I wonder what these pure foreign banks like Citibank, Stanchart, Barcley and HSBC have added value in the country except fleecing the consumer with all the unethical charges and resorted to unew tactics harrassments.

Unforunately these same entities behave differently in NA and Europe and have dual standards when it come to Asia. These ended up as employer of few people but created a negative affect on vast number of consumers.

Competition is not necessarily good for the employees. The new entrant may use hi-technology with higher per-person productivity. This will put an existing business under stress even if it is producing quality products though with reduced productivity. This additional stress will have to play out in 2 ways…increase per-person productivity with same number of employees, thereby increasing the workload and stress on each employee…or retrench them and switch to the same hi-technology used by the competition. Either way, employees lose…their jobs or quality of life.

Competition is good for a supplier IF he has the capacity to supply with no loss of quality. Otherwise you end up increasing production at the cost of quality (reduce QC rejections, use cheaper inputs if the business can’t get funding for same quality at higher volumes). This will not only hamper your steady growth, but can even spawn competition at the supplier level itself. That cancels out the benefit right?

Finally, while competition appears good for the consumer, what ends up happening is that goods/services are produced in excess of demand and keep lying on the shelves of the retailers. There may even be wastage as once retailers margins are recovered, they may dispose off the remaining to people who don’t really need it. Retailers also tend to give selective price reductions…not everything is equally discounted…some products are highly discounted and advertised to get the customers in the door, most others are minimally discounted and serve to pad up their margins.

Just my 2 paisa on “Competition”!

@Ravindra,
Then the potential FDI partner will say “Add a 5th item to the list:
5. Get all your capital from domestic resources as well.
Bye Bye!”

Expecting that FDI is here to support local resources, local farmers, local supply chain etc., is pure fantasy and utopian. FDI will do no such thing…it will source from anywhere in the world who is the cheapest supplier. Domestic suppliers will not just be squeezed, but will be WRUNG DRY if FDI comes in. Same goes for farmers…FDI will establish such economies of scale that will gouge the farmers so badly that the current middlemen will begin to appear as charitable saints! Expect farmers owning their land to sell of in ever larger numbers and next step will be Govt of India will be forced to corporatize farming (forget contract farming) under pressure from the FDI supply chain to reduce food inflation by improving food production.

You think all this cannot occur? Why not? Who/what will prevent it?

everyone needs to realize that the ONLY GOOD OF ANY ECONOMIC ACTIVITY is determined by if it BENEFITS THE CONSUMER.
the worker,entrepreneur,supplier and the rest of the noise making “stakeholder” all exist to serve the consumer.
without the consumer,none of the fellows would earn even one paise.

all production and work exists for the sake of consumption.
so any economic analysis that tries to confuse people by bringing in other parties is muddling the issue.they are playing on the fear of some vocal lobbies.the consumer is not a lobby -though it is the largest group of people.

those who are worried about productivity improving machines only need to recall the protests against computerization.computerization not only improved efficiency,it freed up people to do other things.
this neo-luddism based on gandhian fear of machines is a decivilizing force based on misunderstanding of basic economics: division of labour and specialization.