FDI Paper

Analjyoti Basu and Bodhiswatta Ghosh

Foreign Direct Investment(FDI) in Assam and its

impact on employment and investment with

special emphasis on retail sector.

Subtheme: Government of India’s policy on FDI in retail sector


Abstract:

Foreign Direct Investment(FDI) is the direct investment done by some companies in

other countries either by acquiring other companies in target country or by partial

investment in other companies of the target country or by going into partnership with

companies of the target country or by expanding the present line of business or operation

in the target country. Lot of volumes has being placed regarding positive and negative

impact(s) of FDI entrance in India since the decision of implementation of FDI upto 51%

in Multi-Brand retail was tabled by Prime Minister Dr. Manmohan Singh(September

2012). The advantages and disadvantages of FDI were placed by different experts. The

discussions in this paper moves from the national scenario and enters into the scenario of

the state where the reference of North-Eastern state Assam has been cited .To elaborate

it, first the policy of Indian Government on FDI is been discussed followed by FDI’s

previous impact in India(mainly the post liberalization period after 1990 has put into

focus). On the backdrop of it, the impact of FDI on Assam is discussed which will be

supported by report on Gross State Domestic Product (GSDP), Employment Elasticity

Impact ,Financial and Economic Report on Assam and many other Financial and

Economic data. Lastly few suggestive models with respect to Assamare discussed with

respect to the entrance of FDI in the state which will try to put both the positive and

negative sides of discussion (with respect to FDI) into balance.

Keywords: FDI in retail, Indian Retail Sector, Impact on Assam

*Author

Analjyoti Basu ,Lecturer of Management, Siliguri College of Commerce, Siliguri, West

Bengal India ,email- [email protected], M:9434679226


*Co-Author

Bodhiswatta Ghosh , Ex-student(2008-2011), Siliguri Commerce College ,

BBA(Extension Campus), Siliguri, India, [email protected],

M:9475395888

Introduction

September 2012 was a landmark for both the Retail market in India as well as for

Economical History of India when Indian Prime Minister Dr. Manmohan Singh tabled the

decision of implementing of FDI upto 51% in Multi-Brand Retail. Controversies surged

up regarding this decision with groups either favoring or opposing the decision. But not

going through the controversial statement of good or bad decision it can be spelt out that

this is not a sudden decision rather this decision was in synchronization with all the

happenings since 1990 when Market Reforms came into play. This line of events saw

FDI in cash and carry(wholesale) with 100% rights allowed under the Government

Approval route in 1997 and allowance of 100% FDI in in single brand retail was

permitted. Though FDI in retail followed the reform routes from 1990’s but the Indian

Retail Market started changing slowly since 1980’s .Textile bigwigs Bombay Dyeing,

Raymond’s, S Kumar’s, Grasim and watch giant Titan were first to embrace it(Arun

Kr.Singh etal/VS RD International Journal of Business ManagementVol2(7),2012).It’s

not only India who embraced FDI in search of development. UNCTAD Report 2009

reflects the story that – global FDI figure was around US$ 1400 billion in 2000 and it

increased to US$ 1697 billion in 2008.Even US were the world’s largest recipient of FDI

during 2006 with an investment of 184 million from OECD( Organization for Economic

Co-operation and Development).Not only US-France, Greece, Iceland, Poland, Slovak

Republic, Switzerland and Turkeyalso came under the domain of FDI investment(Parag

Shil and Prantik Roy, International journal of Market, Financial service and Management

Research,Vol2,No.1,January 2013).The market is estimated at US$ 400 billion that

provides employment to 20 million people(FDI in Retail & Assam, December

12,2012).The same magazine furnishes the flipside that Global Multi Brand

Outlet(GMBRO) Walmart has turnover of US$ 410 billion and employs 2.1 million

which is below the Indian figure. A report exposed by New York Times says- Walmart

has captured nearly 50% of Mexico’s retail market in 10 years period. In their model they

used waging a price war, aggressive pricing to destroy to local market and once the

market is captured they went for monopolistic power ensuring predatory pricing. For its

strategy Walmart struggled to open up its store in Brooklyn, New York, USA. Recently, a

British Member of Parliament David Amess was quoted in the media, who has said, FDI

in retail” Literally change the fabric of life in India”.


Now, with several eminent economist and state heads (e.g.-Assam, Andhra Pradesh)

supporting Prime Ministers decision the point comes out not ballooning the controversy-

the entry statement for FDI should be – “Use the giant as Aladdin to work for you and not

as Frankenstein or Bhasmasur who will spell doom on you”.

Review of Literature

Foreign Direct Investment generally known as FDI has gained the focus of the entire

globe and all corners of the world. Even the remote corners were/is not cut-off from this

discussion. W.Jos Jansen and C.J.Stokman in “Foreign Direct Investment and

International Business Cycle Comovement” (Working Paper Series,No-401/October

2004, European Central bank) investigated the relationship between bilateral FDI

positions and cross-country business cycle correlations in the period 1982-2001 which

said that the countries have comparatively intensive FDI relations. In “Conclusions and

Implications for FDI policy in Developing Countries, New Methods of Research, and a

Future Research Agenda” by Theodore.H.Moran, Edward M.Graham and Magnus

Blomstrom tried to answer the question by their work that- the impact of FDI on

development and said that search for so called “universal result” of FDI on developing-

country economy is misguiding and FDI can have both positive and negative impacts on

the economy. Peter Nunnenkamp and Rudi Stracke in their article named “Foreign Direct

Investment in Post-Reform India: Likely to work wonders for regional development?

published in “Journal for Economic Development” used new and detailed database on

FDI approvals since the early 1990’s to address two major issues related to FDI and

regional development in India in post-reform period. In this case Indian authors are also

not lagging behind. In the article “Foreign Direct Investment in Multi-Brand Retailing-A

study on Indian Scenario” by Parag Shil and Prantik Roy in International Journal of

Marketing,Financial Services & ManagementResearch(Vol. 2,No-1,January 2013) have

emphasized that FDI is the tool of Economic Growth and it helped in surging the

movement of trade and investments in the last couple of years. Anand Teletumbde in his

article “FDI in Retail and Dalit Entrepreneurs” has questioned FDI as it benefitted a small

portion of the dalits and major portion of the same is pushed to suffer insecurities and

existential uncertainties. In the Research Paper “The influence of Labor Markets on FDI:

Some Empirical Explorations in Export Oriented and Domestic Market Seeking FDI

across Indian States” by Aradhna Aggarwal investigated the sensitivity of FDI to labor

market conditions and presented improvements to the modeling of the labor markets. In

the Research Article “Foreign Direct Investment: The Big Bang in Indian Retail” by Arun

Kr.Singh and P.K.Agarwal scrutinizes the relationship of FDI with the Indian Retail

Sector and said that Indian Government should take decision to safeguard the interest of

Indian Retail sector. Again in the Research Article “Economic factors and Foreign Direct

Investment in India: A correlation study” written by Nilofer Hussaini in “Asian Journal of


Management research” highlighted the vital economic determinants of FDI inflow in

India and its correlation with the actual FDI inflows.

Objectives and Scope of Study

• To discuss the (maybe) effects on India and Indian Economy after placing 51%

share in Multi-Brand retail.

• To gauge the effect of inflow of FDI from 1990’s (starting of reforms) till date in

terms of employment, GDP and other parameters by the help of Statistical

Analysis.

• Discuss the effect on the Retail Sector in terms of employment and other

parameters.

• Producing Models in the effort to fill up the situational gap arising out due to

misuse of Economic power by the foreign investors investing through foreign

funds in Indian industries.

