Steps to revive the moribund economy are supposed to be on the anvil. Global E-retailers like ebay and Amazon have entered the Indian market but they are not allowed to function in the business-to-consumer B2C model. They are forced to act as a marketplace, enabling sale of products between buyers and sellers. Thus, if the government opens the gates for foreign investment in the B2C business model, it will not only attract the existing global companies to ramp up their existing investments but also encourage new players to enter the Indian market.
Steps to revive the moribund economy are supposed to be on the anvil. Global E-retailers like ebay and Amazon have entered the Indian market but they are not allowed to function in the business-to-consumer B2C model.
They are forced to act as a marketplace, enabling sale of products between buyers and sellers. Thus, if the government opens the gates for foreign investment in the B2C business model, it will not only attract the existing global companies to ramp up their existing investments but also encourage new players to enter the Indian market.
Firstly, increased investment in the retail sector would act as a catalyst in the manufacturing sector. This is noteworthy, considering the present state of the manufacturing sector, the revival of which is necessary for any long-run recovery to take place in the economy as a whole.
Secondly, the entry of globally established players will lead to the development of a strong supply-chain network in the country, bringing more and more people both consumers and producers into the organized retail segment. Both the above factors will also work in tandem to generate the much needed employment in the country.
The first and the most important fear is that it will harm the business of the brick and mortar stores as the local shopkeepers will find it hard to match the global giants in terms of technology and pricing. The other argument against allowing FDI in E-commerce is that this may lead to the emergence of monopolies in the Indian retail sector as it is still in a blossoming stage.
Also, this will be a virtual u-turn of the anti-FDI in multi-brand retail stand of the Bharatiya Janata Party BJP leading the government at present as FDI in E-commerce will enable the global retailers to reach far and wide across the country.
This is different from the present scenario, when FDI in multi-brand retail is allowed only in cities with a population of more than one million, that too, only with concurrence of the state government. It would be worth to watch whether the Narendra Modi government bites the bullet or drags its heels.
Recent decisions, such as the rail fare hike and the ongoing monthly increases in the price of diesel to reduce the subsidy bill give us an indication that the government is not afraid to take politically tough decisions.
A commerce graduate from St. He has been an intern at Youth-Ki-Awaaz and has a keen interest in current affairs.
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