Reverse-Outsourcing OR FDI

Reverse-Outsourcing OR  FDI

India recently approved FDI retail in India aka Foreign Direct Investment in booming retail business of India due to consistent india’s growth story, thus for the first time paving way to foreign retailers tap-in india’s retail/consumer growth story.

US/EUROPE entry into INDIAN RETAIL MARKETS!

FDI allows western retail stores e.g. Sears, Target, WallMart, RadioShack, Toys-R-US etc.etc. sell/retail their products in India directly.

Allowing US/EUROPE companies  to retail in india faces indian resistance/protests!

Since, foreign investment has been key in turning india’s economic boom with  IT/outsourcing to Financial Markets investment by western nations US/EUROPE. However, in-reverse so far the ability to tap-in india’s success/retail story was very limited to foreign firms or western nations.

After years of delay due to political opposition, India’s PM Mr. Singh’s cabinet on November 24 approved 51 percent foreign ownership in multi-brand retail, with conditions, and full ownership in single-brand retail.

India had effectively curbed western-nations direct access to india’s growing spending and consumers by imposing super-TAX on imported goods to India thus pushing india’s growth story both domestic and international where India was tapping foreign IT outsourcing benefits and investments.

However, change was in the pipe-line since, western countries like US felt non-equal-paying-field by India that welcomes benefit of US IT outsourcing of jobs to India but curtailed direct access of US goods to Indian consumers by imposing super-tax on imported goods to India.

Following are some facts on India’s retail sector:

* The retail sector in the nation of 1.2 billion people is estimated to have annual sales of $500 billion, with nearly 90 percent of the market controlled by tiny family-run shops.

*  Organised retail, or large chains, makes up less than 10 percent of the market, but is expanding at 20 percent a year. This is driven by the emergence of shopping centres and malls, and a middle class of close to 300 million people that is growing at nearly 2 percent a year.

http://in.reuters.com/article/2011/11/30/india-retail-stores-idINDEE7AT02I20111130

Therefore, FDI in retail market was proposed to have western countries like US/UK etc. to have sort-of direct participation in india’s growing consumer/retail markets!

While FDI in retail market of India sounds like a good plan, however its facing strong political head-winds, de-support and open protest   from Indian Traders.

Indian Traders feels that FDI in retail markets is like reverse-outsourcing, like  Indian jobs are being outsourced to US/UK/western-nations since, western nations shall be selling their BRANDS/products creating competition and job-loss for Indian traders.

Indian traders apart from fearing reverse-outsourcing of their jobs/trade also fear the bottom line impact FDI shall have on their ‘black-money’ trade.

‘Black-money’ – a term referred of doing transactions    hidden to TAX/uncle-SAM!

e.g. purchasing/selling a real-estate/house in india involves 50-70% ‘black money’ or transaction/deal hidden from TAX so is the story with almost every business run in india.

Imagine if you could carry-on your business without paying a DIME/CENT to UNCLE SAM, yes that’s the way indian business work (small to medial scale) that contributes to more than 70% of doing business!

Almost 70% of Indian retail takes place using ‘black-money’ that benefits Indian traders mostly.

Further US has already outsourced US citizens jobs to india therefore we find the boom in india for last several years with GDP ~7-10% while US is figuring out how to employ US work-force!

Read more: http://www.mcclatchydc.com/2011/11/28/131463/are-too-many-paying-no-taxes-at.html#ixzz1fCdhxTUR

Therefore, Indian retail traders/business are up-in-arms on having FDI in retail business in India.

Indian traders opposing FDI in india

Traders protest against FDI in retail – The Times of India

timesofindia.indiatimes.com › City

The traders associated with Uttar Pradesh Udyog Vyapar Sangathan staged a dharna in Maidagin in protest against the proposed direct foreign …

http://timesofindia.indiatimes.com/city/varanasi/Traders-protest-against-FDI-in-retail/articleshow/10927746.cms

http://www.starofmysore.com/main.asp?type=news&item=30541

Retail FDI: Traders to stage bandh on Dec 1 – Indian Express

www.indianexpress.com/news/retail-fdi-traders-call-bharat…/880875/

3 days ago – Retail FDI: Traders to stage bandh on Dec 1 – Trade organisations today called for a bandh across the country on December 1 to protest …

http://www.indianexpress.com/news/retail-fdi-traders-call-bharat-bandh/880875/

http://timesofindia.indiatimes.com/india/FDI-in-India-Congress-comes-out-to-support-Manmohan-BJP-says-not-ready-for-compromise/articleshow/10932941.cms

Both Indian opposition political party and Indian traders are leaving no-stone unturned to dissuade government implement FDI in India, Indian traders/businesses are claiming that FDI participation in Indian retail market shall lead to price-rise therefore creating fear in Indian consumer regarding western products/retailing in India.

Indians opposing and protesting  FDI or reverse outsourcing!

Perhaps, it’s for the first time Indian-businesses/traders are realizing how US jobs OUTSOURCING has been impacting US citizens and their economy, since 2000 decade!