Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Saturday, April 20, 2013

Do ‘Megatrends’ mean ‘Megabucks’ for DuPont?

Post economic meltdown, Ellen Kullman, CEO – DuPont, has focused the company around innovation through science. The idea is to use DuPont’s formidable research capabilities to meet the needs of diverse growth markets. And that’s where the real challenge lies.

It’s not easy to manage a 210-year-old company – a company that is credited with having invented the modern business model. From an explosives maker to a chemical company, DuPont has reinvented itself twice since 1802 and is yet again in the process of doing it for the third time as it moves towards becoming what it calls “a science based discovery business”. But if one looks at the way employees are groomed at the Delaware-based innovation giant, it becomes clear how such a diverse conglomerate is stably managed.

Take the President, Chair and CEO – Ellen Kullman – for instance. Her ascent to the top has been quite unusual. As an amateur in the industry, Kullman joined GE where she got the chance of observing Jack Welch while working under the then GE Vice-Chairman Edward E. Hood Jr.. After selling CT Scanners for the US based multinational, Kullman moved on to DuPont in 1988. Within a decade, she was running the company’s titanium dioxide business. In fact, she became the first woman Vice President ever at DuPont, managing 6,000 employees and a business generating $2 billion. In August 1998, Kullamn was summoned by Chad Holliday (then CEO). He discussed the possibility of setting up a consulting business around DuPont’s safety practices and suggested that Kullman spearhead it. On the face of it, asking her to leave a key position and initiating something that was completely unrelated to DuPont’s core business areas was like saying, “We don’t need you here. In the meanwhile, try this new project till you get a real job.” After giving considerable thought (and despite her close associates advising her not to take the plunge), she accepted the offer and made the project a $6 million business. It is perhaps this sort of experience that made her an ideal candidate for the top job.

However, when Kullman became CEO in January 2009, the financial crisis had gobbled up growth prospects around the globe. In fact, the economic meltdown revealed that despite catering to a distinct set of customers, there were formidable cracks in the company’s business model. Net income for 2008 fell to $2 billion as against $2.98 billion in 2007. As the crisis unfolded, sales declined by more than 50% in some divisions. First quarter earnings per share in 2009 declined by 59% to $0.54 (compared to the same period last year) . From a high of $52.62 in July 2007, the stock fell to an all time low of $16.87 in March 2009. As a response, Kullman attempted one of the most radical restructuring initiatives in the company’s history. Through 2009, DuPont’s 23 business units were integrated into 13. The initiative resulted in a reduction of 2,500 jobs (primarily in the the motor vehicle and construction related businesses in Western Europe and US). By the end of the year, DuPont had achieved $1.1 billion in fixed cost productivity. Although it was a bitter experience, it gave management a chance to look at new opportunities. As Kullman puts it, “When we looked at the strategic level during the financial crisis we asked ourselves, where are we headed as a company?” One key observation was that the agriculture and nutrition business contributed $8.3 billion to revenues (amounting to 31% of total sales volume). Encouragingly, it was more or less insulated from the after effects of the financial crisis. As a result, DuPont decided to diversify from its key products – Kevlar fabrics (used to manufacture a wide array of blades) and titanium dioxide pigment – to heavily focus on the food and nutrition business by acquiring Danisco (a Danish producer of nutrition and health-related products and enzymes) for $6 billion. It also forayed into innovative markets like solar energy, enabling materials for electronic components, and enzymes that help turn crops, like switch grass, into energy. So what is it that is forcing a 210-year-old chemical giant to initiate such a big shift?


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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Tuesday, April 16, 2013

Mindful leadership – When east meets west

In an exclusive B&E feature, Prof. William George, Professor of Management Practice at Harvard Business School, talks to sean silverthorne, editor-in-chief of hbs working knowledge, about how He looks to the East as a model for developing strong business leaders and how Leaders with low emotional intelligence (EQ), despite having a high IQ, often lack self-awareness and self-compassion, leading to a lack of self-regulation and loss of their very own jobs.