• To study (maybe) effects in the state of Assam on the backdrop of change in

Indian Economical scenario due to entrance of 51% FDI in multi-brand retail.

Methodology and pathway followed for the study

The study mainly takes into count several case studies, secondary data and news

published in different national journals. Overall the pathway depicted in words is as

follows:

A. To discuss the brief history of FDI in India.

B. On the base of discussing the brief history to discuss the main points tabled by

Government of India while allowing 51% in multi-brand retail.

C. Next to find out that what would be the advantages and disadvantages of the

proposal.

D. To analyze the proposal on the base of FDI flow statistically in India since

liberalization processes were taken up and Indian market was opened to the

foreign investors.

E. To analyze the scenario in Assam on the backdrop of the National happenings by

the help of FDI flow data and subsequently discussing the (would be) points of

advantage and disadvantages.

F. To discuss briefly the concept of GSDP.

G. To analyze different products and industries of Assam on the basis of export

probability and definite foreign companies expertise on the definite

product/industry that is placed in Assam.

H. Lastly, placing few models which may play the part of inoculation to the Indian

incorporation in case any negative situation arises due to entry of FDI.


A. Brief history of FDI in INDIA

The FDI proposal tabled by Prime Minister Manmohan Singh was not a new one

rather it was continuation of the events started since 1990s when the reform

processes were started and Indian Government opened the market for the foreign

players. The things will be clear if the incidents one after one are described.

1990- Breakout of Gulf War and subsequent oil shock triggered Balance of

Payment( BOP) crisis in 1991. Indian Government turned to International

Monetary Fund(IMF).

1991- Liberalization started with FDI upto 51% allowed under the automatic route

but only in selected priority sector.

1995-World Trade Organization’s General Agreement on Trade in Services both

Included wholesales and retailing services came into play.

1997- FDI upto 100% allowed under the automatic route in cash and

carry (wholesale).

2006- FDI upto 51% allowed with Government approval in Single Brand Retail.

2011- 100% FDI in single brand retail permitted.

14th September 2011- Government of India announces the opening of FDI in

multi-brand retail subject to approval by different states.

7th December,2012- Federal Government of India allowed 51% FDI in multi-

brand retail in India.

B. Overview of the FDI tabled by Government of India

1. FDI upto 51% permitted under Union Government approval route (i.e-prior

approval from the government before induction of FDI).

2. Fresh agriculture produce including fruits, vegetables, flowers, grains and meat

products although unbranded may be traded.

3. At least 50% of the FDI to be invested in the backend infrastructure within 3 years

of induction.

4. FDI to include investment towards- processing, manufacturing, distribution,

design improvement, quality control, packaging, storage, warehousing, agriculture

market produce infrastructure and logistics.


5. Expenditure on landcost and rentals would not be counted in terms of back-end

infrastructure.

6. Minimum sourcing of 30% of the manufactured /processed products from Small

Scale Industries(units with gross value in Plant and Machinery not to exceed USD

1 million).

7. The procurement requirement to be met in the first instance within 5 years

beginning from 1st April of the year during which first lot of FDI received and to

be met on annual basis thereafter.

8. Government of India has the first right for procurement of Agricultural products.

9. The decision of setting retail outlets has been left to the state governments.

a. These outlets to be set up in cities with population of more than 1 million as

per 2011 census.

b. For states/UTs if they are not meeting the above criteria in that case retail

outlets will be settled up by the decision of the respective State Government.

After the decision was tabled the following states accepted the decision-

Andhra Pradesh

Assam

Delhi

Haryana

Uttrakhand

Daman and Diu (Union Territory)

Dadra and Nagar Haveli (Union Territory)

Again the foreign bigwig companies which accepted the decision and are ready to

invest with brief business line and native countries are given below-

Company Status Origin Product Walmart Have presence USA Runs chains of

department and warehouse stores.

Tesco Have presence UK Grocery & general merchandise

Carrefour Have presence France Wholesale cash and carry

Metro Have presence Germany Diversified retail

IKEA Yet to come Sweden Furniture


H&M Yet to come Sweden Retail Clothing

Uniqlo Yet to come Japan Clothes &Accessories

Canali Have presence Italy Luxury goods

Thomas Pink

Yet to come UK Shirts

Muffin Break

Yet to come Australia Bakery Cafe

C. Advantages and Disadvantages of the FDI in India (likely)

The decision of FDI in Multi-brand retail upto 51% is in the nascent stage and its good or

bad side is likely to come up in the coming years or more elaborately to say in the long

run. So instead of calling the “Advantages and Disadvantages” it will be logical to term

the FDI effect as likely positive and negative effects of FDI.

Advantages

1. Growth of Economy- With the entrance of foreign companies there will be a need

to grow infrastructure and automatically real-estate sector will spell the buzz

word. Simultaneously for the money lending purpose banking sector will also

experience the growth.

2. Job Opportunities- Estimates showed that the entrance of FDI will generate about

80 Lakh jobs mostly by retail sector followed by real-estate and it will be

followed by the other sectors.

3. Opportunity for the Farmersand manufacturers- Previously in the retailing

business the intermediaries have dominated the space between the

farmers/manufacturers and the retailers. In this process the intermediaries use to

eat up the chunk of the profit as the farmers/manufacturers use to enjoy the losers

side in terms of profit. But with introduction of FDI the concept of contract

farming or manufacturing is going to capture the scenario where there will be no

need for the intermediaries and the manufacturer or farmer can directly come into

contact with retailers through contract.

4. Benefits to consumers– With entrance to foreign investment and foreign goods

consumers will get variety of products at low prices compared to the market

prices. It will give more choice for international brand at one place.

5. Infrastructure development- India has large production for grains, fruits and

vegetables but over the year the problem that surfaced was the lack of storage

space which counted for unwanted loss and subsequently supply of crops was


hampered. FDI can help it out by putting up lot of technically enabled storage

space.

Disadvantages

1. Drainage of country’s revenue– It is said that the foreign countries investing

in India will earn the profit in India and invest in their own country and in this

way they will drain way our country’s wealth and stock it in their country for

their own overall development.

2. The domestic retail sector will lose- The domestic retail marketers may not be

competitive enough to tackle the international players and might lose the

market and even may perish away.

3. Loos of jobs- Small retailers and people working under the intermediaries may

lose their jobs as the entrance of FDI is going to spell doom upon the

intermediaries.

4. Bring down prices initially- The entrance of the foreign players may bring

down the prices initially but in the long run when these players gets hold of

the market will use their monopoly power to operate the market.

5. Farmers may get remunerative prices initially- Again the farmers may get the

remunerative prices initially but once the market is captured by the foreign

players and local supply-chains are deleted at that time the monopsony will

come into action where the farmers will be forced to sell their products to a

stipulated foreign buyer.

6. Disintegrate existing local supply chain(s)-As the retailers are going to set up

direct linkage with the farmers so local supply chain(s) will be disrupted.

D.Interpretation of the different data regarding FDI

In the previous part the probable positive and negative efforts were discussed but

this part will be discussed on the basis of real data more specifically taking into

count the happenings of 1997 when FDI upto 100% allowed under the automatic

route in cash and carry (wholesale).

a. FDI inflows during PRE LIBERALIZATION period and POST

LIBERALIZATION PERIOD



Interpretation- 1. In the pre-liberalization period the growth of FDI inflow went

up following an upward trend until and unless Gulf-war triggered Balance of

Payment(BOP) problem.

2. Again as India went for the Economic Reforms the FDI inflows surged up.

b. FDI Inflow VS Sales Growth in MODERN grocery retailers.

