Will they come?

The Congress controlled, freeloading press were hyperventilating over the recent so called reforms announced by our most revered Prime Minister. Fawning articles were already calculating the amount of foreign investments that will flood in. The government decided that foreign retailers, such as Walmart and Tesco, will be allowed majority ownership at 51% in multibrand retail and 100% in single brand retail. Walmart already has a partnership with Bharti Enterprises which runs wholesale cash and carry stores in many states. The new policy will allow it to open stores for the ordinary housewife for her daily shopping. However, there are several problems. 1. Every party, except Congress, has said that they will not allow such stores to open in their states. This leaves just 9 states where such stores can open. However, even here there may be protests by local shopkeepers who will be afraid of losing business. Will the Congress claim that all such protests are being organised by the dreaded " Foreign hand " and slap sedition charges against the protesters, as they have done to protesters against the Kudankulum nuclear power plant in Tamil Nadu? 2. Foreign retailers typically have huge stores over 100,000 sq feet. Land prices in India have risen over 1000% since 2002. Apartments of 5000 sq feet are being sold for Rs 25 crores or about $5 million in Gurgaon, some 15 km from Delhi. At these prices one could buy a nice apartment in New York. So where will they get land to build their stores? It is impossible to drive around any major city. Roads are jammed and there are toll booths everywhere. Will people want to spend 2 hours driving to and from one of these stores? 3. Foreign retailers are required to invest at least $100 million of which $50 million has to be spent on back end infrastructure. What is not clear is whether they will be allowed to count the spending on buying land for the stores and spending on electricity generators in that $50 million. 4. Retailers will have to source about 30% from local small scale industries. It is hard to imagine our friendly neighborhood cobbler stitching on a Gucci label on a handbag that he has just stitched together. Already Adidas, Benetton and Levis have announced that they will be reducing the number of stores in India. 5. Transporting goods between states is a nightmare because of something called octroi. All trucks have to stop at the border and pay taxes, which in some states like UP, can be very high. It is like paying customs duty except that rates can be exorbitant because it is dependent on state governments. 6. In July this year farmers in Britain protested when large supermarket chains decided to pay 2p less per liter of milk. What if the retailers force farmers to accept less for their produce or decide to import from abroad if prices in India are too high? Policies should be for the good of the country and not for the cynical reason of winning elections. Sadly politicians are our worst enemies.