To start with, I want to reaffirm that India needs economic reform, and
lots of it. Reforms should strengthen governance institutions as well as
the working of markets. An increased role for markets and competition
will, on the whole, benefit the Indian economy. If reforms are done
well, they can promote inclusive growth. With all that clearly stated, I
want to question some of the reform rhetoric around FDI in multi-brand
retail, and argue for making a different set of reforms a priority if we
want to improve the supply chain, whether farm to fork (or fingers,
really, for India), or for manufactured goods.
Certainly, Western retailers such as Walmart and Tesco can
bring in knowledge that comes with vast experience, as well as large
dollops of capital. If we can have McDonald’s in India, bringing in new
ideas, high standards of customer service and process efficiencies, why
not foreign retailers too? Certainly, it will help to increase
competition and innovation in retailing. But some of the arguments being
made seem to have shaky foundations.
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