Year 2006 2007 2008

Inflow Inflow E GR(%) Inflow E GR(%)

FDI(Crores) 56390 98642 1.12 75 123025 1.46 24.7

Sales (in billion) 68 125.4 84 170.4 36

Year 2009 2010

Inflow E GR(%) Inflow E GR(%)

FDI(Crores) 37000 -183.37 0.08 88520 -0.85 -28

Sales ( in billion) 145.4 -14.67 180.3 24

(Yes bank & Assocham Survey 2012 and DIPP’s Financial Year wise FDI Equity

Inflows).

Interpretation- 1. Always there is a (positive) growth rate in terms of FDI except

on 2010(when the world scenario came under the clutch of recession).

2. The elasticity of FDI to sales(i.e.-increase of sales change due to change of

FDI) negative on 2009 and due to negative growth rate of sales and FDI

respectively.

Inference- The effect of FDI is not negative.

c. FDI Inflow VS Employment in retail

Year 2006 2007 2008

Inflow Inflow E GR(%) Inflow E GR(%)

FDI(Crores) 56390 98642 0.036 75 123025 0.11 24.7

Employment(Retail

Sector)

37000 38000 2.7 39000 2.6

Year 2009 2010

Inflow E GR(%) Inflow E GR(%)

FDI(Crores) 123120 16.25 0.08 88520 -0.05 -28

Employment(Retail

Sector)

39500 1.3 40000 1.3

(Yes bank & Assocham Survey 2012 and DIPP’s Financial Year wise FDI Equity

Inflows).

Interpretation -1. There was never negative growth rate in terms of employment in retail

(except in 2010)though the growth rate may come down.

2. Elasticity(indicating change in employment due to change FDI) is negative in

the year 2010 due to negative change of FDI(due to recession).


3. Employment growth rate may come down the years but never it was negative.

4.The value of r(=0.71)which again indicates there is a high positive co-relation

between FDI inflow and employment in retail.

Inference: The effect of FDI again on growth of employment in retail sector is not

negative.

d. FDI(% of GDP) vs. Trade(%of GDP)

Year 1992 1993 1994

% % E GR(%) % E GR(%)

Trade (%of

GDP)

18.7 20.0 0.06 6.9 20.4 0.04 2

FDI (%of GDP) 0.1 0.2 100 0.3 50

Year 1995 1996 1997

% E GR(%) % E GR(%) % E GR(%)

Trade (%of GDP) 23.2 0.14 13.72 22.4 NA -3.4 23.0 0.05 2.6

FDI (% of GDP) 0.6 100 0.6 0 0.9 50

Year 1998 1999 2000

% E GR(%) % E GR(%) % E GR(%)

Trade (%of GDP) 24.1 -0.142 4.7 25.5 0.31 5.8 28.5 NA 11.6

FDI (% of GDP) 0.6 -3.3 0.5 -16.67 0.5 0

Year 2001 2002 2003

% E GR(%) % E GR(%) % E GR(%)

Trade (%of GDP) 27.6 -0.05 -3.1 30.8 -0.12 11.59 30.5 NA -0.97

FDI (% of GDP) 0.8 60 0.7 -12.5 0.7 0

Interpretation- 1.Growth rate of Trade as percentage of GDP went negative in the

years 1996, 1998 and 2003.

2. Again Elasticity (1% change in trade growth rate due to 1% change in FDI

growth rate) went negative in the year 1998,2001 and 2002.

3. The term NA is applied in those cases where there were no changes in terms of

FDI.

4. The value of R(=0.64) indicates that there is high positive-correlation between

Trade (% of GDP) and FDI(% of GDP) which indicates that with the growth of

influence of FDI in GDP there is also growth of influence of trade in GDP.

Inference– 1.In terms of Growth rate and Elasticity the figures are average

but in terms of correlationship it is spelling out that increase or decrease of

FDI’s influence in Trade is going to have incremented or decremented effect

on Trade’s effect on GDP.

2. So, inflow of FDI will have a positive effect on trade as well as on GDP.


e. Degree of Correlation(r) between different Economic Factors and FDI inflow in

India

Year FDI inflow (Rupees Crore)

GDP at Market Price (Rupees Crore)

Openness of Trade (Rupees Crore)

1991-92 316 654729 0.140353

1992-93 965 752591 0.155547

1993-94 1838 865805 0.164993

1994-95 4126 1015764 0.169966

1995-96 7172 1191813 0.19217

1996-97 10015 1378617 0.186953

1997-98 13220 1527158 0.186148

1998-99 10358 1751199 0.181615

1999-00 9338 1952036 0.192004

2000-01 18406 2102314 0.20665

2001-02 29235 2278952 0.19931

2002-03 24367 2454561 0.225027

2003-04 19860 2754620 0.236866

2004-05 27188 3239224 0.27056

2005-06 39674 3706473 0.301318

2006-07 103367 4283979 0.329667

2007-08 140180 4947857 0.337151

2008-09 161536 5574448 0.397383

Coefficient of Correlation (r)

(+)0.91

+)0.92

(Asian journal of Management Research, Volume 2 Issue 1 ,2011)

Inference – 1.The inference drawn in (c) is again repeated by the table in D ,ie,

there is a positive correlation between FDI inflow with GDP at market price and

again between FDI inflow and Openness of Trade.

2. It indicates that with increase of FDI inflow there is positive increase of GDP

(Very high,r= .91) and again very high(r=.92) positive increase of Openness of

Trade.

3.So again it could be said that FDI inflow is good for GDP.


f.FDI approvals and % Gross Value added by Industry

Inference- As the value of correlation-coefficient(r=0.41) we can infer that the flow of

FDI is positively correlated with Gross value added by the industry, i.e., FDI flow

indicated growth of the Indian Industry in terms of value.


f. Retail Growth in India-

Uptill now the data were considered in terms of FDI flow. Next data will consider the

prospect of Retail Market in India.

Interpretation- 1.The Retail Sector in India has experienced a high growth rate

(Yes Bank and Assocham survey 2012) which has surged up from 12 INR Trillion

to 23 INR trillion. In 2016-17 it is expected to go up to 47 INR Trillion which

spells 14.5% and 15% growth respectively.

2. The Yes Bank and Assocham Survey-2012 has calculated high growth rate and

also projecting high growth rate.

Inference- The Retail Market in India has very high prospect.

E.Analysis of ASSAM regarding FDI

In Indian union each and every states are shackled by the same financial system and

economic criteria so overall impact discussed uptill now may not be different in terms of

Assam also. So on the backdrop of the national scenario the advantage and disadvantage

of FDI in terms of Assam if it enters the state would be-

1. Assam do not have strong supply economics so the foreign retailers will bring

goods from cheaper destination with a set logistical management process like

China sell at higher rates and earn profit.(As per Assam Tribune, 24/12/2012)


2. Initially primary producers and end users will get benefit but the foreign players

will try to weed out the small business buyers. Once the network is established

they may act as a Monopsony with many seller and single buyer which is never an

ideal situation for the sellers.

3. (As per planning commission data) GSDP in for 2005-06 to 2010-12 for

agriculture and industry for Assam is lagging behind Bihar, Gujarat, Tamil Nadu

and Karnataka ad they are opposing FDI.

(As per the Assam Chief Minister, Tarun Gogoi)

4. By the help of FDI Govt. of Assam to boost Small, Medium and Cottage

Industries and the matter is with the planning commission.

5. It will cater 10-20% of the demand of the cities and 80% business in interiors will

stay with local retailers.

6. Assam in Agriculture based FDI will benefit farmers as direct buy will be from

farmers and farmer’s development will develop the state.

