Opposition to the FDI-in-retail idea is genuine and widespread. The main reason is people's distrust of politicians including, in this case, Manmohan Singh. The Prime Minister is seen as an American camp-follower. Remember his telling the very unpopular George Bush that the people of India loved him. When he and “experts” like the World-Bank-branded Ahluwalia say that FDI in retail will do no harm, people just don't trust them.
It now stands revealed that America in fact had a major role in Delhi's recent reform package. When Time magazine put Manmohan Singh on the cover with the title “Underachiever,” India was shaken. We have a colonial mentality towards western criticism/praise. When an arbitrary list of “most influential” people is put out by an American publication, we treat it like an event of great significance. In fact, it is just routine commercial tricks by market-savvy publications, but because it comes from the west, we stand up and salaam.
Then came the Washington Post report calling the Prime Minister a tragic figure. That saw India going crazy. The Prime Minister's Office issued frantic statements, apologies were demanded, the Post's correspondent in Delhi was cursed and loud TV anchors held loud discussions on the topic. Can we imagine the White House moving a little finger if all the newspapers and magazines in India splashed Obama's picture and called him an Underachiever which he certainly is? Can we imagine China caring a damn if the Washington Post described Hu Jintao as a tragic figure? Can we imagine the Post daring to do that in the first place?
Reports now say that the Time and Post stories were part of a concerted American campaign to force the hands of the Indian Government. The US Chamber of Commerce claimed some time ago that its pressure tactics had made the Indian Government take some key policy decisions. A specific example cited was the raising of FDI in single-brand retail from 51 percent to 100 percent. What Time and the Post did this time was the American equivalent of “Paid News”, the money part of it perhaps waived because it was patriotic service for the American Flag.
Our country is easy for foreign lobbies to conquer. Look at the zeal with which Sharad Pawar is fighting for endosulfan even after it is banned in the US. FDI in retail has become suspect because people do not like America arm-twisting the Indian Government. This is a pity because, in itself, the idea has merit. An alert Government focussed on the benefits of the local economy and the local people can take advantage of it. This is what China did. Even Walmart became a tool in the hands of the Chinese authorities instead of the other way round.
China rejected the FDI-in-retail concept until its economy reached a certain stage of development. Even then it moved cautiously, putting a cap of 26 percent initially, raising it to 49 percent later and finally to 100 percent in 2004, that is, 25 years after its economic reforms began. By then China had achieved phenomenal progress in the manufacturing sector and in transportation infrastructure. Big-ticket retailers who came in found that in their own interest they must participate in the local economy. Walmart with more than 350 supermarkets in the country has 15,000 Chinese suppliers. More than 90 percent of the merchandise it sells in China are Chinese products. Export of these products to the US has risen too.
The gradual opening of the retail sector gave time to Chinese small and big retailers time to adapt. Walmart and Carrefour may be the giants in other countries. But in China the retail giants are Chinese companies like Bailian, Suning and Gome. China of course had some advantages, not being the riotous democracy India is. But this is one case where democracy is not the villain. The villain is a Government – and a culture – that is scared by American press criticism. We can hear Walmart laughing.