WAT Practice Topic 4 Answer – FDI in Retail

Dear Readers,

Yesterday, we
gave you the following practice topic for WAT – “What are your views on FDI in retail?” This topic had appeared in IIM
Bangalore entrance in 2013. In this article, we will look at the approach to
use and some of the primary points to be mentioned.

Guidelines – How to Approach this Question

·
This topic is not just opinion-based
but also knowledge-based. In contemporary issues like this, it is crucial to
provide a background of the topic. This may include relevant facts, statistical
figures and patterns and other data.

·
The introduction should touch
upon the definition and impact of FDI in India. Since it is a broad question
that asks for views on a certain issue, the main body should comprise both
merits and demerits of FDI in retail.

·
Your points should be accurate/factual
and precise. Do not try to delve too much into one argument because you have to
cover multiple aspects. Covering every point equally is very crucial to form a comprehensive
and impactful answer.

How to write the answer to this question

·
Firstly, you can introduce by
citing India’s position in the list of world economies. Briefly discuss the
importance of retail sector as the second largest employer in India, after
agriculture.

·
A brief tracing of how FDI in
Retail has progressed in India would also be a good start. Mention that even after
the UPA introduced the new FDI law in 2012, there have been no actual
applications.

·
The cabinet has approved 51 per
cent FDI in multi-brand retail and increased the earlier 51 per cent to a full
100 per cent in single-brand retail.

Pros of FDI in Retail

·
The local ventures will get a
boost with the help of foreign management and logistics techniques. The
government will also pay extra attention to improve the infrastructure of
industries and also get access to better technologies brought to the country by
the foreign firms.

·
Ample employment opportunities
will be generated and also strengthen competition among the leading brands in
the market. The sectors which will get the largest boost vis a vis employment are
agro-processing, marketing, logistics management, sorting and front-end retail.

·
Since foreign investment will
be directly brought to India, FDI would aid in integrating Indian markets with
their international counterparts. This dynamic expansion will contribute to the
overall economic development of the country and make India a stronger economy.

·
Farmers will also be benefited
by access to direct marketing and contract farming schemes. Modern techniques brought
by foreign firms will also help in improving agricultural production.
Similarly, the elimination of middlemen will help farmers get better prices in
the market.

Cons of FDI in Retail

·
The most significant negative
impact expected is immediate loss of jobs on a massive scale.

·
Once foreign brands establish
themselves well in India, they will make the public switch to their brand and abandon
local ones.

·
Innumerable small scale
enterprises, retailers and farmers will lose their livelihood. Once this
competition is eliminated from the marketplace, foreign giants will build their
monopoly and hike the prices of goods, thereby manipulating consumers.

·
A major loss of jobs will take
place in the manufacturing sector because organised foreign enterprises make
their purchase from international markets and thus, the domestic sources will
be rendered unemployed.

In the
conclusion, briefly summarize the major pros and cons of the topic. A
conclusive argument should also be added. In case you have any quote or an
interesting anecdote, it would make for a good ending.  

The next topic
is – “Corruption in sports committees
and government interference are degrading the quality of sports in India.
Elaborate and provide remedies.”
(IIM Calcutta, 2013)

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