IT & Walmart

[Ramacchandran]

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Here is a doubt!

India is working for American Companies and charging a good amount as fees. Now the wall mart may insists that all the employers working for America should collect the required provision from them, and the amount will be detected from the salaries of the employees. How to over come this?

 

[prasad1]

Here is a doubt!

India is working for American Companies and charging a good amount as fees. Now the wall mart may insists that all the employers working for America should collect the required provision from them, and the amount will be detected from the salaries of the employees. How to over come this?

Ramachandreanji,
Do you even understand what you are saying, I do not understand your question?
Walmart does not make their employees buy provisions from them in USA. Just as Reliance market in India does not force its employees to buy produce from reliance.

 

[sankara_sharmah]

Here is a doubt!

India is working for American Companies and charging a good amount as fees. Now the wall mart may insists that all the employers working for America should collect the required provision from them, and the amount will be detected from the salaries of the employees. How to over come this?

I am sorry that you have such a poor opinion of India. India is working for Indians and not Americans or anyone else. India can not be purchased by any one.

You seem to believe in the propaganda by the trading lobby in India who purchase vegetables at Re. 0.50 from the farmer and sell it to us at Rs. 5. And these middle men are the major source of black money. They do not pay any tax. They have plenty of money and can purchase people. India is not owned by the Dalals.
The traders are not interested in India but their own pocket which they fear would be affected.

 

[sangom]

Here is a doubt!

India is working for American Companies and charging a good amount as fees. Now the wall mart may insists that all the employers working for America should collect the required provision from them, and the amount will be detected from the salaries of the employees. How to over come this?

I am sorry that you have such a poor opinion of India. India is working for Indians and not Americans or anyone else. India can not be purchased by any one.

You seem to believe in the propaganda by the trading lobby in India who purchase vegetables at Re. 0.50 from the farmer and sell it to us at Rs. 5. And these middle men are the major source of black money. They do not pay any tax. They have plenty of money and can purchase people. India is not owned by the Dalals.
The traders are not interested in India but their own pocket which they fear would be affected.

Dear Ramacchandran,

I seem to get your doubt. You may be knowing that till a few years back, many employers in the IT sector, as well as outside that, were compensating their employees by giving "coupons" which could be exchanged for traded goods at stipulated retail outlets and in this way the amount of such 'coupons' were outside IT net. The law was amended to plug this loophole only in 2009 or so. But I am told that such coupons are still prevalent and that purchases made through these coupons are still attractive possibly because the buyers get some extra discount. I think this should be on the basis of some underlying agreement between these retail outlets and the employers.

So, as you say the likelihood of some "understanding" between the IT companies which mostly undertake work for US companies and Walmart cannot be ruled out. After all, is there not sufficient reason to doubt that the very entry of FDI in the retail sector is itself nothing but a grand effort to sponge off (regain) a good part of the inflow of moneys which came into India during the few years past due to the IT boom.

 

[prasad1]

I am sorry that you have such a poor opinion of India. India is working for Indians and not Americans or anyone else. India can not be purchased by any one.

You seem to believe in the propaganda by the trading lobby in India who purchase vegetables at Re. 0.50 from the farmer and sell it to us at Rs. 5. And these middle men are the major source of black money. They do not pay any tax. They have plenty of money and can purchase people. India is not owned by the Dalals.
The traders are not interested in India but their own pocket which they fear would be affected.

It is also his ability to analyse a situation on his own. LOL

 

[sankara_sharmah]

Sangom,

You overestimate the importance of Wallmart. Just because they could lobby here it does not make them representative of U.S interests. In fact they are in trouble in U.S for the lobbying.

I do not know how investment in retail trade would siphon off money from India. I have been listening to one too many bearded people on TV comparing Wallmart to East India Company and what not. The antipathy of our Communists towards U.S is well known. That clouds their views.

The Indian consumer market is very strange and extremely price conscious. Many American and European companies which came here expecting to reap a windfall have incurred huge losses. I know of one company personally. Henkel India. The other well known company is Whirlpool.

