FDI merits outweigh the de-merits completely

New Delhi: In a bid to show that reforms are truly on their way, a 51 per cent foreign direct investment was announced in multi-brand retail. However, when the chief allies of the Congress-led UPA government rallied against the decision, FDI in retail was rolled-back . With the big hopes of retail companies deflated, India Inc was disappointed. Reflecting the industry sentiments, Rajan Mittal, Vice- Chairman and Managing Director of Bharti Enterprises, that has a tie up with Wal-Mart, spoke about the FDI policy’s roll back and its effect on the Indian market.

 

Here are edited excerpts from the interview:

 

Thanks so much for talking to us on this subject of FDI in retail, which has been such a political hot potato. Now of course it looks like it’s gone in some limbo; but would you still believe that it’s an important step? Would have been an important step, for India and for the retail space?

I still clearly think that this is an important landmark for India's long term growth story; in terms of food security, food quality and the understanding of what we are doing on agriculture reforms at the end of the day. If you don’t have a complete eco system built around your supeopley chain you are going to have a loss of 30 to 40 per cent from farm to folk.

 

So, then were you, in a sense, disappointed by the lack of political consensus on this, since there have been so many debates and discussions on it?

Several years, this has been going on and i think, each stake holder, in that sense, has seen the merits. Even if there are de-merits, the merits outweigh completely. So it’s not that the discussions have not happened; it’s not that people haven’t spoken about it. I think everybody understands and recognizes that, but yet there seems to be a disconnect, and that is why we are here, where we are.

 

For somebody like you and for other big retailers, who are waiting for this to come as you felt it would bring in badly needed funds, expand the market, bring in modern technique; does this become a major setback?

I think so. You know the issue is really technology, know-how and processes, and of course, funding. The question that I have repeatedly raised is that if you are allowing the Indian corporate houses - large corporate houses into retailing, what is wrong with somebody who can bring you all the other stuff, including technology, funds and manufacturing around India, which can serve their global needs.

Agriculture too will be positively affected, where we can go directly to the farmers, as they get a better yield and employment generation. You look at it, it is really the people at the bottom of the pyramid who come and join here. What about the consumers? There are so many stakeholders, who are going to benefit out of this.

 

And now who may not benefit…

As always it happens. And we've seen reforms. We've seen telecom reforms within our own space. How we started last 15 years. Look at the economic connectivity as well as the empowerment of those people. So it’s only in that sense, I am saying it’s something which we believe is good for the country.

 

Chambers of commerce and business including the ones that you represent have been extremely concerned, about what's often been described, as a policy paralysis in the government. If FDI were to be rolled back for some reason, what does it mean for the, Indian economy?

The chambers have supported it and said that this is a landmark decision. Hence, we are appealing all sections to have a rational discussion and allow this decision to go ahead.

If things don't work out, it does leave behind some kind of a question mark, so as to how decision making will take place in future. Governments will come and go, Governments will take decisions but the FDI policy decision has to be taken, keeping in mind the national interest.

 

 you know an interesting thing about this debate is that people like you, who are already in the organized retail and others as well like Future group, are all welcoming FDI in retail, while most people would have thought there would be increase in competition for you.

Do explain that anomaly, because that is not clear to a lot of people. What are the advantages that the new players would have brought in which would have outweighed the fact that they would be rivals competing with you?

No I think in India when they come in, they will look for partners as we already have. If you see Tesco, if you see our partners, if you see Carrefour, they're looking for partnership and we expect that most of the global brands will look for Indian partners.

This is because the way India works and understanding the Indian consumer is very different. If you go from up north to down south, it’s a completely different consumer that you have. So clearly you would want to look at the space in different ways. Similarly, in the front end, that would have been the case. So, as the established retailer, they would like more funds, technology and relationships.