Foreign direct investment (FDI) is direct investment into production
in a country by a company located in another country, either by buying a
company in the target country or by expanding operations of an existing
business in that country. Foreign direct investment is done for many reasons
including to take advantage of cheaper wages in the country, special investment
privileges such as tax
exemptions offered by the
country as an incentive to gain tariff-free access to the markets of the
country or the region.
It is not Portfolio
Management where you buy stocks and bonds as securities of another country. It
is deeper than that, The foreign investment that is set up in the retail brand,
creates certain amount of job opportunity, but in return sucks away the profit
to their country, not only profit but also the taxes are paid in their own
country. Thus, the product that is being sold to people of, for ex. India and
the earnings are transferred to the country of origin and hence the Indian
wealth goes offshore.
It is another thing to
invite industries to India, which brings know-how and new job opportunities
which were non-existant in India. Retail business is already well-establish in
India since last 5000 years. What know-how will foreign multi-brand retail
bring to us? Our own multi-brand stores are
well-set like Reliance, Tata etc. Moreover, the foreign industries which
come to our country, for setting up industry here, come with technological
updates but set up the industry, on local soil where the entire production
takes place. Thus, apart from creating huge job opportunity, it also ensures
control over production according to Indian laws and norms. For ex. Bondage
labour and child labour is prohibited in India. Production taking place in
India, will not be permitted to do so but in muti brand retail, where the
finished good arrives in India for selling purpose, does not ensure control
over production. Secondly, the small manufacturers of India, whose products,
may have qualitative values will be doomed as their products can not compete
with multi brand retail products which are produced in bulk. Thirdly, the
skilled laborer of the country will diminish. For ex. For years, cobblers,
carpenters, tailors have provided community service but with multi-brand
retail, they will cease to exist.
During Maughal era, Jahangir
had permitted British to do trade in Surat and finally, it brought East Indian
Company to India and along with that more than 200 years of British rule!!!
Are we, on onset of the same???