Wallmart has to compete against our small retail shops. What is called Kirana shops. They have the ability to sell below the M.R.P. They have no employee cost, their overheads are very low, and they pay very little or no tax. Of course they will never accept that they are making a profit, because then they have to pay tax.

They will not only give Wallmart a run for its money, but also beat them. Wallmart will be like the Malls and shops like Big bazaar, Spencers who cater only to a particular segment of the population.

I have seen this happening in Madras. Even after Spencers opened outlets in Anna Nagar and Numgambakkam , 3 to 4 new provision shops opened in Nungamabakkam and they are doing well. I can personally vouchsafe this because I was a resident of Nungambakkam. They offer personal service. One of the shops had me compare prices with Spencers. All the items were cheaper.

Wallmart is bigger. May be they can get a bigger discount on articles than Spencer. But they have overheads and employee costs. And they have to pay tax.

Though the Mom and Pop stores have almost disappeared in U.S our Gujarathi community seems to be doing pretty well inn running shops. They even defied the Mafia.

We the Indians are the greatest traders of the world.

More than the small traders it is the middle men who are behind the agitation against FDI. These middlemen are not even known to the public. They only deliver goods and make money. And they are politically powerful. They would be affected by Wallmart.

 

[prasad1]

Sangom,

You overestimate the importance of Wallmart. Just because they could lobby here it does not make them representative of U.S interests. In fact they are in trouble in U.S for the lobbying.

I do not know how investment in retail trade would siphon off money from India. I have been listening to one too many bearded people on TV comparing Wallmart to East India Company and what not. The antipathy of our Communists towards U.S is well known. That clouds their views.

The Indian consumer market is very strange and extremely price conscious. Many American and European companies which came here expecting to reap a windfall have incurred huge losses. I know of one company personally. Henkel India. The other well known company is Whirlpool.

Wallmart has to compete against our small retail shops. What is called Kirana shops. They have the ability to sell below the M.R.P. They have no employee cost, their overheads are very low, and they pay very little or no tax. Of course they will never accept that they are making a profit, because then they have to pay tax.

They will not only give Wallmart a run for its money, but also beat them. Wallmart will be like the Malls and shops like Big bazaar, Spencers who cater only to a particular segment of the population.

I have seen this happening in Madras. Even after Spencers opened outlets in Anna Nagar and Numgambakkam , 3 to 4 new provision shops opened in Nungamabakkam and they are doing well. I can personally vouchsafe this because I was a resident of Nungambakkam. They offer personal service. One of the shops had me compare prices with Spencers. All the items were cheaper.

Wallmart is bigger. May be they can get a bigger discount on articles than Spencer. But they have overheads and employee costs. And they have to pay tax.

Though the Mom and Pop stores have almost disappeared in U.S our Gujarathi community seems to be doing pretty well inn running shops. They even defied the Mafia.

We the Indians are the greatest traders of the world.

More than the small traders it is the middle men who are behind the agitation against FDI. These middlemen are not even known to the public. They only deliver goods and make money. And they are politically powerful. They would be affected by Wallmart.

My sentiment.
Sarvana stores in Chennai is doing tremendous business, but so too are the Kinara shops. Walmart (and others) may bring more consumerism, but may also check the run-away inflation.

 

[sangom]

Sangom,

You overestimate the importance of Wallmart. Just because they could lobby here it does not make them representative of U.S interests. In fact they are in trouble in U.S for the lobbying.
...

They will not only give Wallmart a run for its money, but also beat them. Wallmart will be like the Malls and shops like Big bazaar, Spencers who cater only to a particular segment of the population.
...

Though the Mom and Pop stores have almost disappeared in U.S our Gujarathi community seems to be doing pretty well inn running shops. They even defied the Mafia.

We the Indians are the greatest traders of the world.

More than the small traders it is the middle men who are behind the agitation against FDI. These middlemen are not even known to the public. They only deliver goods and make money. And they are politically powerful. They would be affected by Wallmart.

