An Urbanist’s viewpoint on FDI in multi-brand retail

Recently the way FDI in multi-brand retail (henceforth referred simply as FDI in this post) got clearance from the Indian parliament was interesting, as very rarely such fierce debates happen these days. But the debate was more concentrated on job creation and on economics, I felt sad that none of the politicians talked about any of the urban implications. Especially in light of the largest ever investment after independence into urban areas through JNNURM. I thought Kamal Nath would have taken up some issues, because he is the urban development minister and was with the ‘ministry of commerce and industry’ too. Jaitley was speaking red and lefties were making arguments way too below their standards. Well! All others were just speaking something which I found really hard to make any sense in terms of a logical argument.

I can’t really make any judgments on the economic side, let’s just hope for the best, but FDI in multi-brand retail is going to be an urban disaster in India, unless something is quickly done in this regard.

FDI facilitates a morphology that is completely anti-sustainable. For FDI to run a profitable business they will need huge foot prints. Any urbanist would know the adverse effects of super blocks; with large foot prints they screw the traffic system in an urban area and generate humungous amount of waste and increase pollution. Also a super block is an anti-thesis of a humane city.

Me being an optimist thought that government would have done something about it and started looking into implementation documents, only to horrify myself…… “We are identifying land in Delhi’s peripheries as these chains need big chunks of land” ~ Mukesh Sharma (Parliamentary Secretary to CM Delhi)…. Sharma ji isn’t the MPD 2021 aiming the exact opposite through its policies and newly in process TOD guidelines?…. BTW by outskirts did you mean the green belt????

FDI’s biggest benefit is that it will offer good (so called) quality products at a cheaper rate, and one of the key requirements for it, is to have concentrated retail, like a super market. Now a cheap super market is repulsive to mixed use development. Here it should be noted that how the sealing of ’96 in Delhi was required for malls to first pop up in NCR, and I guess Justice Sabharwal understood it the best 😉 . So cities will register an increased travel demand and blunders like flyovers and urban-highways will pop up.

More malls will come up, and I guess I better don’t go into already known urban effects of shopping malls….. well it is not that the industry is not aware of these things…. Builders are fiercely looking on to build more malls….” FDI in multi-brand retail will increase demand for mall space” ~ Subhash Roy (National Director for Retail, Knight Frank India)…. Higher value of commercial property means that the land value will rise, leading to a housing crisis. Urban India as such still don’t have any clue on how to deal with existing urban housing crisis and an increased land rate will lead to either poor quality housing or housing only for the minority affluent population.

There is one other major factor that will affect urban housing.  As quoted in Rajya Sabha by Mr. Jaitley “Number of manufacturing jobs has come down in countries that allowed international structured retail”….. what it means is that small time investors will move away from the manufacturing sector and only more lucrative option for them would be real estate. Thus the speculative real estate market will grow much beyond where it is today. I guess it is pretty clear that small investors have limited options in commercial properties and more comfortable range in residential properties. Today, houses are out of reach even for a middle class family, and after the FDI, houses will be even more expensive….(well! optimists and/or money-less people like me would want to believe that the bubble will burst and they will get a house at a cheap rate… lets keep hoping for the Dday 😉 )

Another implication of the same phenomenon is that there will be a major shift of jobs from manufacturing to retail. More retail job means more housing for LIG in urban areas and more diverse rental housing options in the city…. And in an urban area, I don’t think anyone have a clear idea on how to meet this demand!!!

To sum it all up; FDI in multi brand retail will lead to –

  1. A chaotic traffic situation in the city
  2. Increased pollution
  3. Less humane urban environment
  4. Housing crisis
  5. Skewed land dynamics leading to social issues

Above all I personally feel that FDI in general is an emphasis on GDP driven growth which completely neglects the much needed HDI approach as a measure of development.

In a large and diverse economy like ours, it is difficult to predict the exact implications of FDI, but at least we should take steps to counter the known adverse effects.


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