At last, the debate on whether to allow Foreign Direct Investment in Indian retailing or not seems to be over. Contrary to the speculations of 100% FDI, the government is contemplating stipulation to 51% with other riders. Along with several other MNC retailers, Wal-Mart is a strong contender that soon plans to commence its operations on Indian soil. The pertinent question is is Wal-Mart good for India?
On June 12, Menzer, International President of the world's largest retail behemoth-Wal-Mart, had a series of high-level meetings with Indian Prime Minister, Minister of Commerce and with other senior bureaucrats of the leading institutions. His only mission is to persuade the policy makers to ease FDI norms and allow the retailer to operate on Indian soil. The Government of India, which has withheld the decision since November 2004, seems to have budged to external pressures (WTO) and, to meet its own growth commitments, eased FDI norms. Perhaps, in the near future, we may see Wal-Mart entering organized retail sector in India. Why are we so apprehensive and skeptical about retail MNCs in general and Wal-Mart in particular, when with open arms invited MNCs of other sectors? Either, the concerns might be too risky to ignore or are unnecessarily apprehensive about a business eventuality!
Inspired by the business philosophy of a barber of Berryville, Herb Gibson-"Buy it low, stack it high, sell it cheap", Sam Walton, founder of Wal-Mart, led his small countryside 5-and-Dime store to evolve as the world's number one `discount retailer'. Even today, after 54 years of its inception, with an annual turnover of $285 bn, with over 3,000 outlets across US and around 1,600 in 9 other countries, the underlying philosophy remains the same-"Always low prices. Always." This guiding philosophy, though gaining accolades from several quarters of business, is now under intense scrutiny. Some argue that it is a curse to the welfare of the nearby community, while others believe it to empower the customer and enable him to lead a decent life. It seems that going by the experiences of the US and other countries, India too needs validation of its proposed FDI norms.
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