Stupidity Inc

It’s a fantastic notion by Shri Shri Anna Hazare to imagine that allowing 51% FDI in multi-brand retail would somehow lead to a loss of sovereignty of the Republic of India, in existence now, despite its flaws, for over 60 years. Comparing the incoming FDI by foreign retail players to a ploy akin to that hatched by East India Company two and a half centuries back to take over the country is nothing but hyperbolic paranoia at work.

While the immediate provocation is Hazare’s comment, the protests ignited by political parties and traders associations are equally to blame for this post.

To be sure, paranoia seems to be the first reaction whenever a game-changing policy announcement is made. Recall the (in)famous Bombay Club of the 1990s when the Indian economy went ballistic on liberalization – a bunch of industrialists, all of whom have reaped the benefits of liberalization over the past 20 years, clammed up to demand the government adopt a level playing field as they feared their companies’ survival.

Just to humour Mr Hazare, let us consider his warning seriously. There are several reasons why his paranoia does not stand the test of time. For one, if Mr Hazare had cared to revise his history lessons, he would have realized that there’s a world of a difference in the times when the Battle of Plassey took place in 1757 – the defining moment for the advent of British imperialism in India – and 2011.

India then was a conglomerate of haphazardly shaped kingdoms of disparate rulers whose individual armies were no match for the collective military might of the East Indian Company which had a sovereign backing.

Does Mr Hazare seriously envision a scenario of Rob Walton of Wal-Mart fame, making a hostile takeover bid of South Block? In which case either Mr Hazare does not trust the Indian security establishment – which incidentally changes rules at its whims and fancies, ask any journalist who’s covered the beat – or he thinks occupying South Block is akin to a board room battle.

The above however, is rather a technical detail why a Rob Walton will not be able to take the salute on August 15 at the Red Fort ramparts. What Mr Hazare tends to forget is that the world has changed a lot in the last 250 odd years.

Companies today, Mr Hazare, thrive on not just product and process innovation, but also on goodwill generated among the local population. A country takeover is hardly the way to go about earning brownie points with your prospective customer base. It’s not just bad business, it’s bad for business as well.

What the saint of Ralegaon Siddhi also tends to forget is that the business environment today is cut-throat and the consumers, far savvier and canny than he might give them credit for. Subhiksha, for whatever reason, licked the dirt rather publicly in this game.

There is this anecdote, related to me by a colleague of mine, who says that in his locality, some years back, three branded retail players opened shop, competing against the three established stand-alone retailers, popularly called kirana stores.

Today, the three stand-alone stores continue to not just survive, but thrive, while the branded stores have long since shut shop, and in Subhikha’s case, which was one of the three branded outlets, done so lock, stock and barrel.

The fact is, the neighbourhood grocer has far greater knowledge of the consumer preferences and tastes than a large format player. He can offer sops, such as free home delivery. Even a McDonald’s charges Rs 20 as convenience charge for home delivery. He usually owns the premises or pays historically low rental; values and can operate in small format stores that could vary between 100sq ft to 500 sq ft, and going up to 1000 sq ft.

Retail players themselves admit that four fifths of the Indian retail market will be in the unorganized sector and the Wal-Marts, the Tescos, the Metros and the Carrefours of the world can at best capture a less than 20% share of the retail pie. So frankly, it’s quite amusing to see all this high-decibel drama and breast-beating of woeful tidings banging at our doorstep.

This is not about politics of the Congress or that of the BJP – quite frankly, both can lick each other to oblivion. It’s about having a choice – whether or not one exercises it, is also a consumer’s choice. India, Mr Hazare, and the various political parties supporting the anti-FDI tirade, is fed up of being told of what is good for it and what is not – let the people decide. Subhiksha learnt it, so will the others.

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