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Gyan Ki Baatein

The real reasons behind allowing FDI in retail in India were not related to supply chain issues or technology. The Agricultural Produce Marketing Committee (APMC) Act created legalized cartels of middlemen by making it illegal for farmers to sell more than 400kg of crops directly to retailers. This denied farmers freedom of choice and led to lack of infrastructure investment, food shortages, and rising prices. Allowing large retailers to purchase directly from farmers threatened the monopoly of inflated prices enjoyed by middlemen, triggering protests. However, true freedom of choice for farmers and consumers was still not achieved.

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Teddy Jain
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214 views2 pages

Gyan Ki Baatein

The real reasons behind allowing FDI in retail in India were not related to supply chain issues or technology. The Agricultural Produce Marketing Committee (APMC) Act created legalized cartels of middlemen by making it illegal for farmers to sell more than 400kg of crops directly to retailers. This denied farmers freedom of choice and led to lack of infrastructure investment, food shortages, and rising prices. Allowing large retailers to purchase directly from farmers threatened the monopoly of inflated prices enjoyed by middlemen, triggering protests. However, true freedom of choice for farmers and consumers was still not achieved.

Uploaded by

Teddy Jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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GYAN KI BAATEIN

Real Reasons behind FDI in Retail in India! Why


coming of Wall-mart in India was such a big issue.

The Pretext

The government of India stated that they were allowing global giants like Wal-Mart to set foot in the
country only because they had the technology to help Indias supply chain issues. India had been
suffering from a warehousing problem as millions of tons of food grains were simply rotting away. At the
same time, India was experiencing astronomical food inflation.

Therefore, the absence of a world-class supply chain was cited as the biggest reason behind the co-
existence of these contradictory problems. As a result, creation of a world class supply chain in the
remote rural areas of India was the top priority of the government. Wal-Mart seemed to have the capability
and the track record to help the government accomplish this task. Hence, the government was willing to
crack a deal with Wal-Mart allowing it to set up stores in the country if it was willing to assist in the
creation of the supply chain that would end the wastage of food.

The Real Problem

The government of India seemed to forget the fact that the real problem was not

the absence of cold storages and

elements of the supply chain.

Indian companies had the technology which was required to create this infrastructure. There was
nothing new that Wal-Mart was bringing to the table

However, even if Wal-Mart helped build this infrastructure, India did not have the electricity to
keep these cold storages running. India simply did not have the power to keep the cold storages
running! The government of India was either completely misreading the problem or else there
were some hidden agendas which were being pushed forward.

The APMC Act: Legalized Cartels

The real story begins with the Agricultural Produce and Marketing Committee (APMC) Act which is a
draconian statute governing the marketing of agricultural produce in India. This law was created during
the British imperialist regime in order to exploit the local people and enrich the British Empire.
The law makes it illegal for farmers to sell directly to the retailer. Any famer who sells more than 400 kg of
their crop directly to anyone other than the authorized agents appointed by the government can be
penalized and/or jailed. The basic principle of freedom of choice is being denied to the farmers. They
are forced to sell to a small group of people who, with the blessings of the governments, have formed a
powerful cartel!

This has caused food shortage, lack of infrastructure and rising food prices in India.

Selling to anyone else is illegal! Therefore, these middlemen have no real reason to be competitive and
hence cold storage and other supply chain infrastructure is not being built in the nation.

The Model APMC Act

When big corporations entered the retail foray in India, they were obviously not willing to buy these
vegetables from these middlemen at inflated prices. They wanted to be able to purchase directly from the
producers thus breaking the chain of middlemen. That is what the rioting was all about!

Farmers are now allowed to sell their produced either to state appointed middlemen or to mega
corporations! They still do not have freedom of choice and neither does the consumer! All this is being
done while the government is supposedly trying to curb food inflation!

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