Nathaniel Ribao (Nagaland): Knowing well that a sound economy is vital for the growth and development of society, I wish we delve into the recent announcement by GOI easing the restrictions on single/multi brand retail allowing 100% and 51% FDI respectively. Don't you think Nagaland have to grab the opportunities and derive maximum benefits?
Till now Nagaland Govt. is one among the states which has kept mum or opposed the entry of FDI in these sector. But are the denizens of Nagaland ready to welcome and geared for the entry of FDI in the said sector? The Union Govt. has put a condition that it depends on respective state to oppose or welcome FDI in retail and informed the advantages/benefits which you all might have read and are thoroughly aware of. At present, Nagaland state has no big time entrepreneurs who can in collaboration with big time retail chain established retail business. So how can we solve on this front?
For instance, farmers can sell their finished products at a fixed point at competitive price as one of the conditions laid down by GOI for FDI is that a good percentage of raw material should be sourced locally. Simultaneously, they saved their produce from wastage(As their will be proper storage centre) or are free from the burden of not being able to sell their finished goods. Thus the consumers in return can purchase their needs at competitive and reasonable price with establishment of innumerable retail chains. Or say, a Pantaloon/ Planet Fashion/ Lifestyle retail chain setting up multi-brand apparel shops would give us variety of choices and there can be stiff competition among the retail chains in the form of offering customers value added or discounted price.
After all, retail chain delivering quality with reasonable price for customer satisfaction that is of utmost importance and is the objective of bringing in FDI by GOI. On a lighter note, we can show off with heads held high our branded goods and can discard the Moreh/ Silliguri routed branded goods.
Kekhrie Mezhur Sekhose (University of Bath, UK): I don’t really blog but I felt compelled to share my thoughts on reading this astute write up.
Starting with its benefits, retail FDI would help promote employment specially the local youth. The entry of FDI would open opportunities to work in various positions such as the sales, management and finance department of the foreign retailers. With the current situation of rising unemployed youth workforce in our state, I think there could be immense benefits on this front. By promoting private sector employment, this may also encourage the present Naga youths (Moreover the Naga society as a whole) to reconsider their quest in seeking only government jobs.
Well, this could be argued as an overtly optimistic possibility, but nonetheless it is a possible scenario. Aware of the possible benefits that the state can reap from retail FDI, it may succumb to pressure in developing the local infrastructure (specifically the roads and electricity supply) and improving the local market conditions in order to encourage foreign retailers into our market. Mentioning a few, I cannot possibly imagine how they can function efficiently at their desired standards with the frequent lengthy power cuts and the dismal road conditions. These problems could be minor in comparison to the notorious tax collection system that is so prevalent. Considering these factors, I doubt any MNC would be at all be interested in investing in our state even if the government allowed retail FDI or there is scope for potential profits for them in our market.
However, there needs to careful consideration in allowing FDI retail into the state as there is a possibility of excessive exploitation economically and also impairing the social structure of our society. Competition is indeed beneficial for the market, however effective policies to curb it is required to a certain extent as the superior foreign retailers may monopolize the market and wipe out our promising and efficient local retailers. Our local retailers should be adequately protected from the instantaneous formidable competition that the FDI retail will bring with them.
Moreover if the government doesn’t ensure that these MNCs pay an acceptable price to our local farmers for their products and also source a reasonable proportion of raw materials locally, this could have detrimental effects on the grass roots level in particular. Low prices will only make our poor farmers poorer and widen the existent pervasive inequality that our state suffers from. Also to actually reap these benefits at a macro level, a sufficient percentage of our farmers should have easy access in supplying their produce.
All in all, the benefits of FDI can be seen clearly but the drawbacks can eclipse them if not regulated correctly. I personally feel it will be a positive step to liberalise our market and welcome retail FDI, which could ultimately spur economic growth in Nagaland. However, this process of allowing retail FDI should be done in a gradual and controlled manner in order to allow our society to integrate with FDI beneficially. Regular checks and attentive oversight will be necessary and essential to mitigate the chances of any undesirable economic or social outcomes that could occur because of FDI.
Yanpvuo Kikon(Admin): The two arguments that FDI brings in foreign exchange and displaces local products are misconceptions. What FDI brings in is foreign knowledge, expertise, capital and marketing links which are non-existant in our present system. Nagaland is in dire need of reforms to quench the thirst of our progress and development seeking educated youths. We need FDI's, BOOT's and PPP's to boost our infrastructure. Most Indian politicians think that anything foreign is bad for the local population is totally short sighted! Before the 1991 reforms, from 1950's to 1991 import duties were as high as 300%! The GDP grew just 3.5% and number of poor people actually doubled! The experiment of self sufficiency failed. And even considering Nagaland, this is the case, our dreams of exports and revenue generation through our local produce will ever remain a far fetched dream unless we work on reforms after careful calculation of the policies needed to check exploitation. We challenge that it will affect our local retailers? There are already around 4000 non-local shops in Kohima alone, our economy is already controlled by outsiders, how can be argue that our Naga businesses will be affected. How does it affect local business? When we talk about retail chains, we already have Desi retail chains such as Vishal in Dimapur doing good and in no way its entry has wiped out the smaller business selling essential commodities(Most of them run by Illegal Bangladeshi Immigrants, ironically!). FDI entry will not only provide job opportunites for the Nagas, give direct link and better prices to the farmers but also add bonus features such as improved logistics, cold storage etc! Politicians such as the eccentric Mamata Banerjee will always oppose just for the sake of opposing! She chased away all major companies from West Bengal without realizing that Farmers in West Bengal have benefitted most from foreign companies such as Pepsi which sourced thrice as much potatoes from them. The Government and NGO's need to empower farmers through initiatives such as cooperative societies to get rid of the greatest evil which exploits farmers – The Middlemen and enable the farmers get good money after selling it a higher rate and the consumers get quality products at a lower price. But unless our foundation is strong – Roadways & Electricity; backed with transparent and investor friendly policies, our future will ever remain shaky.
