A Boon To Retail?

In a country with a population of over 1.2 billion, it certainly makes sense to get into retail.  This is why Wal-Mart was pleased when foreign-investment restrictions were eased in India last Sept. 14 as this gives India’s individual states the autonomy to determine if they would let foreign retailers in.  Under the plan, India would only allow foreign retail operations in cities with a population of at least a million.

For those who are unaware, India’s retail industry is dominated by mom-and-pop shops; trade is frequently carried out by middlemen that when fresh fruits and vegetables are involved, a substantial portion would go to waste even before reaching retail outlets.  This is why the Indian government is hoping that the entry of foreign retailers, such as Wal-Mart, would not only boost its economy but modernize its supply chain as well.

Still, this move drew protestations.

An Indian at Wal-Mart.

Obviously, the main concern once Wal-Mart opens retail stores would be the survival of mom-and-pop shops, and everybody else depending on it.

And so, think about these…

Exactly how many are relying on India’s retail industry?  Easing of foreign-investment restrictions would certainly benefit Wal-Mart and their key supporters.  Yet, can Wal-Mart give secure jobs or business support in case those affected lose their source of income?  We are talking about providing for “everybody” in the food chain here and not just a number of “bagging” and cashiering jobs.

Thus, if Wal-Mart and the government means well to a struggling land, consider social responsibility – the way capitalists should be doing it.

  • First, determine the actual number of people in the retail industry (wage or commission earners, and entrepreneurs of at least 2 years) per state/area as of August 31, 2012.  These are the people who are really dependent on retail.  Then, require all these people to have authentic IDs or certifications on how they are retail-connected to be used for claiming Wal-Mart “displacement” benefits or related irregularities, if ever.  On the other hand, anyone caught in bribery or alike shall be accountable to all local retail industry members of the particular state, this means the bribe money or asset shall be equally divided by the said members – not returned – while perpetrators and conspirers would be punished accordingly.
  • Obviously, Wal-Mart is to provide in first priority for those that loses their retail revenue source for a particular state through either a job that pays a little higher than they used to earn, or business support for mom-and-pop shops – depending on their “retail-connectivity”.
  • If Wal-Mart India has been fully employed, the rest who lost their retail livelihood would be given employment in other Asian Wal-Mart branches; and if it’s still full, then outside Asia.  Now, other countries where Wal-Mart operates may want the same deal as in India – well, it can not be.  Their respective deals are not retroactive unless otherwise stated.  Otherwise, it would just disturb the “present balance”.  What other governments could do is work on the future, restructure their agreements in time or before renewal of licenses.
  • Notwithstanding the scheduled taxes, Wal-Mart should help the Indian government secure foreign investors of whatever industry.  As part of the agreement clause, Wal-Mart’s taxes would decrease each time it “successfully” brings in an investor – this would be part of a yearly tax restructuring to be witnessed by those in the local retail industry.

Governments should work for the good of the people while investors should learn to blend and help government programs, and not merely seek profit.

This… is the revolutionary way to rev up a country’s economy and truly help its people.

What’s your take?

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