Reform taken in India to restore economic growth

The Indian prime minister has approved the proposal of allowing foreign companies to hold 51% stakes in supermarket chains in India. However, the move is considered as deeply controversial. As India has committed to economic self-reliance for decades, the ambiguity created by the big change has caused fears among local retailers. Critics say it would mean lower price paid to farmers and huge job losses.

 

On the other hand, the presence of global giants such as Wal-mart and Carrefour would increase competition in the market and hence bring down soaring food prices. The foreign direct investment brought by theses multinational companies can be considered beneficial to the India’s economy. Although India had been experiencing a high economic growth, India’s poor infrastructure has always been commented as a constraint of the further growth in the economy. The massive investment used in enhancing the distribution network could boost the economy. The problem of job losses may not be significant as the unemployed could be absorbed in the market with the presence of these multinational supermarkets. Also, there has been evidence of multinationals engage in joint venture with local partners. For example, Tesco linked up with the retail arm of India’s Tata conglomerate three years ago and has opened opened 13 “Star Bazaar” hypermarkets.

Reference: http://www.guardian.co.uk/world/2011/nov/24/india-allow-foreign-supermarkets-stores