In his support the honorable Chief Minister said that coming of eateries brand like

McDonald's has not hampered the sale of local eateries or delicacies. He also

added that Assam has failed to bring in much big industries to set up their units in

Assam. Now Assam has changed the thrust to small medium and cottage

industries.

On the backdrop of the above statements some data-based facts regarding Assam

and FDI are summarized as follows:

a. Elasticity of Employment to GDP

Broad Industry

Groups

Assam All India

E(2004-05) E(1999-00) E(2004-05) E(1999-00)

Agriculture 1.0 1.0 0.58 0.0

Manufacturing 0.07 0.0 0.73 0.21

Wholesale

&Retail Trading

0.0 0.0 0.40 0.66

Mining &

Quarrying

1.0 1.0 0.54 0.0

Transport,

storage and

construction

0.15 1.0 0.30 0.55

(Department of Labor, Govt of Assam,2011)


Interpretation-

1. Elasticity of GDP change with respect to the change in Employment almost

remained the same or even decreased for all the sectors if the stretch from 1999-

2000 to 2004-05 is considered for Assam. Except for Manufacturing where there

a marginal increment is recorded.

b. Part on Statement on RBI’s Regional Office with state covered received FDI

equity(from April 2000 to March 2012)

Inference- The FDI inflow has come down from 2009-10 to 2011-12 which is not

an inspiring story for the state.

c. Break-up of outstanding investment by sector(2011-12)- Total investment-US$

50.4 Billion

Inference-The overall data is not representing any good pictures. So for her

development Assam Govt. should take important measures before welcoming the

FDI for the state.

d.Macro-Economic aggregates GDP(India)and GSDP(Assam)year-wise at current

price.


Year GDP(India)in Rs.Billion (A)

INR equivalent of one US$(Exchange Rates) (B)

GDP(India)in US$ Billion (A ÷ B)

GSDP(Assam) in US$ Billion

2004-05 32422 44.95 721 11.8

2005-06 36934 44.28 834 13.4

2006-07 42947 45.28 949 14.2

2007-08 49871 40.24 1239 17.6

2008-09 56301 45.91 1226 17.6

2009-10 64574 47.41 1362 19.5

2010-11 76741 45.57 1684 22.8

2011-12 88558 47.94 1847 24.0

Interpretetion – If the values of GDP(India) and GSDP(Assam) at current price are

compared on the basis of Co-relational Analysis than the value of r=0.99

Inferences

1. The value of r=0.99 indicates that the GDP of India and GSDP of Assam are

highly co-related.

2. In previous section “Interpretation of the different data regarding FDI” it

was indicated by help of data(point-f) that FDI inflow and GDP growth have

high positive co-relation(r= 0.91).

3. So,comparing previous and present part it could be interpreted that- FDI

inflow and GSDP growth should have positive corelation,i.e,more inflow of

FDI should produce more growth of GSDP of Assam.

F. Discussion on Gross State Domestic Product (GSDP)

Now on the basis of discussions on Section E the obvious question

arises is what is Gross Domestic Product or GSDP.GSDP is the counterpart of

Gross Domestic Product(GDP).GSDP is considered in case of the states while

GDP in case of the whole country.

The sum of the monetary values of the goods and services

produced in a year in Primary,Secondary and Tertiary sectors of an economy

constitutes the Gross Domestic Prdoduct(GDP).The components of the three

sectors are-

a) Primary Sector- It includes the activities and products of

agriculture,sericulture,forestry and logging,fishing and mining.

b) Secondary Sector- It includes manufacturing, construction,electricity,

gas and water supply activities.


c) Tertiary Sector- It consists of hotels and

restaurants,transport,storage,communications,insurance,real estate and

business services,community services and social and personal services.

So from the above discussions of the sectors it is quite obvious

that the retail products that comes in forms of Business to

customers(B2C) and sometimes as Government to customer(G2C) are

mainly from the Primary Sector.

So for any states growth of GSDP with help of Retail

Sector is reflected by the growth of Primary Sectors.

G.Descriptive analysis of Assam’s products and industries

On the basis of discussion carried up in the previous part(i.e-Part F) in

this section we will carry out our discussion under following heads(considering

the fact that if foreign companies enter the state what are points to be considered)

i. Points of advantages for Assam.

ii. Infrastructural facilities available in Assam.

iii. Modular suggestion for website development.

iv. Modular suggestion for selecting investors.

v. Models about using and working with the investors.

vi. Main industries of Assam followed by analytical discussion focusing

on-

• Main products of the industry

• Main importer countries of products of the industry

• Top companies of the world involved in the industry

i. Points of advantages for Assam.

a. The state is the gateway to Northeast and shares its border with seven states namely Arunachal Pradesh, Nagaland, Manipur, Mizoram, Meghalaya , Tripura and West Bengal.The state also shares international borders with Bangladesh and Bhutan.

b. Assam is the largest economy of the Northeast region. It is the most

industrially advanced state in the Northeast India and at the same time enjoying proximity with rest of India with respect to rest of the North-Eastern state.


c. Assam is rich in natural resources such as natural oil and gas, rubber, tea, and minerals such as granite, limestone and kaolin.

d. The state is rich in water resources. Other potential areas of investment

include power and energy, mineral-based industries, tourism and crude

oil refining.

e. The state has pleasant climatic and scenic landscape which has

presented it as popular tourist destination and also attract the foreign

investors.

ii. Overall Infrastructural facilities available in Assam.

i. Assam has a total road length of about 42,641 km (covering both

metalled and non-metalled surfaces).

ii. Major towns in the state are connected by National Highways that cover 2,940 km*. (As of June 2012)

iii. The Assam State Transport Corporation (ASTC) provides state

road transport services since its establishment in 1970.

iv. The headquarters of the North-East Frontier Railways is located at Malig- aon, on the outskirts of Guwahati.

v. Within the state, all the major towns such as Dibrugarh, Tinsukia,

Jorhat, Nagaon, Guwahati, Tezpur, Barpeta, Bongaigaon are well connected by the railway network.

vi. In Rail Budget 2012-13, a survey for railway electrification project

has been sanctioned for Assam. The Budget also envisages to bring the northern banks of the Brahmaputra river under rail connectivity.

vii. The Airport Authority of India plans to make Guwahati Airport as

one of the major international airports of India, connecting Southeast Asia with India.

viii. The state also has six domestic airports, at Guwahati, Tezpur,

Jorhat, Dibrugarh, Silchar and North Lakhimpur.

ix. Assam’s major river routes are the Brahmaputra and the Barak rivers, with a combined navigable length of around 1,000 km.


x. Seven port locations are operational in the state for import and

export to the Kolkata and Haldia ports. These services are used for the transportation of passengers and goods across the state and to West Bengal.

xi. As of January 2013, Assam had a total power generation installed

capacity of 1,020.04 MW, which comprised 507.54 MW under central utilities, 488.00 MW under state utilities, and 24.50 MW under the private sector.

xii. The Asian Development Bank (ADB) has sanctioned US$ 200

million under the Assam Power Sector Enhancement Investment Programme. Besides, ADB has provided a grant of US$ 1 million for capacity development of the power-sector utilities in the state.

xiii. The teledensity in the state was 46.5 per cent, as of December

2012. As of December 2011, the state had 597 telephone exchanges.

xiv. The Government of India has sanctioned a food processing park

with a total project cost of US$ 1.2 million. The park is being set up near Chaygaon in the district of Kamrup (rural). The implementing agency is Assam Small Industries Development Corporation Limited.

