Since the early 1990s when India was reluctantly forced to open up its economy to the world, we have been trying to tread the delicate balance in protecting our domestic economy from global oligopoly, lest we once again become the victim of a version of British era colonialism.
It did not need any further clarification. But driven by their expansionist agenda to grab as much land of the Indian consumer as possible, by whichever means available, coupled with practically non-existent enforcements of our own laws, it created a situation where the spirit of the law was blatantly and continuously violated by these companies under the guise of “but customer is winning”.
By itself it seems like a cogent argument but a slightly deeper look at the situation will make it clear that the customer is not winning — actually the customers are being fed the “cocaine of discounts”. It is an unsustainable and harmful business practice, which does not do any long-term good to the economy or the ecosystem.
The government’s restriction on foreign direct investment in multi-brand retail has been to invite lakhs of crores of foreign investment to come into India to help build its fledgling ecommerce infrastructure.
It was to bring millions of small & medium businesses to participate and benefit from the internet revolution that is happening around the world. Instead, if we look around, what do we see? We see that more than Rs 1 lakh crore of foreign direct investment money has been spent in the country and the only beneficiary of these investments are a handful of large corporates.
A majority of these are group companies, or, are controlled directly or indirectly by large foreign players. These companies have used capital dumping to eliminate competition, destroy the SME ecosystem or otherwise damage the fabric of retail [industry] in the country.
The clarifications on foreign direct investment policy have at least taken cognizance of the rampant violations of the law by the two large players.
It will force ecommerce players to not only follow the letter of the law but also prevent them from coming up with “creative” corporate structures to circumvent the spirit of the law.
Even though the clarification on foreign direct investment policy is welcome, our failure to enforce the law of the land allowed these companies to become disproportionately large at the expense of the customer and sellers. “Success” built by dubious means should be deemed as fruit of the poisonous tree.
Source: The Economic Times