On September 14th, India's Cabinet Committee on Economic affairs decided to pass a few strong reforms - allowing 51% FDI in multi-brand retail; 100% in single-brand retail; 49% FDI in two power exchanges; and an increase from 49% to 74% in the broadcasting sector. Basically, foreign companies like Wal-Mart, Tesco are now allowed to form ties with a local partner in order to invest in local companies. In the long run, this will boost the economy without a doubt.
But as one would expect in India, this was met by fierce criticism by coalition and opposition parties. Their reasoning being that this move would leave countless of small retailers out of jobs as they won't be able compete with the heavyweights. Yesterday, Trinamol Congress had announced that would withdraw their support to the UPA government. If they did break their ties on account of the Centre enforcing the FDI reforms, it would bring out the inconsistency in the party's manifesto which, in 2009 elections, clearly stated that “The entry of large domestic and foreign capital in retail trade will occur.”
The Prime Minister gave a strong speech yesterday addressing the nation's primary concerns regarding job losses due to FDI. He requesting that we, the people, support him, and to "not be misled by those who want to confuse you by spreading fear and false information." It was a statement of intent from the Prime Minister. One that had the message: "No going back on FDI reforms this time." A breath of fresh air our dwindling economy so desperately needed. Overall, this is a massive, bold step in the right direction.
A brief summary:-
1) Our aviation industry is in desperate need of funds. Foreign equity will go a long way in solving that crisis.
2) In the broadcasting sector, foreign investments will help in the complete digitization of cable TV.
3) With 50% of investment going to the ‘back-end’ infrastructure (which includes processing, manufacturing, warehouse etc.), FDI in multi-brand retail will help to create over 10 million jobs and investments of around 2-3 billion dollars (in 2-3 years). Farmers stand to benefit too. And of course, we, the consumers will be able to afford products at reduced prices as competitions will rise.
But as one would expect in India, this was met by fierce criticism by coalition and opposition parties. Their reasoning being that this move would leave countless of small retailers out of jobs as they won't be able compete with the heavyweights. Yesterday, Trinamol Congress had announced that would withdraw their support to the UPA government. If they did break their ties on account of the Centre enforcing the FDI reforms, it would bring out the inconsistency in the party's manifesto which, in 2009 elections, clearly stated that “The entry of large domestic and foreign capital in retail trade will occur.”
The Prime Minister gave a strong speech yesterday addressing the nation's primary concerns regarding job losses due to FDI. He requesting that we, the people, support him, and to "not be misled by those who want to confuse you by spreading fear and false information." It was a statement of intent from the Prime Minister. One that had the message: "No going back on FDI reforms this time." A breath of fresh air our dwindling economy so desperately needed. Overall, this is a massive, bold step in the right direction.
A brief summary:-
1) Our aviation industry is in desperate need of funds. Foreign equity will go a long way in solving that crisis.
2) In the broadcasting sector, foreign investments will help in the complete digitization of cable TV.
3) With 50% of investment going to the ‘back-end’ infrastructure (which includes processing, manufacturing, warehouse etc.), FDI in multi-brand retail will help to create over 10 million jobs and investments of around 2-3 billion dollars (in 2-3 years). Farmers stand to benefit too. And of course, we, the consumers will be able to afford products at reduced prices as competitions will rise.