xv. The Government of India has sanctioned an agri-export zone for

the state, for fresh and processed ginger. The nodal agency for implementing this project is Assam Industrial Development Corporation Limited. The zone is located in eight districts Kamrup, Nalbari, Barpeta, Darrang, Morigaon, Nagaon, Karbi Anglong and North Cachar (N.C.) hills of Assam.

xvi. Assam Industrial Development Corporation (AIDC) has

implemented an Export Promotion Industrial Park (EPIP) at Amingaon, near Guwahati in the district of Kamrup, at an estimated cost of US$ 3.0 million. The total area of the park is 68.1 acres.There are 38 companies and firms in the park.

xvii. Industrial growth centres with supporting infrastructure have been

set up at Balipara in the Sonitpur district and Matia in Goalpara. The Matia industrial growth centre has been set up with a total project cost of US$ 4.5 million and spans across an area of 700 acres. The Balipara Industrial Growth Centre has been set up with a total project cost of US$ 5.3 million and is spread across an area of 400 acres.


xviii. Integrated Infrastructural Development (IID) centres have been

planned at Parbatpur, Serphangguri, Dalgaon, Demow, Bhomoraguri, Malinibeel,Dahudi, Silapathar, Rangia, Banderdewa and Titabar.

xix. Border Trade Centres(BTC) are located at Mankachar (Dhubri),

Sutarkandi (Karimganj) and Darranga (Kamrup).

iii.Modular suggestion for website development.

Now for placing informations to the foreign investors regarding Agricultural activities,Manufacturing activities and Retail Sector of the state elaborately websites should be developed.Modular suggestion regarding the website may be-

INFORMATIONAL WEBSITE

TARGETING INVESTORS

MANUFACTURERS DATA COVERING ALL BIG

MEDIUM AND SMALL MANUFACTURERS

MANUFACTURING POTENTIALITY OF ALL BIG

MEDIUM AND SMALL MANUFACTURERS

LOCATION OF DIFFERENT MANUFACTURERS

EXISTING OWNERS

LOCATION OF DIFFERENT MANUFACTURING

OUTLETS

INFRASTRUCTURE

POST PRODUCTION DATA

COVERED BUSINESS GEOGRAPHICAL AREA

ANY SPECIAL ADVANTAGE TO BE GIVEN

BY THE GOVT. ON INVESTMENT PROBABLE PLACES TO SET UP NEW

MANUFACTURING UNIT

SPECIAL INFORMATION

RAILWAYS ROAD WAYS AND

OTHER CONNECTIVITY

INFORMATION

REGARDING

MANUFACTURERS

MANUFACTURING

LEGAL PROCEDURE TO BE

FOLLOWED ON INVESTMENT

NEAREST LOCATIONS WITH RESPECT TO THE

MANUFACTURING UNIT


INFORMATION REGARDING AGRICULTURE

INFORMATIONAL WEBSITE TARGETING

INVESTORS

AVERAGE ANNUAL YIELD CAPABILITY OF LANDS

NO. OF CROPS GROWN IN THE FIELDS

GEOGRAPHICAL LOCATION (PLACING MAPS OF

GOOGLE EARTH TYPE)

ATMOSPHERIC DATA

AGRICULTURE

NEAREST MARKET TO TRADE GOODS

RAILWAYS ROADWAYS AND OTHER CONNECTIVITY IF

ANY

YEARWISE PRODUCTION DATA

ANY SPECIAL DATA TO BE GIVEN BY THE COURT ON

INVESTMENT

ANY SPECIAL ADVANTAGE TO BE GIVEN BY THE

GOVT. ON INVESTMENT

SPECIAL INFORMATION

EXISTING OWNER OF LAND

LEGAL PROCEDURE TO BE FOLLOWED ON

INVESTMENT


INFORMATIONAL WEBSITE TARGETING

INVESTORS

YEARLY TRANSACTIONS OF DIFFERENT OF DIFFERENT

EXISTING RETAIL OUTLET

DATA OF ALL EXISTING RETAIL OUTLET

WOULD BE LOCATIONS TO SET UP RETAIL OUTLETS

PRODUCTS TO BE TRADED IN OUTLETS

EXISTING OWNERS

FACILITIES

INFRASTRUCTURE

GEOGRAPHICAL AREA OF POTENTIAL BUSINESS OF

EACH OUTLET

LOCATIONS OF THE OUTLETS (BY PLANNING GOOGLE

MAPS SORT OF)

LEGAL PROCEDURES TO BE FOLLOWED DURING

INVESTMENT

PROBABLE PLACES TO SET UP NEW MANUFACTURING

UNIT

SPECIAL INFORMATION

INFORMATION

REGARDING RETAIL

SECTOR

RETAIL OUTLET


Different agricultural goods and the goods that are being manufactured from raw

materials or finished products(like soaps in the factory) generally come as retail products

in the market.So these two sectors along with the gross retail sector should be taken care

of.

iv.Modular suggestion for selecting investors.

Now in the next model it will be discussed that – what should be the criteria for

selection of the investors and what should be desired from them for each and

every stipulated criteria.

INVESTOR

AMOUNT OF INVESTMENT

SOURCE OF INVESTMENT FOR THE INVESTOR

WHETHER RELUCTANT TO INVEST 50% IN THE

INFRASTRUCTURE GROWTH AND THAT ALSO

WHETHER 3 YRS. OF INCEPTION

THE TIME FRAME WHIICH THE INVESTOR IS GOING TO

CARRY OUT HIS BUSINESS IN INDIA

WHETHER THE INVESTOR IS A LONG TERM PLAYER IN

THE BUSINESS IN WHICH THEY ARE INVESTING

WHETHER THE INVESTOR COMPANY BELONGS TO SUCH

COUNTRY WHERE THERE IS HIGH DEMAND OF THE

PRODUCT IN WHICH THE INVESTOR IS INVESTING

CRITERIA FOR

SELECTION

AS STIPULATED BY GOVT.

OF INDIA

SOURCE OF INVESTMENT

OF INVESTOR SHOULD BE

TOTALLY LEGALIZED

INVESTMENT

SHOULD DO IT AS PER THE

CRITERIA SETTLED BY THE

GOVT. OF INDIA

AT LEAST 10 YEARS

SHOULD HAVE MASTERED

THE SKILL SET NEEDED IN

THE FIELD FOR NOT LESS

THAN 10 YEARS AND PUMP

IMPOTRTANT SKILLS,

EXPERIENCE, EXPERTISE IN

INDIA’S END

THE HOME COUNTRY OF

THE INVESTRO HAVE HIGH

DEMAND FOR THE

PRODUCT IN WHICH THE

INVESTOR IS INVESTING

DESIRED

WHETHER THE INVESTORS SELLING GOODS WHICH

ARE PRODUCED OUTSIDE INDIA

THE INVESTOR SHOULD

HAVE MANUFACTURING

UNITS IN INDIA FOR

GOODS AND PRODUCTS

THAT THEY ARE SELLING IN

INDIA TO GENERATE

EMPLOYMENT FOR LOCAL

PEOPLE


Increase Export

From the above model it’s quite clear that what should be the selection criteria

and what is the desired criteria for it.For example,if we go for the last criteria ,i.e,

whether the investors are selling goods in India which are being manufactured

outside India but the desired criteria should be that –the investors should set-up

atleast one manufacturing unit of the prdoducts in India so that both employment

and expertise is generated in India.

iv. Models about using and working with the investors.

Probable selection cum working Model

Select Select

Investments

Industry Type

Focus on Focus on Focus on

Countries those who

highly import goods and

products of the specific

industry.

Foreign

Investors/Companies

High expertise in the

present industry/

product.

For industries /products

which may have a good

potentiality of start up at

Assam.

