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Why India Should Not Allow FDI in Retail

How does FDI help India, other than a steroid booster to the economy which is sickened by scams of billions by the Government? The FDI “reform” is no more than a step taken by the Govt to deviate the attention from 2G, CWG, swiss bank accounts, and Coalgate.

What do you mean by FDI in Retail?

The term FDI means Foreign Direct Investment is an investment made by a foreign firm in a domestic economy.  Now the obvious question is why does somebody invest?  And the obvious answer is, to make money.  If you invest huge, you would expect huge returns, since the stakes involved are high.

Now when you buy something, and sell it to others, you try and earn a profit.  When you have 51% stake, you take that much amount of profit (in simple terms).

So, if I’m financially strong.  I’ll invest in some place where I do not belong, with the help of a local guy.  I will invest in a market entirely new to me.  I will set up my shop, buy a commodity from the producer directly and sell it at a price lower than the existing market price.  I would gradually end up killing the competition.

Since I can now generate profit.  I will have a strong customer base, and I can earn huge profits.  There is no one to compete.  Now, I have a setup which gives me a share of 51% profit.  I can now call the shots.  I have to buy the local produce and sell it locally.  The domestic market of that locality gets only 49% of the total produce over the entire sales, while I get 51% without anything to produce.

So basically I am not generating anything, I’m just grazing the profits generated from the local market and taking it home from my other investments.  I can create many more such ventures in which for a small investment, I can get long term results without anything to produce but only to manage.  Plus, this money I generate from that local market can help me grow my home turf, making my domestic economy stronger.

How does FDI help India, other than a steroid booster to the economy which is sickened by scams of billions by the Government?  The FDI “reform” is no more than a step taken by the Govt to deviate the attention from 2G, CWG, swiss bank accounts, and Coalgate.

Will FDI in retail help more than 600 millin people of India under BPL for which Montek Singh Ahluwalia has defined a minimum livable income per day of Rs 25?

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