Friday, February 23, 2007

No, the entry of WALMART is not beneficial for India

In fact, it is not good for anyone, anywhere, ever. This has absolutely nothing to do with the protectionist argument. The choice is not between the real WALMART and Indian wanna-be WALMARTs. The opposite of WALMART is a corporation with increased corporate social responsibility; just treatment of workers; commitment to labour rights; ethical corporate behaviour etc. Bringing WALMART (and its likes) will only help set in motion a 'race to the bottom'. The US-based groups like Wake-Up WalMART argue exactly this: A Substantial Number of Wal-Mart Associates earn far below the poverty line; Wal-Mart Associates don't earn enough to support a family; Wal-Mart forces employees to work off-the-clock; Wal-Mart executives did not act on warnings they were violating the Fair Labor Standards Act (FLSA; Wal-Mart’s Health Insurance Falls Far Short of Other Large Companies etc.

But let us set aside even these arguments for a moment. Walmart operates on monopolistic principles: it generates profits not through innovation or creativity, but by exploting workers whereever it can, and driving potential competitors out of the market. Is this what India's so-called emergence into a global giant is supposed to be premised on? Whatever happened to dynamism, entrepreneurship, the knowledge economy, etc. etc.


Kaisar Ahmad said...

Wal-Mart's operations in the USA have to follow minimum statutory rules. Whether the minimums in every state conforms to some ideal standards or not, is a matter for the US regulatory authorities.

Similarly, Wal-Mart has to conform to labor practices and laws wherever it operates. In the EU it conforms to European standards, in China the authorities obtained agreement from WAl-Mart re: compliance with the Chinese labour laws before allowing Wal-Mart to set up business there in 2003.

However, these are irrelevancies as far as India is concerned, since in India the employer in the stores will not be Wal-Mart but Bharti. The stores will merely bear the name Wal-Mart under a license agreement. The Wal-Mart corporation's role will be restricted to selling the merchandise to Bharti and supplying the knowhow on retail systems and supply chain management. Presumably Bharti will comply with Indian statutory labour provisions as regards its associates.

Sridhar said...

To an extent yes. Walmart has a big history of exploting people, but I dont think the process will be the same as in US.

Bharti is a trusted group in India. I dont think, they will go to sucha extent to make workers/ employees life hell!!!

Moreover there are Labour Laws in India + Oppositions parties are always just looking for mistake by any so called MNC's :)