Centuries of murderous incursions by foreign invaders have imbued in the psyche of the inhabitants of this subcontinent a phobia about foreigners. The hue and cry against the entry of retail MNCs via the FDI gate is just the latest example of this xenophobia. The Indian corporate sector, which is shouting from the rooftops that it welcomes the government move, has in the past been one of the fiercest opponents of free FDI.
After Independence, the indigenous car industry, led by a prominent industrial house of the time, exerted tremendous pressure on the government of the day to prevent foreign automobile giants from setting up shop in the country. The result was that our automobile industry was stunted in its growth and remained stagnant in obsolete technology for the next three decades, till the personal interest of the scion of the nation’s ‘royal’ family forced the government to change the rules of the game and Suzuki made its entry. Who can forget the fierce resistance that Parle’s Chauhan put up to prevent the return of foreign cola companies to protect his own turf, when the government was opening up the sector following the liberalisation move in the early Nineties?
There was a time, in the Fifties and Sixties, when India led the rest of the east in the infant computer manufacturing field, thanks to the efforts of IBM (USA) and ICL (UK). The same paranoid fear of a foreign entity’s true intentions forced IBM to quit India in the Seventies. While Fernandes is credited with hastening the exit, the fact is that the government (read Department of Electronics), wanted the computer maker to start making its latest systems in India while the company felt that the country was not ready for it then. IBM did come back in 1992 but the two decades gap made India lose the edge in Asia, not only in making computer hardware but also a lot of associated electronics.
We are proud today of our software industry. But, back in the early Eighties, it took Texas Instruments almost three years to persuade the government to agree to its investment proposal to put up a satellite link between its development centre in Bangalore and its US headquarters.
Remember the dire warnings issued by furious activists, when the government was considering permitting foreign fast food chains to enter India, that the country’s small eateries would become history? What actually has happened, in the last decade, is that, despite the spread of foreign fast food outlets, there has been no let up in the growth and diversification of the Indian eatery sector.
Something similar will happen to the Indian retail sector following the entry of multi-brand foreign retailers. Instead of fading away, our local stores will learn from them. It has already happened when they faced the challenge from organised retail. They started using pre-weighed, pre-packaged wares instead of loose stuff, changed from manual scales to electronic ones, took up computerised inventory control for keeping optimum stock levels, jazzed up their store fronts, introduced walk-in facilities enabling customers to personally select their purchases etc. The brighter of the lot have gone one up on organised retailers and introduced home delivery, big boon in traffic-clogged and parking-short Indian cities.
The people who should really feel scared about getting ousted in the long run by MNC retail giants are Indian companies in organised retailing.