Products and industries

already present in the state.

40%-50% investment in

infrastructural growth

and that also within 3

years of inception (As per

Govt.of India’s guidelines

on FDI)

Small Scale Industry Medium Scale Industry Export capable large

scale industry

As not export capable

industry so focus on

infrastructure

development so that it is

capable of providing

employment opportunity.

Developing present

products of the industry

and to make them export

capable.


Few points regarding above model-

a. The above model mainly focuses on the point that use FDI for the overall

development by three ways- 1. Incresing employment 2. Developing

infrastructure and 3. Increase export and earn more foreign currency for state

development.

b. The model says select companies from those countries who highly

exports/produces(from their countries or in their countries) goods with respect

to our specific industry- like China,Kenya,Srilanka and Turkey are the top

producers of Tea in the world and the top class tea companies are with

USA.So in case of selecting Tea companies they should be selected from

USA,China and Turkey.

c. The model also emphasizes for investments in such industries which has/have

high potentiality but not explored to that extent still now.For example-

Nilachal Hills of Assam has high cummulation of medicinal plants(April

4,2013 Assam Tribune) which could be explored to build Assam as Medicinal

hub.

d. Lastly,it emphasizes that-small scale industries should be built up to provide

employment,middle scale to start export and large scale to generate more

export.

In totality it could be said that when the foreign investments will

come use them for Assam’s and in broader sense for development of India.

v. Main industries of Assam followed by analytical discussion focusing on-

• Main products of the industry

• Main importer countries of products of the industry

• Top companies of the world involved in the industry

This section will be discussed based on above three points and focusing upon the

main industries(or potential industries).Here we will discuss in brief about the

following industries-

a. Tea Industry b. Food Processing Industry c. Fruit Processing Industry d. Jute Based Industry e. Rubber Based Industry f. Sericulture Industry g. Fisheries h. Forest Based industry(Bamboo) a. TEA INDUSTRY


Facts Assam produces over 50.0 per cent of the tea produced in India and

about one-sixth of the tea produced in the world. In 2011-12, total tea production in the state was 501,419 tonnes. About 17.0 per cent of the workers of Assam are engaged in the tea

industry. Presently major players

1. Assam Tea Corp.Ltd.

2. Assam Company India Ltd.

3. Apeejay Tea Ltd.

4. Williamson Magor Group.

Major Tea importing countries of the world

a. Russian Federation b. United Arab Emirates c. United Kingdom

d. United States of America e. Iran f. Germany g.Japan h.Pakistan

i. France j.Canada

So, these countries should become the focus

destination for export.

Major Tea producing countries (as per 2011 data)

a. China b. Kenya c. Srilanka d. Turkey e. Vietnam f. Indonesia g.

Japan h. Argentina (India is not considered in this case)

As these countries already have Tea production base so

expertise regarding production could be sought from these

countries.

Major Tea companies of the world

Tea company Country

American Tea Room United States

Norbu Tea United States

Canton Tea Co. United kingdom

T-OolongTea.com Taiwan

Joys Teaspoon United States

JING Tea United Kingdom

Mellow Monk Japan

Mark T. Wendell United States

Driftwood Tea United States

Butiki Teas United States

Vicony Teas China

White August Tea Co. United States

Up N Atom United States


As these companies already have expertise so obviously these companies

could be sought for investment.

Major new sorts of products to be fcocussed

1. Alcoholic Tea 2.Almond Tea 3. Aloe Vera Tea 4. Apple Tea 5. Apricot Tea

6.Banana Tea 7.Barley Tea 8. Basil Tea 9.Beetroot Tea 10.Berry Tea 11.

Black Berry Tea 12. Cardamom Tea 13. Carrot Tea 14.Chocolate Tea

15.Cherry Tea

Crores of people throughout the world take tea each and every day and

addition of new new products will go on boosting the industry.

b. FOOD PROCESSING INDUSTRY

Facts

• About 77.0 per cent of Assam’s workforce is engaged in

agriculture and allied activities.

• In 2011-12, agriculture sector contributed around 23.0 per cent to

the state’s GSDP. Rice is the main food crop in Assam.

• Other food crops cultivated in the state include jute, sugarcane,

fruits, tea, pulses, coconut, potatoes, cotton, and areca nuts.

Vegetable cultivation is also a major agricultural activity in the

state.

• Production of major foods and spices

Item Production

Rice 5033000 tns(2010-11)

Sugarcane 1076000 tns(2010-11)

Potato 657000 tns(2010-11)

Rape Seed and Musturd Seed 142000 tns(2010-11)

Chilli 13000 MT(2010-11)

Ginger 1.03 MT(sep24,2010)

Turmeric 10500 MT(2010)

Black Pepper 5000 tns(Sep 24,2010)

Sweet Potato 36390 tns(2011-12)

Owing to the great potentiality in Agriculture Govt. of Assam has

established Food processing park and Agri-export zone for ginger

(already discussed).

Major companies for Food Processing


As these companies are the leading and experts in Food-Processing

Industries they can well be tried for the development of this industry in

the state.

c. FRUIT PROCESSING INDUSTRY

Same story also prevails for fruit production in the state. Facts Horticultural crops occupy about 15.0 per cent of the gross

cultivated area of the state. The surplus expotable fruits of Assam are Banana, Pineapple,

Orange, Papaya, Guava, Jackfruit. Production of different fruits

Major Fruit-Processing companies

Companies Country

Pepsico Inc USA

Tyson Foods Inc USA

Nestle Switzerland

Kraft Foods USA

Anheuser-Busch InBev Belgium

JBS USA USA

Dean Foods Co. USA

General Mills Inc. USA

Coca-Cola Co USA

Kellogg USA

Fruits Production(in MT)

Banana 724000(2010-11)

Pineapple 221000(2010-11)

Orange 160000(2010-11)

Papaya 134000(2010-11)

Guava 97000(2010-11)

Jackfruit 201000(2010-11)

Company Name Country

AGRANA Beteiligungs-AG Austria

Agrexco Agricultural Export Co. Ltd. Israel

Air Stream Foods USA

Alpine Fresh Inc. USA

Asko Hedmark AS Norway

AVI Limited South Africa

Barkett Fruit Company, Inc USA


H

.

M

d. JUTE BASED INDUSTRY

Fact

The Jute production in the state is about 637000 tns.

Major importing countries

1.USA 2.Turkey 3.Egypt 4.Saudi Arab 5. UK 6.Belgium 7. Netherland

8.Germany 9. Ghana 10. UAE 11. Indonesia 12. Australia 13. Zimbabwe 14.

Tanzania 15. Italy

So these countries may be targetted for business.

10 major jute producers (as per data of 2010)

1. India 2. Bangladesh 3. China 4. Uzbekistan 5. Nepal 6. Vietnam 7. Myanmar

8. Zimbabwe 9. Sudan 10. Thailand

So the important point that is coming up is that India atleast in this sector can

get her expertise help from neighbouring countries like Bangladesh,China,

Nepal, Myanmar.

Major Jute product producing companies

Bud's Salads, Inc. USA

Chaoda Modern Agriculture (Holdings) Limited

Hong Kong

Chiquita Brands International, Inc. USA

Dole Food Company, Inc. USA

Del Monte Pacific Limited Singapore

Companies Country

Bangladesh Jute Mills Corporation Bangladesh

Akij Jute Mills Ltd Bangladesh

Anji Zhenxing Lianma Spinning and Weaving Co. Ltd

China

Talan Best Co.Ltd China

The Sudan Cotton Company Limited Sudan

South Sudan Consult Sudan

HANOI IMPORT EXPORT AND PRODUCING INVESTMENT LIMITED COMPANY

Vietnam

DAI CUONG GROUP JOINT STOCK COMPANY

Vietnam

UC Manufacturing(Asia) Co. LTD Thailand


e.RUBBER BASED INDUSTRY

Fact- Assam produced 10200 tons of rubber(2010-11)

Major importing countries

1. China 2. US 3. Germany 4. France 5. Italy

So these countries could be targeted for exporting Rubber or based product.