Prof. William George of Harvard Business School, an expert on leadership development, recently teamed with Tibetan Buddhist meditation master Yongey Mingyur Rinpoche to present a conference on “mindful leadership,” a secular process to explore the roles of self-awareness and self-compassion in developing strong and effective leaders. “To our knowledge, this is the first time that a Buddhist Rinpoche and a leadership professor have joined forces to explore this subject and see how Eastern teaching can inform our Western thinking about leadership and vice versa,” George says. For George, leaders who don’t develop self-awareness are subject to becoming seduced by external rewards, such as power, money, and recognition. They also have difficulty acknowledging mistakes, an Achilles’ heel that has crippled a number of CEOs who have appeared in the news recently. Excerpts from the interview:

Q: What is mindful leadership, and what are its benefits?
William George (WG): Mindfulness is a state of being fully present, aware of oneself and other people, and sensitive to one’s reactions to stressful situations. Leaders who are mindful tend to be more effective in understanding and relating to others, and motivating them toward shared goals. Hence, they become more effective in leadership roles.

Q: How does one become mindfully aware?
WG: I would not claim to be an expert in this area. Our Mindful Leadership seminar focused on the practice of meditation as one of those ways, with a variety of meditation techniques taught by Rinpoche. This was strictly a secular teaching, not a Buddhist one. In my experience I have observed that people become more mindful through prayer, introspective discussions, therapy, & the use of reflective techniques & exercises.

Q: You have said that few leaders lose their jobs because of lack of intelligence, but many do so because of lack of emotional intelligence. Can you talk about this a little more and cite a few examples?
WG: Leaders with low emotional intelligence (EQ) often lack self-awareness and self-compassion, which can lead to a lack of self-regulation. This also makes it very difficult for them to feel compassion and empathy for others. Thus, they struggle to establish sustainable, authentic relationships. Leaders who do not take time for introspection and reflection may be vulnerable to being seduced by external rewards, such as power, money, and recognition. Or they may feel a need to appear so perfect to others that they cannot admit vulnerabilities and acknowledge mistakes. Some of the recent difficulties of Hewlett-Packard, British Petroleum, CEOs of failed Wall Street firms, and dozens of leaders who failed in the post-Enron era are examples of this.

Q: The two essential aspects of effective leaders, you explain, are self-awareness and self-compassion. Could you please elaborate?
WG: An essential aspect of all effective leaders is authenticity; that is, being genuine and true to one’s beliefs, values, and principles that make up what we call someone’s True North. Authenticity is developed by becoming more self-aware and having compassion for oneself, without which it is very difficult to feel genuine compassion for others. Self-awareness starts with understanding one’s life story and the impact of one’s crucibles, and reflecting on how these contribute to motivations and behaviours. As people come to accept the less-favoured parts of themselves that they do not like or have rejected, as well as learning from failures and negative experiences, they gain compassion for themselves and authenticity in relating to the world around them.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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Friday, January 11, 2013

It’s a business deal

It’s a business deal. They have your asset (son) and you have the consideration (Rs.60 lakh)…

But Sanjay is bravely trying to pick up the pieces and move on. Speaking to B&E, a tormented Chawla turns philosophical and offers a few words of advice to fellow entrepreneurs and CEOs, “Law is technically reactive in nature, and it comes into picture, only after the crime is committed. Even the Government is trying to put in place a CISF security system for the corporates, but keeping in mind the population of India, it is practically impossible to assign a policemen or a security guard for everyone. Citizens need to be more proactive in nature...”

Given the dysfunctional nature of the law and order and police system in India, virtually every citizen is vulnerable to some kind of crime – from chain-snatching to car-jacking to rape and murder. But particularly vulnerable as ‘soft targets’ are CEOs like Anant Gupta and entrepreneurs like Sanjay Chawla and their near and dear ones. And almost everyone concerned with this “industry” agree that the danger will become even more potent and menacing in the months and years to come. “It’s a big business these days... and is constantly on the rise! And we can do little about it at the moment,” states V. M. Pandit, a former official of the Central Bureau of Investigation (CBI) who runs his own private security outfit. A top cop of Haryana Police, who has been privy to information regarding scores of kidnapping cases and who doesn’t want to be named says, “The number of rich businessmen and senior corporate managers is growing manifold every year. It is but natural for criminals to target them. The problem is, many such potential victims are simply not just aware of the simple steps that they and their family members need to take to prevent such crimes. You have to be proactively careful too!” (See Infographics)

Virtually every security expert agrees that there are three things that a family must do when a kidnapping has happened and the ransom calls start coming in – do not lose your cool, do not succumb too easily or too fast to ransom demands and always seek the help of a ‘professional’ who understands the psyche of the criminals.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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Monday, November 19, 2012

Global CEOs have destroyed their companies...

