason could be US is helping people to safely hide the funds in the Swiss bank of powers that be."

How would this machination work exactly?

American companies in India are taxed twice, by India and USA if they repatriate money to the parent companies in US. This is why there are trillion dollars of American Corporate profit money floating outside of USA. Usually part of the money is reinvested in the countries where these companies make the profit.

I don't exactly understand what you are saying.

Regards,
KRS

Shri KRS,

We have the tussle going on between GOI and the supreme court for revealing the names of Indians who had money in the swiss bank accounts. GOI is still refusing to come out with those names. I meant these rich and powerful people who may be given some way to transfer funds-in a manner that its route cannot be followed or traced - from wherever it now is to some new safe haven by CIA/FBI and US Govt. if the US MNCs are allowed to harvest from India thru retail chains.

Assange has indicated he will reveal the names thru wikileaks in 2012, hence the urgency, I believe.

 

[Iyyarooraan]

Having flooded India with shiploads of paper money, they have pulled the carpet under your feet with the result 'rupee' is at its lowest value. Another trap of FDI will only entrap us inside. We will be blessed with a hallucinated feeling that the FDI people are behind the bars/trap, when they pull the next carpet under your feet. Rupee value may rest at pre-independence rate. This of course could be a pleasure for a few here!

 

[biswa]

Our policy should be like China: welcome them in, take their money, steal their technology and then boot them out! Or at least spank them frequently so that they stay in line.

The "they" of course refers to the Walmart and Carrefours of the world.

 

[kunjuppu]

Our policy should be like China: welcome them in, take their money, steal their technology and then boot them out! Or at least spank them frequently so that they stay in line.

The "they" of course refers to the Walmart and Carrefours of the world.

biswa,

the chinese are big dadas at it. i think.

carrefours and walmart bring in great logistics know how. great systems, which can spot the cost accurately of every thimble in the store and price them accordingly.

but the chinese, now being the workshop of the world, have stolen wholesale the know-how to make apple ipad/ipod/iphone to soon airbus 320/21 planes.

i still do not understand the logic of the western countries, where for the convenience of a few dolla, and reduced profit, they give away whole generations of technology.

this habit started late 1940s when bell labs gave away the transistor technology to the japanese for 25 million dolla. and the rest, we all know, is history.

we can all start thinking of how our lives will be changed in a world dominated by china.

for one, we might want to start learning mandarin, and eat with chop sticks?

 

[biswa]

Mr K, you are absolutely right.

The big difference is that China made itself indispensable to the west, by becoming the factories to the world. Now they can hold the west hostage.

India hasn't been able to do that yet. If India obliterates itself tomorrow, no big losses for Western businesses. After all India exports only bodies/brains which can easily be replaced.

I had read somewhere that the US plans 1 year at a time, India plans 5 years at a time and China plans 100 years at a time. Now their time has come.

 

[biswa]

Having flooded India with shiploads of paper money, they have pulled the carpet under your feet with the result 'rupee' is at its lowest value. Another trap of FDI will only entrap us inside. We will be blessed with a hallucinated feeling that the FDI people are behind the bars/trap, when they pull the next carpet under your feet. Rupee value may rest at pre-independence rate. This of course could be a pleasure for a few here!

Of course! If India wants to play with the big boys, it has to be able to defend its currency. There are plenty of jackals and vultures around.

 

[guruvayurappan]

dear VSubbu !
i am fully agre with your opinion and very much like the lines ". There is a paradox in the Indian economy. While the government is actively seeking FDI, news paper reports indicate that Indian businessmen are frustrated with the government's policies or lack thereof and are seeking investment opportunities outside the country. This is like putting the cart before the horse. When Indian entrepreneurs have enough resources no enabling environment is being created and we beg foreign entrepreneurs to come in."
cheers,
guruvayurappan

 

[guruvayurappan]

dear iyyarooran!
likewise china is flooding our country with thier cheap toys and electrical goods. on one side they extent their friendship and other side placing road block for oil exploration.they want to keep india under check by moving close with PAK and n korea.

 

[Iyyarooraan]

The recognized business people/houses in India do not know what they want. The continue to be ordinary "traders" and at the same time play agent to the West. There are best brains and talents all over India. The government and business houses will suppress by various means. This may not go on and on any more.

 

[venkitesh]

Sir,

now the reformists are saying there is a very big gap between rich and poor than it was 25 yrs, ago. All the employees are going to loose their PF gratuity and even assured pension through the PFRDA bill. The oil price determination is by the market now and what it give to the common man and poor. we brahmins all are not rich, may be rich with our culture and behaving by money i think we most are not.

The present governance by the pro rich CRONY Capitalism is dangerous . FDI in R S also will be disastrous.

 

[Yamaka]

Sir,

now the reformists are saying there is a very big gap between rich and poor than it was 25 yrs, ago. All the employees are going to loose their PF gratuity and even assured pension through the PFRDA bill. The oil price determination is by the market now and what it give to the common man and poor. we brahmins all are not rich, may be rich with our culture and behaving by money i think we most are not.

The present governance by the pro rich CRONY Capitalism is dangerous . FDI in R S also will be disastrous.

Dear Venkitesh:

Here is my two cents on this -

1. Long term commitment of foreign funds (FDI) will be a NET positive in India, as it is in China and other developing countries, who are all doing all sorts of concessions to FDIs to get their money.

