FDI in any sector is good, but then there should be some cap on the ownership pattern/s, where FDI is given—like in case of FDI in retail it is 51%, which means the foreign entities can hold majority stake in the companies.

However, in the days of internet and rapid development in the ICT space, it would be too much of a guess to think that foreigners can take over our country through FDI. It is because most of the corporations are now Joint Stock Companies, where the shareholders are defacto owners of the company. Now an American company might have one big shareholder, from India, and he might dictate terms.

Hence, all these l0ose talks of US taking over India through FDI does not hold water. Moreover, in many US corporations too, we find that the original promoters do not hold more than 25%, in such scenario, other foreign partner/s could hold the remaining stake.

Now, FDIs have varied influence or effect in different sectors. Like say, in the Aviation sector, due to populist policies of the government of keeping the railway fares abnormally low, the sector is suffering. It is because if the fares in Railways are too low as compared to Airlines, then only those who are in a hurry or compulsorily wants to avoid land travel takes the air route. But if the gap is small, then we might many normal passengers from the Railway shifting to air. Unfortunately, TMC is to be squarely blamed for this problem. Trinomool Congress and its earlier benefactor, Laloo and Co, made it a bankrupt company, through wrong policies. If we want only eggs from a golden goose without providing it proper food and nutrition will it survive? The same thing happened to railways as both went for populist measures like not increasing the railway fares by reasonable amounts, periodically in tune with the inflation.

Now, coming back to FDI in Retail, if a foreign company takes over an Indian company, then the Indian company might benefit in two ways: (i) Get new technology and (ii) Get infusion of the working capital/Funds.

As mentioned earlier, in India due to the policies of the government in successive regimes, the Aviation sector is in a mess, with most of the companies in virtual debt trap. The same is the case with the retail sectors.

Now if a foreign company comes and infuses, new blood into the system, apart from sharing the technology, then it should be an excellent idea.

Now in case of retail, since they will be very large departmental stores and hence, they will directly buy from the farmers, reducing the effect of the middleman, who generally makes maximum profit. These middle men are notorious for price rise of essential commodities through hoarding and monopoly. So, once FDI in retail comes, then we can see many tie ups of foreign entities with Indian Retail companies, providing employment and at the same time help in reducing inflation. These will also give the necessary resuscitation of the Indian Retail companies who are under life support system, like Koutons Retail Ltd.

Any FDI is more or less good for India, when it is allowed to function in a quasi-controlled environment.


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