From the Editor’s desk, comes to you seven rocking ways in which global CEOs have destroyed their companies...

Lousy CEO Habit #4: Being proud of not being an MBA

I’ve seen many such CEOs, boasting to the world how an MBA is plain rubbish. Apart from innumerable researches, Sloan MIT’s spectacular research (Managing With Style) of 7,500 of the world’s top firms proved conclusively how companies with MBA CEOs perform fantastically better than those having non-MBA CEOs.

Lousy CEO Habit #5: Believing CSR (Corporate Social Responsibility) adds to profits

Umpteen reports, like Stanford’s definitive Social Innovation Review, have year after year vindicated that CSR investments are particularly unlikely to pay off. Michael Porter, the father of modern strategy, blasted CSR as being just “a PR game!” The most respected Peter F. Drucker historically documented his statement in the documentary The Corporation, “If you find an executive who wants to take on social responsibilities, fire him... Fast!”

Lousy CEO Habit #6: Wanting to convert his ‘privately held’ company into a ‘public’ one

University of Michigan, Chicago University, London Business School and many other top researches have beyond doubt proved how public ownership is clearly disadvantageous for firms, not only in terms of control, but also in terms of business volatility.

Lousy CEO Habit #7: Believing in the ridiculous concept of core competencies

BCG showed at the start of 2007 (after a ten year in-depth study of hundreds of firms) that being diversified was thunderingly better than sticking to the ‘core’. They also showed how “there is no statistical correlation” between a core focus and shareholders’ wealth. There, that was simple, wasn’t it? Strangely, India Inc. seems to be getting none the better, with a growing majority of those CEOs stupidly indulging in almost all the above mentioned 7 lousy habits bang on... which brings me to my junior’s most disturbing statement, that I had completely missed out on.


Source : IIPM Editorial, 2012.

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Tuesday, October 30, 2012

Past quarter were simply, just numbers...

Both public and private banks are facing a similar predicament today – the lying mirror! manish k. pandey discusses the dangers ahead, and how strong numbers during the past quarter were simply, just numbers...

A small data crunching allows us to easily figure out that the net repo volumes (funds kept by banks in aggregate with RBI at a paltry rate of 3.25%), at present stand at a staggering Rs.1.68 trillion. In fact, the situation seems to be touching alarming proportions when one considers how the amount parked under this window is more than double the new incremental deposits (about Rs.620 billion) brought in by the banking system during the year. “Banks fear a rise in non-performing assets (NPAs), so much that they are willing to sacrifice the [negative] differential in deposit rates offered to customers and the interest earned from RBI at reverse repo rates,” says Ashok Jainani, VP, Khandwala Securities. The average rate offered on one-year fixed deposits is about 7.25% currently, while the reverse repo rate is 3.25%! It clearly shows that banks are suffering a killing margin loss of almost 4% for every rupee being kept with RBI; a trend which, if it continues into the next quarter, has the potential to wipe out clean the past year’s profits of many banks within one quarter.

Even if one looks at the broader picture, one can easily figure out that NIMs have been on a declining mode for the last three quarters now. Amit Saxena, CEO, Planman Financial says that there’s worse in the banquet hall – the Incremental LDR (Loan-Deposit Ratio) has already fallen to an eight-year low of 14%. Evidently, the outstanding credit-deposit (CD) ratio of scheduled commercial banks has dropped below 70% for the first time in almost three years (The CD ratio currently stands at 69.01%, the lowest since May 2006 when it stood at 69.89%). Add to this the fact that the credit off-take growth too has come down to 16% – as compared to 25% a year back – and you start wondering whether the house that actually collapsed was insured or not.


Source : IIPM Editorial, 2012.

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Wednesday, October 17, 2012

Total rec'oil'!

The deal promises tons to Suncor

You lose some, you gain some. Quite true! Just when the price of oil per barrel eased from a high of $147 (in August 2008) to the current $47.92, thereby threatening bottomlines for most oil companies across the world, there's one name which begs exception to the rule! Alright, though that sounds unreal, yet the situation is not too far from being true, given the condition that the $19.18 billion merger between Suncor Energy Inc. & Petro-Canada comes through. As per experts, the new entity, valued at a mind-blowing $43.4 billion would then have comfortable oil reserves for the next 100 years in its kitty. Now that's a deal!

