India last year backed away from what was then controversial and remains controversial – allowing the international big box companies like Walmart, Tesco, and Carrefour into the Indian retail market.
These companies already have business in India but up to now have to sell through smaller retailers. This new deal will allow them to sell directly to the Indian consumer.
It’s always been controversial as the owners of small businesses and corner shops that abound in India fear they will be put out of business.
Anyone who has been to India knows that they have perfected bureaucracy and a further look into this new ‘opening’ suggests that the government are up to their usual tricks. There seem to be conditions to this deal that have not been made fully clear as of yet. Both Tesco and Walmart in statements have said they are of course interested in developing their business in India but await details, which could mean “who do we pay off now?”
Relevant to our interest in commodities and farming, is that one of the advantages put forward by the promoters of allowing these foreign companies into the market, is that it will help India’s notoriously unproductive agriculture to develop. That as a result of the former restrictions on foreign business being lifted these companies will have a positive influence on the lives of the farmers.
Raising both India’s agriculture production and the lives of those involved is obviously desired but currently in India a farmer can only own 5 hectares of land by law. How can Indian farmers honestly be expected to compete with other productive nations who don’t put restrictions in place?
Walmart, et al may bring in expertise but before getting too bullish on their effect on agriculture remember the Government of India will still need to get out of its own way and allow farmers to run profitable businesses without imposing the usual ubiquitous red tape, or corruption at the upper end of the political spectrum.
Given the glacial pace of change I suspect more “stop and start” before this story really sees the positive change for Indian agriculture that may potentially manifest.
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