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Economy Dec 5, 2012

FDI debate: Why Sushma should get the stupid-statement award

By Vivek Kaul

It's that time of the year when awards are given out for the best things and possibly the worst things too. And the award for the most stupid statement of the year has to definitely go to Sushma Swaraj, the leader of Opposition in Lok Sabha.

During the course of the debate on the government decision to allow foreign direct investment in multi-brand retailing or what is more popularly referred to as big retail, she said: "Will Wal-Mart care about the poor farmer's sister's wedding? Will Wal-Mart send his children to school? Will Wal-Mart notice his tears and hunger?"

These lines sound straight out of a bad Hindi movie of the 1980s with dialogues written by Kadar Khan. Yes, Wal-Mart will not care about the poor farmer's sister's wedding. Neither will it send his children to school. And nor notice his tears and hunger simply because its not meant to do that.

This is because Wal-Mart is a selfish company interested in making money and ensuring that its stock price goes up, so that its investors are rewarded.

The same stands true for every Indian company which is into big retail (be Tata, Birla, Ambani or for that matter Big Bazaar). No company, Indian or foreign, into big retail or not, is bothered about the tears of the farmer. And neither is the government.

Let's look at some other things that Swaraj went onto say.

"The remaining 70 percent of the goods sold in these supermarkets will be procured from China. Factories will open in China, traders will prosper in China while darkness will befall 12 crore people in India," she declared.

Already a lot of what is sold in India comes from China. Around three weeks ago I went around several electronic shops in Delhi trying to help my mother choose a refrigerator. Almost all Indian brands had compressors which were made in China. If one takes the compressor out of the equation what basically remains in a refrigerator is some plastic and glass. And all that is Made in India.

My television set, which is a Japanese brand, is also Made in China. A leading Indian electrical company buys almost all the irons that it sells in India from China and simply stamps its brand name over it.

A lot of pitchkaris that get sold around the time of Holi and diyas and electronic lighting that get sold around the time of Diwali are also Made in China.

Swaraj could have clearly done some better research before making one of the most important speeches of her career. PTI

As a quote from a story that appeared in The Times of India earlier this year went ,"It seems that 'Made in China' has researched our festivals and sensed the need of the customers. For the past 10 years, the business of local sprinklers is decreasing due to stiff competition with Chinese sprinklers. We are facing huge loss, plastic powder through which the pichkaris are prepared locally are bought at Rs 100 per kg while at the same time, there is no subsidy or relaxation on the name of festival," shared Bihari Lal, a local manufacturer and trader of sprinklers." Chinese made colours are also available during Holi.

And none of this has been brought to India by Wal-Mart. It was brought to India largely by Indian entrepreneurs and traders, a lot of whom form the core voting base of the Bhartiya Janata Party (BJP) and also fund the party to a large extent.

Made in China has become a part of our lives whether we like it or not and it will continue to remain a part of our lives, with or without Wal-Mart. If Wal-Mart does not supply us with Made in China goods, the Indian entrepreneurs and retailers will surely do, primarily because Chinese goods are cheaper than the Indian ones. Hence, what Swaraj wants us to believe is already happening with no Wal-Mart in sight.

The other point that comes out here is the ability of Wal-Mart to source stuff from China. This is not rocket science. Indian retailers can also do the same thing.

As Rajiv Lal of the Harvard Business School told me in an earlier interview "If Wal-Mart is operating in Brazil there is nothing that Wal-Mart can do in Brazil that the local Brazilian guy cannot do. If you want to procure supplies from China, you can procure supplies from China as much as Wal-Mart can procure supplies."

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by Vivek Kaul

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