So what about synergies? Ron Brenneman, CEO, Petro-Canada explains, “The merger will be good for shareholders of both companies, with reduced capital requirements, operating efficiencies and complementary integration opportunities between upstream and downstream assets.” Most definitely, this deal will not only boost Suncor's (the merged entity) balance sheet (with a pro-forma debt to capitalisation of 29.6% and a debt-to-cash flow ratio of 1.2), but will also make it North America's 5th-largest oil company. The fact that there is very little overlap between the refineries of the two companies will also help their case. While, Petro-Canada has refineries in Edmonton and Montreal, Suncor has it in Sarnia, Ont., and Denver. But there are challenges too. Firstly, with this merger, Suncor will venture into the international space, something unknown to it so far. Secondly, the new company shall be governed by the Petro-Canada Public Participation Act that restricts the ownership of more than 20% of shares by a party.


Source : IIPM Editorial, 2012.

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Wednesday, October 10, 2012

Growing, growing, gone...

Over-expansionary policy is responsible for Starbucks predicament

Recession is casting its depressive effects on stress buster lattes and cappuccinos too! Yes, at least the American born, world’s largest coffee-chain Starbucks, is proving the same. The coffee chain is passing through a lean tunnel and has further decided to cut on further fat, errr... Starbucks outlets. It announced to follow the slimdown policy over the forthcoming quarter, on a worldwide scale on January 29, 2009. Here is where the question arises: why the reduction, for isn’t coffee retailing recession-proof?

Starbucks has announced a closure of 300 stores (200 stores in US) and a further reduction of 7,000 names from their employee base. Add this to store closures announced in July, and we would stand witness to 991 outlets doing the disappearing act! Further analysis of this problem makes clear the fact that the issue at hand is clearly self-inflicted; a problem that worsened at the onset of recession as even Howard Schultz, CEO, Starbucks confessed.


Source : IIPM Editorial, 2012.

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Wednesday, August 08, 2012

CADBURY-KRAFT: AN EXERCISE IN EGO MANAGEMENT

Kraft CEO Irene Rosenfield’s overeager bid for Cadbury has done more for Cadbury’s shareholders than its CEO Todd Stitzer could ever achieve in his tenure. A tale about how Todd pulled it off, by B&E’s Vareen Ray

Brian Weddington, VP-Senior Analyst, Corporate Finance Group, Moody’s Investor Service agrees on this to B&E, “We expect the follow-up offer by Kraft would be likely to involve a higher price.” Alex Sloane, Research Analyst – Food Producers, Evolution Securities, London tells B&E that a fair bid value per Cadbury share now could be 850p.

And for dear Todd, we have good news now! Ildikó Szalai, Packaged Foods Company Analyst, Euromonitor International (Asia) tells us that given the situation, “a Nestlé-Hershey joint bid for Cadbury is also a likely scenario.” Hats off to you Todd, for playing Irene just the way your shareholders wanted. Just one piece of advice. Get your golden parachutes and retrenchment bonuses in order; for once Irene finally manages to takeover Cadbury, there’s a saying that might come to haunt you: hell hath no fury as...



 
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Saturday, July 14, 2012

“It has to be taken as a marathon”

Kris Gopalakrishnan, Executive co-Chairman, Infosys, led the company through the recession and recently passed on the CEO baton to SD Shibulal. He talks to Virat Bahri on the Infosys leadership and succession model and what will be expected from the future leaders of the company

B&E: In a few years, Infosys will be led by its first non-founder CEO. How do you view the transition and how has the company prepared itself? How do you think the non-founder will approach the business?
Kris Gopalakrishnan (KG): We have been preparing for this since 30 years. We knew even then that definitely the company is going to be led by non-founders one day. So we have been preparing for this. The company is constantly changing. No company is the same. The environment is changing, business & customers are changing; so we are constantly changing. Unless you change, you will not be relevant. We are changing as required by the market. There will be changes in approach (by the non-founder CEO) but they will be primarily led by the market changes and the environment where we are operating. As long as we select the right people and manage the transition well, the company will continue to be run as efficiently as is necessary in the environment in which we are operating.

B&E: From the outside perspective, it looks as if Infosys is led more by a strong set of processes than by people. What is your take on which has worked more for you?
KD: The thing is people, process and technology are the three pillars, which we need to look at. I would say that all these matter. Some companies would depend on just one aspect; we look at all. In 1999, we did a comprehensive internal assessment. It looked at various aspects of the business and also at the results. We realised that we have informal processes for leadership,but no formal processes. We didn’t have a model, which is the technology aspect. We created the Infosys Leadership Model, we created a process to implement that model and the result is the Infosys Leadership Institute and our leadership development programme. We are trying to ensure that we look at it more holistically and do all the things that are necessary.