Dear Shri Sharmah,

I agree with much of what you say in your above post and sincerely wish your calculations come true. I also agree fully with you in this:-

More than the small traders it is the middle men who are behind the agitation against FDI.

But I am sceptical only because these middlemen of India are more clever and cunning, politically powerful and even have mafias working under their control. These may make them (the middlemen) to get the giants on to their bandwagon and then our politicians who can all be purchased will also join this caucus and gradually decimate the Kirana shops. Two instances may be worthwhile in this regard.

1. One particular brand of raw rice was being sold by our street corner Kirana shop for years and about 200 to 300 tabra families used to buy their requirements. Of late he is not getting this particular variety and when we asked him, he said the rice mill is now not selling it to any one in TVM other than a particular supermarket and that the rice mill has entered into an agreement for this. So, we have to either go to that supermarket, spending at least Rs.100/= autorikshaw charges to & fro, or make do with whatever we find most suitable from our kirana shop.

2.வடுமாங்காய் (மாவடு) used to be a commodity which used to be sold from door to door by headload vendors a few years ago. But now it has become a real rarity even in the central vegetable market. Reason : the pickle manufacturers advance moneys to each and every mango grower and reserve their entire produce. When I asked why this shortage has arisen only recently, whereas pickle manufacturers have been there for a long time, the reply I got was that now the supermarkets are giving advances to pickle manufacturers to ensure guaranteed delivery of their entire annual requirements and so the pickle manufacturers are reserving the produce from as many growers as possible. The funny part is my opposite house has one very yielding mango tree and for this also the owner has got advance and some folks come periodically and collect the crop at various stages till they become fully ripe.!:faint2:

A stage may therefore come when we are really at the mercy of these Supermarkets only, imho.

I do not know how investment in retail trade would siphon off money from India.

I have understood it as under.

Much money has been earned by our IT companies during the last few years by taking up contracts with US and European companies. Foreign exchange flowed into India as these companies got their payments from the foreign companies and in their turn, paid huge salaries to their staff. All this increased the total foreign exchange holdings of RBI/GOI and there was a new found confidence that India is emerging as a World Power, and so on. But our Govt. was lured into believing that in order to emerge as a "super power" it is necessary to have all the "Lakshanas" of a Super Power such as modern cars, super markets, and so on. Our government started factories to manufacture/assemble all the most modern cars; quickly followed different brands of two-wheelers. Whatever foreign exchange these car and scooter manufacturers had brought in, in order to start their factories, etc., and also whatever our IT companies had brought in as their earnings, all disappeared in a trice because we had to import very huge quantities of crude oil for the petrol and diesel needed by us. Our earnings touched the rock bottom. That was when our Govt. said our current account deficit has become seriously low. So, the subsidies were cut - on cooking gas, diesel, petrol, kerosene etc. This reduced the outgo of rupees from govt., but foreign exchange is a country's real earning and we have to have a good amount of FE at all times just as each one of us should have a thick wallet with us at all times.

For this we now depend on our share-markets and the FIIs bringing money to bee poured into our share-markets. But these are "flight moneys"; they don't remain in India for long, they are like gamblers' stake money. So, in such a precarious situation our Govt. was advised that inviting 100% investment in retail trade will help getting some direly needed FE on a long term basis. But the Foreign Governments consider that by operating in the retail sector in a vast market like India, they will be able to make very good profits on a long-term basis and repatriate those in dollars to their country. In this way they will be able to get back whatever they lost in the IT bargain.

And, as you say, the particular segment of the population which is served by these retail giants will only increase as time passes.

 

[prasad1]

Do we think that local merchants are for the farmers and consumers, please grow up.
All merchants are for their bottom lines. The MNC bring in a lot of efficiencies and improve the productivity. India needs infrastructure reform, storage facility, transport and distribution of products. Because of ill equipped transport and storage India looses lot of food grains, and produce. A company like Walmart will bring new technology that will help Indians. Will it help Walmart, you bet it will or at least they will try it.