2. The problems of the GAP between RICH and POOR is not due to FDI at all. In India, only about 7.5% of the total population has high school (pass) education. This is only about 90 million of the total 1200 million people.

Of this 90 millions, a small portion has a college degree; a very very small slice of this has Masters and PhD degrees in this world of Knowledge Economy all around the globe.

We have only about 9.6 million people owning and operating a car in the country. What % is this? Please calculate.

So, the problem is education and skill levels of most of the people -about 1110 million people - in India. That's why there is so much disparity in INCOME and WEALTH of people in an Open Market Driven economy.

3. You called the situation in India as Crony Capitalism. Will you then prefer to go back to pre-1992 period of Licence Raj? Or compete with the Socialist Central Planning of North Korea or Cuba?

Look around, China - the Red Communist - has embraced Centrally Planned Capitalism! India is now forced to compete against China, whether you like it or not.

That's an Existential Problem for most Indians!

Cheers.

 

[vsubbu48]

Dear Venkitesh:

Here is my two cents on this -

1. Long term commitment of foreign funds (FDI) will be a NET positive in India, as it is in China and other developing countries, who are all doing all sorts of concessions to FDIs to get their money.

2. The problems of the GAP between RICH and POOR is not due to FDI at all. In India, only about 7.5% of the total population has high school (pass) education. This is only about 90 million of the total 1200 million people.

Of this 90 millions, a small portion has a college degree; a very very small slice of this has Masters and PhD degrees in this world of Knowledge Economy all around the globe.

We have only about 9.6 million people owning and operating a car in the country. What % is this? Please calculate.

So, the problem is education and skill levels of most of the people -about 1110 million people - in India. That's why there is so much disparity in INCOME and WEALTH of people in an Open Market Driven economy.

3. You called the situation in India as Crony Capitalism. Will you then prefer to go back to pre-1992 period of Licence Raj? Or compete with the Socialist Central Planning of North Korea or Cuba?

Look around, China - the Red Communist - has embraced Centrally Planned Capitalism! India is now forced to compete against China, whether you like it or not.

That's an Existential Problem for most Indians!

Cheers.

Dear Shri Yamaka,

The point is whether you require foreign investment at all? Whether we lack the resources? Not at all. The problem is that the resources raised through taxation are frittered away in populist schemes like MNREGA without creating any asset. Now the government is going to pass Food Security Bill which will almost suck all the lendable resources of the nationalised banks which are already faltering and require frequent infusion of funds to maintain capital adequacy ratio. The private industry will have no chance of sourcing funds for investments from banks as food credit, which is a directed lending at a RBI determined interest rate will have priority over everything. In fact this is highly misused and opaque form of bank credit as the financing banks never get to know the quantity and value of stocks financed by them.

On the one hand the government's resources are sunk in bottomless holes , for electoral gains, without capital creation and on the other hand a hue and cry is made for lack of resources.

 

[Yamaka]

Dear Shri Yamaka,

The point is whether you require foreign investment at all? Whether we lack the resources? Not at all. The problem is that the resources raised through taxation are frittered away in populist schemes like MNREGA without creating any asset. Now the government is going to pass Food Security Bill which will almost suck all the lendable resources of the nationalised banks which are already faltering and require frequent infusion of funds to maintain capital adequacy ratio. The private industry will have no chance of sourcing funds for investments from banks as food credit, which is a directed lending at a RBI determined interest rate will have priority over everything. In fact this is highly misused and opaque form of bank credit as the financing banks never get to know the quantity and value of stocks financed by them.

On the one hand the government's resources are sunk in bottomless holes , for electoral gains, without capital creation and on the other hand a hue and cry is made for lack of resources.

Dear Vsubbu:

You asked a very important question that needs to be addressed head on here -

Do we need Foreign Investment at all? Yes, we MUST have foreign investments.

Some background -

1. About 1200 million people in India has about 600 million people in the workforce, which collectively makes products and services worth nominally about U$ 2 trillions a year (here called the GDP). This gives a per capita GDP of U$1666 per person per year or $4.56 per person per day: convert this into per person per day of INCOME of about U$3.65.

This is a very poor income. Because about 1110 million people don't have even a high school pass education (of this about 360 million does not know to read or write even the mother tongue).

2. Of this GDP, the Indian Govt collects totally (both Union 20% & States 15%) 35% of the GDP as tax (of all forms including VATs). Every year India has a budget deficit (about 5% of GDP) and has a total Debt of about 60% of GDP already, paying interests every year.

This is very inadequate to do any long term investments in modernization of education, infrastructure or retail etc etc.

Therefore, we need INVESTMENT from rich savers from outside the country: this is called the Foreign Direct Investments...

If you give some incentives, these Investors will come and employ their hard earned money in India to benefit both INDIA and for their pocket book...

If not they will go to China, Malaysia, Singapore etc etc.

It depends on what India wants? To be a poor neighbor to a booming China or not?

Learn from Chinese, please!

Cheers.

ps. If you own and operate a car in India, you are one of only 10 million people in India who make up the Upper Middle Class. Only about 1 million are Rich class and most of others are lower middle class (80 millions) and dirt poor (1110 millions). This should give you the right perspective of what India is in 2011...