Government has finally opened doors for FDI (Foreign Direct Investment) in retail. The most important is the vote given to retail FDI government can push any policy measure. Walmart in the country is going to work or not is totally upon government. That’s why India’s biggest retailer, Pantaloon, has a completely unviable debt-ebitda ratio of 5.5. FDI in real estate laws, similarly, that restricts FDI to only new projects and to projects with more than 5 lakh square feet of space, need relooking. It will be difficult for the retailers to provide quality goods.
There is little doubt that limiting the geographical areas a Walmart can set up shop in is restrictive, and the SME capital investment limit of $1 million—retail FDI players have to source 30% of their requirements from local SMEs—makes it that much more difficult for retailers to develop local suppliers who can offer good quality produce. But the positive point is that foreign retailers have accepted the negative point is that without Good and Services, all multi state retailers not only foreign ones, have to pay large amount of taxes as they have to transport goods from central warehouse to across states.
It is important to allow direct procurement from farmers instead of through arhatiyas in state-controlled mandis who take 8-10% of a farmer’s income for conducting a 5-10 minute auction. Let’s see in the india context we have D mart in India. It’s my personal experience; everyone goes to D mart and shop a lot. They charge 3 rupee for plastic bag. There all products are of large size. You will not find medium or small pack of a particular product.
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