B&E: What are the traits that you would look for in the new responsible leader?
KG: The basic model is the same. We look for a person with high integrity, entrepreneurial spirit, driven, self motivated, one who understands technology and who has a successful track record of working in the Infosys context; as ultimately, the whole thing has to be delivered in the Infosys context. Some elements can be more or less from person to person. The person would also have weaknesses; you can augment the weaknesses with processes and technologies and people who support the leader. Ideally, that’s how the entire process should work.

B&E: CEOs of Infosys in the past, including you, have personified the company in many ways. To what extent do you think it will be necessary for the new CEO?
KG: The CEO is the first person and so in that sense, you are the brand personality for the company. To that extent yes, the correlation will be there. But to me, if you choose the right person, that is a positive rather than a negative. A smart person will understand that you have to also give face to other people. If there are other good people in the organisation, you have to allow them to also be the voice of the company. They must get the visibility required. I have tried very hard myself to ensure that I give visibility to others and that the company is not identified with one person.

B&E: The millenial workforce of today is identified with unique personality traits like the need for quick gratification. What is your view on how leaders must adapt to this workforce?
KG: You need to respect the individual, give them the space & appreciate the work they are doing. Lots of people do not work today just for the money; they work because it is the right thing to do. They can associate themselves/identify themselves with the process and things like that. It is slightly different from the command & control structure, which has to be adjusted for the new generation. If they don’t feel that their voice is heard, they are appreciated or given space to operate, they will not identify themselves with the company and you will not get 100% output from them. As far as expectations are concerned, today the world is generally becoming faster and faster, and the expectations are there as a result of the environment.

B&E: How do large organisations with bureaucratic processes and set ups manage the innovation process better? In the global technology environment of today, a number of large companies seem to be getting most of their innovations from M&As. How is it in your case?
KG: You do require a set of disciplined processes in a large company, else there will be chaos. To me, innovation is a separate process. If done right, it can also succeed in a large organization. There are separate advantages in a large organization. You can scale up faster, funding is easier, et al. You have to understand that the process has to be different; that is how it has to be managed. We expect innovation from both within and outside. We have to preferably encourage innovation from within, as we have 6000 projects with lots of clients, so there is a huge opportunity for innovation.



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Tuesday, July 10, 2012

Are we still in the Dark Ages?

FDI in retail has been stalled by allies and opposition parties alike. The critical view on this issue betrays a very myopic vision on India’s future

While we keep talking about a resurgent India that looks at new possibilities rather than one that intends to stick to a comforting yet illogical comfort zone, certain developments from time to time serve as grim reminders that this need not necessarily be true. By the time of this going to press, a lot had been spoken, written, declared and retracted about the proposed opening up of the multi-brand retail (51% of it, that is) in India for foreign players. The final word is that it is on the backburner now and Finance Minister Pranab Mukherjee has declared that the decision will only be taken after a consensus is reached among all stakeholders. Considering how consensus is typically reached in India, hope rests on a sticky wicket. Expectedly, India Inc. has described it as a setback in terms of both economic rationale and symbolism. On the day the decision was announced, the markets saw a precipitous decline in stock prices of listed retailers Pantaloon (by 12.86%) Koutons (by 6.49%) and Store One (by 2.49%). The reform, which was meant to kick-start approvals for a long queue of pending reforms and was termed as the initiation of a mini-liberalization has been gutted at the onset.

