Enslaving India

Never a dull day in Indian politics this week attention is, rightly, fixed on Prime Minister Manmohan Singh’s decision to allow 100% Foreign Direct Investment (FDI) in the retail sector.  Opposition parties and apparently the majority of Indians are against 100% FDI as it goes against Indian interests, jobs and competition.

The decision has been compared to the British coming under the guise of trade and that even today’s potential loosening of restrictions would lead India to slavery once more.  While this comparison is dramatic I do think there are points of concern and markets should not be opened to companies such as Walmart and Tesco without considering the direct consequences for a developing economy.

Currently the rules state that a foreign company can only enter the Indian market with a 49% Indian business partner.  As a small business owner who has often been asked by Indian whether I would open a branch in India, I found the FDI rules overwhelming and the list of potential partners non-existent.  However, on a grander scale I do think companies such as Tesco would harm small Indian businesses just as it is doing in the UK but companies such as Ikea may incentivise Indian companies to raise their game with regards to quality, innovation and customer service (the customer is ALWAYS WRONG in India!).

There is never a completely right path when changing investment rules but it would be nice if the British government thought of small businesses before rushing into EU rules and privatisation but as we know they don’t care what we think and a vociferous opposition party doesn’t exist.

Bubbly

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2 Comments to “Enslaving India”

  1. The FDI decision has been postponed for further review.

  2. Well that is a good thing. Small businesses are imperative to a thriving economy. Shame some of the western governments don’t recognise this. I hope the Indian govt learn from the British mistakes.

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