Top Producers

1. Thailand 2. Indonesia 3. Malaysia 4. India 5. Vietnam 6. China

Top Exporters

1. Germany 2. US 3. China

So the producers and exporters could be used for expertise helps for this

industry.

Top Companies

1. Dalian Rubber & Plastics Machinery Co. Ltd. (China)

2. Eskay Tyres Ltd. (UK)

3. Carter International Ltd (UK)

So these companies could be used for expertise and investment.

e. Sericulture Industry

Facts- The climate and general environment of Assam is well-suited for

sericulture. Traditional varieties of silk cultured in the state include eri, muga and mulberry. The muga silk, known for its fine sheen and golden colour, is used by the local silk-weaving industry and has contributed to the development of muga in the state.

Assam is the 4th largest silk producing state in India. Assam produces about 8.3 per cent of total natural silks of India.

The state contributes 99.0 per cent of total muga silk production in the country.

Siammit Industry Co.Ltd Thailand


The state has 10,532 sericulture villages and provides employment to more than 250,000 families.

In 1982, the Central Silk Board has established a regional office at Guwahati for extending guidance and technical assistance in sericulture practices in the state.

In 2011-12, total raw silk produced in the state was 1,934 Metric Tonnes (MT).

(Sources: Economic Survey of Assam, 2011-12, Ministry of Textile, Annual Report 2011-12)

Main Importers of Silk

1.Italy 2. France 3.Germany 4. United States 5. Japan

As these countries are the major importers so they could be focused countries for future for

export(at present the domestic production is not enough to be exported and so some quantities

are being imported each and every year)

Main Cocoon cum Raw Silk producing countries

1. China 2. Uzbekistan 3. Brazil 4. Iran 5. Thailand 6. Vietnam 7. Romania 8. Japan (India is not included in the list).

So these countries can be focused for getting expertise in production of cocoon, production of products and exports.

Top Companies(in producing silk based goods)

Companies Country

JIANGSU XINMIN TEXTILE SCIENCE & TECHNOLOGY CO.

China

DEQINGBAOMA WEAVING CO.,LTD China

Beraldin Brazil

Mais Modas LTDA Brazil

Kar Va Danesh Co. Iran

MZS Persian Rug Exporter Iran

Tora Thai Silk Co.Ltd Thailand

Nangfa Manufacturing Co.Ltd Thailand

VINABT Co.LTD. Vietnam

Yiwu Rocky Apparels Ltd. Vietnam

SC Erbay Impex SRL Romania

Kowichi Co.Ltd Japan

Tatsumwa Textile Co.Ltd Japan


f. FISHERIES

Facts

1. For development of fisheries in the state National Fisheries Development

Board, Fisheries Investment Facilitation Centre, Fresh Water Prawn Hatchery,

State Fish Laboratory, Live Gene Bank in the state has been established.

2. Apart from the above innovative schemes like Matsya Mitra is introduced and

yearly Fish Festival known as Assam Matsya Mahotsav is being celebrated

each year.

Different Processed Fish Products

As the Assam Govt. is emphasizing more on fisheries different processed fish

products on which business may be done are –

1.Fish Glue 2. Fish Oil 3. Fish Emulsion 4.Fish Hydrolysate, 5. Fish Sauce, 6.

Isinglass

Top Fishing countries in the world

1. Poland 2. Denmark 3. Greece 4. China 5. Peru 6.USA 7.Vietnam

8.Thailand 9.Indonesia 10.Spain 11.France 12.Italy

So expertise could be sought from these countries for the growth of this

industry.

g. BAMBOO BASED INDUSTRY

Facts

1. This region has highest concentration of bamboo, which accounts for around 60.0 per cent of the total bamboo of the country. Assam has ample scope for Bamboo based industry like paper manufacturing industry.

2. The objective of the Government of Assam is to promote bamboo as a substitute for wood, to make it the timber of the 21st century.

Different Bamboo based products of Assam

1. Tea Tray 2. Bamboo Basket 3. Bamboo mats 4. Sital pati 5. Winnowing

trays 6.Sieves 7. japi or chatta 8. various types of fishing implements,


Modular Suggestions

This is the last part of the study in which instead of placing suggestions some

suggestive models are placed whose implementation prior to the entry of the

Foreign players may help our Indian companies from being exposed to any

negative happenings due to entry of FDI-

Model 1

It’s a big-buzz in terms of entry of the FDI that it may eat up the jobs of the middlemen.

The above model tried to solve the problem.

In these cases the middle-men after the entry of FDI will be converted to companies

employ,i.e., foreign players employee. In other words Middleman 1 and Middleman2(as

per the model) will be absorbed by the company in the new form (CM1) and (CM2).This

could be done because company needs experts to rule the chain and if they get

readymade skill and expertise than for the company it will not be a big deal to train the

people who already worked in the chain. Simple training by the company may do for the

company. On the other hand the persons who were going to lose their income totally

may get some amount of income.

The characteristics of different Levels may be as follows:-


Features of CM1

1. Procuring seeds/manufacturing inventory material for the farmer/manufacturer.

2. Already have knowledge and skills and so brushing their skills by company training.

3. Should have complete knowledge of “Profile Card” of the farmer/manufacturer.

4. If any problem regarding farming or manufacturing is fatal they will escalate it to experts

by the reference of “Profile Card”(Discussed in Model-2).

5. Work side-by-side for work-in-progress inventory and finished goods inventory.

6. Brief technical knowledge of “Profile Card” will be given to them.

7. Work side-by-side of the farmer.

Features of CM2

1. Managing the inventory and the material previous to the retailer.

2. Will be in a constant touch with the cm1.

Features of CR

1. Work in maintenance of the retail outlet.

2. They are already the salesman of their form so simply providing modern selling

knowledge and simple training can do well for the company.

3. Still Indian mentality completely doesn’t permit suited and tied salesman to sale the

product to them rather they prefer colloquial language in the selling end of the

outlets. In context to it this persons are indispensible.

More than 2 Intermediate Level

It may happen that there may be more than two intermediate levels in the previous

(old) position (as mentioned by the model).It indicates that the chain is a big one with

high amount of transactions taking place throughout the chain. In that the following

operation may be carried out-

1. To break cm1 and cm2 as per the numbers of intermediaries in the old position.

2. Instead of making the old chain workers jobless give them all an employment

opportunity.

Model 2


In the Model 1 already there was the mention of the Profile Card. Now the details of the card

are as follows:-

1. Each and every manufacturer/farmers will have unique Profile Card and a number

associated with it known to be Profile Number.

2. As mentioned above in the Model the profile card will contain all the relevant

informations(for example-crop to be used, land type, seeds to be used in the Profile card

for Farmer and Product Details, machine details about the land occupied by the farmer

or for the manufacturing company owned by the manufacturer –Machine Details,

Product details, Raw Material Details).

3. The card should be staffed by that sort of information that could be useful to all persons

who needs information about the manufacturing unit/farmers land.

4. Some sorts of information may be very confidential to the farmers/manufacturers which

may be blocked by password but still if the farmer/manufacturer wants to share the

information they can spell out the password to the persons and if needed change the

password later on.