Currently, organised retail is expected to account for 6-7% of total retail in the country with a turnover of around $28 billion. It is expected to increase its share to around 20% by 2020, when the industry as a whole will reach a size of $1.25 trillion (BCG report), and FDI could in fact make even these predictions look pessimistic. Consider the case of the telecom sector in India. The increase in FDI beyond the 49% cap to 74% acted as a welcome catalyst for the industry. The sector has since been one of the largest recipients of FDI in India (contributing around 8% of the total FDI to the country) with $7.55 billion invested in FY 2010-11 and $12.34 billion received in FY 2009-10 as per data from Department of Industrial Policy & Promotion. It has been critical for the execution of the strategic plans of domestic players. The National Telecom Policy of 1999 projected a subscriber base of 500 million in India by 2010, while the actual number easily crossed 700 million in that year. Amit Bagaria, Founder Chairman & CEO, ASIPAC, asserts, “Telecom in India developed much faster after FDI was allowed and this helped bring down telephone call charges by 99% in 16 years.” FDI in retail, in turn, means a welcome overhaul of the supply chain in the country. Supply chain costs in India are 12-13% of GDP compared to around 8% in developed countries. A CII report in 2010 projects that supply chain inefficiencies in India cost the exchequer around $65 billion every year. With a $100 million minimum investment benchmark proposed by the government and at least 50% mandated for back end operations, a massive overhaul can be visualised. The setting up of cold storage in the nation shall help reduce the enormous 30% wastage of farm products. It may not be a mere coincidence that the call for FDI in retail saw some initial support from the Badal government of Punjab, where Wal-Mart set up shop with Bharti in a cash & carry format. Later on, of course, the Badal government had to succumb to the whims and fancies of its political ally BJP.

A major stumbling block in Indian back end operations is the large number of middlemen. Between the farmer and the consumer, the product goes through upto four intermediaries including the aggregator, the market trader, the wholesaler and the sub-wholesaler. In western countries, there is normally just one point of contact. These unnecessary levels can significantly increase the price of the commodity for the consumer by as much as 100% in some cases. According to a study by Boston Consulting Group, while a farmer in India gets at most 35% of the market price for his produce, the figure can rise as high as 65-70% for farmers in developed nations like Australia.

The prime reason cited for a rollback of the reform by the opposers is the possible closure of mom & pop stores and the huge unemployment it would result into. According to Tamil Nadu CM Jayalalitha, the move would lead to massive job losses among the 40 million employed in the trading sector in India. Factually though, as industry bodies argue, out of the 40 million employed in the trading industry in India, 35 million are employed in smaller cities where population is less than a million (the government has initially restricted the FDI leeway to 53 cities with 10 million plus population). So they would be largely unaffected by foreign multi-brand retail establishments. Furthermore, large retail setups require high quality labour and would need to make massive investments in hiring, training and development. In addition, the catch that 30% of the inventory has to be sourced from local SMEs also provides a wonderful opportunity for Indian companies to scale up and become more powerful brands, the way it’s been for counterparts in countries like China & South Korea. Consider, for instance, how Wal-mart stores in China sources over 95% of their merchandise locally.

Anand Sharma, Union minister of Commerce, claims that over 10 million jobs shall be created within three years post the implementation of the policy. According to a projection by ASIPAC, 4.35 million jobs will directly be generated from organised retail in another 4 years, assuming that this segment will occupy 783.63 million sq. ft. of retail space by that time. The report argues that organised retail will only affect around 19,850 businessman rather than the many millions that are talked about.

Leave alone the ministry and industry honchos, even some local retail associations feel that the reform is a step in the right direction. According to K. S. Khamba, President, Hauz Khas Market Association, which represents a number of mom & pop stores, the entry of foreign retailers shall instigate improvement in the retail industry with a shift towards service oriented retailing. The mom & pop stores, who thrive on strong personal relationships with customers and services like credit and home delivery have the ability to compete with organised retailers. Also, while it has been taken for granted that the cost of products sold by organised retailers will be lesser, it may not necessarily be true. A survey by Assocham claims that kirana stores provide price undercutting to the extent of 25% and also offer options for avoidance of payment of duties such as VAT & other local levies on articles sold by them.

Even the governments, at both the central and state level, are set to gain in the long run since FDI would bring into the tax net a huge section of daily sales which go unchecked at the moment. According to an ASIPAC study, a total of Rs.1.58 trillion shall be generated as additional tax if FDI is implemented by means of GST collections at various points that was previously unaccounted, corporate tax generated by these firms, and the personal income tax garnered due to the creation of new taxable labour.

With so many multiple benefits for the Indian economy, the entire hullabaloo about the perils of FDI is illogical. And so is the logic that Indian farmers and businesses are unprepared. We were not prepared in 1991 for liberalisation either. We always seem to put our house in order when a much debated change happens and presents real & present challenges along with opportunities. Stalling parliament and preventing FDI liberalisation in retail tantamount to preventing one very critical transformation. Only a very short sighted & ignorant vision on India’s future can be behind the backlash that the retail liberalisation agenda faces currently.



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