Pros and cons of foreign equity in retailing

November 26, 2011 20:15
Pros and cons of foreign equity in retailing

The following are the main issues raised by those in favour of foreign equity in multi-brand retailing and those opposed to it

-It will lead to closure of tens of thousands of mom-and-pop shops across the country and endanger livelihood of 40 million people

- It may bring down prices initially, but fuel inflation once multinational companies get a stronghold in the retail market

- Farmers may be given remunerative prices initially, but eventually they will be at the mercy of big retailers

-- Small and medium enterprises will become victims of predatory pricing policies of multinational retailers

- It will disintegrate established supply chains by encouraging monopolies of global retailers

Those in favour:

- It will cut intermediaries between farmers and the retailers, thereby helping them get more money for their produce

- It will help in bringing down prices at retail level and calm inflation

- Big retail chains will invest in supply chains which will reduce wastage, estimated at 40 percent in the case of fruits and vegetables

- Small and medium enterprises will have a bigger market, along with better technology and branding

- It will bring much-needed foreign investment into the country, along with technology and global best-practices

- It will actually create employment than displace people engaged in small stores

-- It will induce better competition in the market, thus benefiting both producers and consumers.

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