5. They may seek help of the monitoring committee for any help.

6. The “Profile card” will become useful when any investors wants to invest in any

manufacturing company or wants to invest for any farming land.(Discussed in Model-3 &

4).

7. Other side is also true for the profile card where the manufacturer or farmers needs

investment for their land or for their manufacturing plant may apply to the investors by

the help of the said profile card. (Discussed in Model-3 & 4).


Model 3

10


Already there was a mention of Model-3.The overview of Model-3 may be.

1. The manufacturers factory/farmers land as per their potentiality (already given in

Profile Card) may be divided in four categories- Grade A, Grade B, Grade C and

Grade D in the decreasing order of potentiality. Here the potentiality could be

measured by their yearly production or yearly yield and simultaneously on the basis

of generation of money. So the company which is generating most is given the

Grade-A, next generator Grade-B and so on.

2. In the Profile Card itself the Grade of the unit under consideration may be furnished.

3. Now the total money invested by the investor may be divided among the units

(farming/manufacturing) as per their Grade. It may be 10, 20,30 and 40 percent

respectively for Grade A,B,C and D as mentioned in the figure.

4. Objective should be the revival of the Indian companies and more efficient company

investment measure should come down in those case.

5. Now if the investment by the foreign investor is quite less than construction of the

portfolio of the percentage investment may be done by-

Responding to the request by the home country’s unit and approving by the

monitoring authority.

Or

Placing preference of investment in front of monitoring authority and approving it

by monitoring authority.

Example- A foreign company (FA)is ready to invest a small amount (with respect to

the other investors’ amount) of 10 lakh(not going through minimum investment

criteria for FDI stipulated by Government of India).Now there may be certain Indian

units(Let U1) wanting investment of more than 10 lakhs and they may apply for it by

the help of their “Profile Card” in general manner or specific manner (General

manner means- the unit needs the 10 lakh Rs. amount of investment and they have

applied in general and not specifying any company. While specific manner refers to

applying for the investment of specific company. Even in specific manner the Indian

Unit may ask for the investment of FA’s 10 lakhs.).In this case FA may invest in U1 as

per the request of U1 or invest in other companies’ portfolio as per their wish. But

the total procedure will be monitored and passed by the monitoring authority.

6. If the investment by the investor is quite big in nature than-

a. Constructing portfolios of Grade A, Grade B, Grade C and Grade

D and approving by the monitoring authority

Or

b. Responding to the request by the home country’s company and approving by

the monitoring authority.

For example- A foreign company (FB)is ready to invest hopping amount of 100

cr.(not going through minimum investment criteria for FDI stipulated by

Government of India).Now this 100 cr. Will be divided as 10 cr,20 cr,30cr,40 cr

among Grade A,B,C and D respectively. Again as discussed in 5’s example this 10 cr


may be divided into a single Grade A unit or multiple Grade A unit as per the

requirement furnished by the Grade A units in General or Specific mode (discussed

in 5’s example).

Again this division of 10 cr may be taken up by FB by themselves without

considering the request done through Profile card in General or Specific Mode.

Again the division may be a mixture of both the types mentioned above.

Same pattern may be followed in terms of division of the above mentioned 20, 30

and 40 cr division in terms of Grade B, Grade C and Grade D company. But again the

same word said in 5 prevails that the total dealings and procedure will be monitored

by the Monitoring Authority.

7. Options 5 and 6 should be carried out in order to stop monopoly of the

Foreign investors.

8. There may be an option of changing the portfolio by the investors or investee on the

basis of

a. Calmness/roughness of the relationship.

b. Profit/Loss earned on previous year’s investment.

It should be passed by the Monitoring authority after going through requesters’

request, checking it and finding out to be justified.

Model 4

Previously lot of discussions and instance came up regarding the work of the

Monitoring Authority. The work carried out by the monitoring authority may

be divided as furnished in Model 4 above.


Another aspect of the Monitoring Body should be kept in mind is the

hierarchical division of the Monitoring Body,i.e,the Monitoring Body should

be divided first in terms of National Level followed by State Level, District

Level.

If we go through Industrialization Policy, Guidelines and objectives of Assam

1991 than it’s obvious that most of the policy framework is being covered up

by the above presented Models. The glimpse of it is as follows:

1. Balanced Regional development through promotion of villages, tiny cottage

, small and ancillary industry(Model-3).

2. To set up/promote medium and large industries in the state by using

available local resources.( Model-3)

3. Create suitable environment for basic infrastructure facilities for industrial

development.(Model-3)

4. Proper development of local skills and entrepreneurship(Model 3 & 4).

5. To promote and protect the interests of the people of Assam (Model 2 & 3).

6. To ensure that local entrepreneurship is given preference in setting medium

and large industrial units(Model-3).

7. To encourage traditional artisan and handicraft sector.(Model-3).

8. To ensure development of less improved districts and hill districts in

developing industrial infrastructures.(Model-3)

9. To ensure viable growth by building data bank of the directorate of

industries at Assam Industries Development Corporation(AIDC).(Model 2,3

& 4)

10.Provide a single window clearance agency at each District Industry Centre

for small sector and at Assam Industrial Development Corporation(AIDC) for

medium and large sector(Model 2 & 3).

11. To provide for the revival of viable seek unit through proper identification

and provision of comprehensive package of assistance (Model-3).

CONCLUSION

In conclusion it could be said as Indian Government has approved FDI upto

51% in multi-brand retail so it’s inevitable that it will enter India. Government

in their end has kept some good provisions for the betterment - 50% of the

total investment should be invested in Backend infrastructure, the union

government will have the first right to procure the agricultural products and

the decision to permit retail outlets depends upon the State Government.

Again the analysis taken up in this study that previous instance of FDI

entrance did not etch out any doom syndromes for India rater healthy figure

was furnished. For Assam it is not a good story in terms of entrance of FDI

which the government should take appropriate measures for the state’s


development. Again we have to remember that the foreign bigwigs are coming

to do business by investing billions through FDI. So we can’t expect any

leniency in terms earning profit from their side. So we have to keep some

strict regulating authority to get hold of the situation which will continuously

monitor the interest of our people. In other words we can say-“Use the giant

as Aladdin to work for you and not as Frankenstein or Bhasmasur who

will spell doom on you.”

References

1. Singh, Arun.Kr and Agarwal, P.K, Foreign Direct Investment: The Big Bang

in Indian Retail. VSRD International Journal of Business & Management

Research, Vol.2(7),2012,327-337

2. Food & Agribusiness Strategy Advisory and Research(FASAR) Team-Yes

Bank, FDI in Retail-Advantage Farmers

3. Anitha.R, Foreign Direct Investment and Economic Growth in India. Journal

of Marketing, Financial Services & Management Research, Issue 8,August

2012,ISSN 22773622

4. Kadam,N.Ravindranath, Attracting Foreign Direct investment by India:A

Today’s Great Challenge, International Journal of Social Science

Tomorrow,Vol.1 No.4

5. Husseini, N. H Nilofer,Economic factors and foreign direct investment in

India: A correlation study,Asian Journal of Management Research(ISSN

2229-3795).

6. Siddharthan,N.S, Regional Differences in FDI inflows: China-India

comparison.

7. Website visited:

a. www.ibef.org

b. books.google.co.in

8. Department of Labor, Government of Assam, Assam Employment policy,

January 2011

9. RBI Factsheet on FDI (From April 2000 to March 2012).

10. Goldar, Bishwanath and Banga, Rashmi, Impact of Trade Liberalization on

Foreign Direct Investment in Indian Industries, Asia-Pacific Research and

Training Network on Trade Working Paper Series, No.36, June 2007.


Documents

FDI Paper