FDI in Retail and Dalit Entrepreneurs

 MARGIN SPEAK

10 january 19, 2013 vol xlviii no 3  EPW Economic & Political Weekly

Anand Teltumbde (tanandraj@gmail.com) is a 

writer and civil rights activist with the 

Committee for the Protection of Democratic 

Rights in Mumbai.

FDI in Retail 

and Dalit Entrepreneurs

Anand Teltumbde

Questioning the thesis that 

foreign direct investment in 

retail will have a favourable 

effect on the fl edgling class of 

dalit entrepreneurs in India 

because processes of capitalist 

modernisation automatically 

undermine the signifi cance of 

social identities like caste, creed 

and race, this article argues that 

only a minuscule section of dalits 

has benefi ted from globalisation 

while the majority, being 

"uncompetitive", has been pushed 

to suffer ontological insecurities 

and existential uncertainties.

E

conomic issues, barring reservation, 

do not count in the political culture 

of  dalits.  If  Mayawati's  Bahujan 

Samaj Party (BSP) Members of Parliament 

absented themselves from voting in the 

Lok Sabha and voted in the Rajya Sabha 

in favour of up to 51% foreign direct 

investment (FDI) in multi-brand retail 

with the sole purpose of supporting the 

United Progressive Alliance government, 

it was not for any intrinsic economic 

merit of the case but for keeping "communal forces" at bay. 

Dalit apathy towards economic issues 

can be traced to their contention with 

the early communists who had made a 

dogma of the Marxian metaphor of base 

and superstructure to ridicule all noneconomic struggles, including those of 

Babasaheb Ambedkar. It resulted in alienating the dalit movement not only from 

the left movements but also from economics in general. In this situation, it was 

a pleasant surprise to see an article in The 

Times of India (TOI) (5 December 2012) – 

"To Empower Dalits, Do Away with India's 

Antiquated Retail Trading System" by 

Chandrabhan Prasad and Milind Kamble, 

both evangelists of dalit capitalism – lauding the government decision to allow up to 

51% FDI in multi-brand retail, which paves 

the way for the entry of the big global 

retail chains like Wal-Mart and Texaco. 

FDI and Dalit Entrepreneurs

Prasad and Kamble try to establish that FDI

in retail will have a favourable effect "on 

the fl edgling class of dalit entrepreneurs 

in India". The main plank of their argument is that the traditional, caste-bound 

retail sector does not provide opportunities 

for dalit entrepreneurs. FDI is modern and 

caste neutral, hence favourable to dalit 

entrepreneurship. In support of the argument the authors cited two studies. The 

fi rst is a study on dalit enterprise by the 

Centre for the Advanced Study of India 

(CASI) at the University of Pennsylvania, 

which found that most of the dalit entrepreneurs surveyed were fi rst-timers who 

had started their business after 1991 when 

the pro cess of liberalisation began. It is 

construed that the neo-liberal reforms 

have been greatly benefi cial to dalits in 

general and dalit entrepreneurs in particular. CASI researchers had found "dalit 

entrepreneurs of different shades enga ged 

in manufacturing heavy duty cranes, 

constructing tunnels, building bridges and 

building machines". The second, supplementing the fi rst, concerned a search for 

dalit  adhatiyas (middlemen) in Delhi's 

Azadpur fruit and vegetable mandi by the 

members of the Dalit Indian Chamber of 

Commerce and Industry (DICCI), obviously 

fi nding none. 

Prasad and Kamble attribute the phenomenon of post-1991 dalit enterprise to the 

impetus given to outsourcing and ancillaries industries by global competition. In 

this, there was an explosion of entrepreneurship in which dalits also found their 

place. The argument is exten ded to syllogistically establish that the tools of modernity will help India progress faster and 

FDI being one such tool will surely benefi t 

dalits. Of course, the interests of the 

dalit masses and dalit entrepreneurs are 

assumed to be the same. The authors of the 

TOI piece further claim that FDI-propelled 

organised retail would provide job opportunities to thousands of food technologists, MBAs, and CAs. Moreover, manufacturers of refrigerated food vans and refrigerators would also generate more jobs. 

The dictum that processes of capitalist 

modernisation automatically undermine 

the signifi cance of social identities like 

caste, creed and race, and their role in 

affecting economic outcomes is not new. 

One could intuitively agree that social 

identities restrict market competition, impede institutional change, raise transaction 

costs and make markets non- competitive 

and that market-driven economies would 

undermine ascription-based social identities. Writing in New York Daily Tribune

(5 August 1853), Marx noted:

The railway-system will therefore become, 

in India, truly the forerunner of modern MARGIN SPEAK

Economic & Political Weekly EPW january 19, 2013 vol xlviii no 3 11

industry...Modern industry, resulting from 

the railway system, will dissolve the hereditary divisions of labour, upon which rest the 

Indian castes, those decisive impediments to 

Indian progress and Indian power.

India came to possess the fourth largest railway network in the world just 

behind US, Russia and China and a large 

industrial base with many global companies, but the caste system, instead of collapsing, is menacingly alive and kicking. 

Notwithstanding the laments of many 

who relish seeing Marx proved wrong, 

capitalism did affect the caste system and 

even benefi ted a section of dalits. Indeed, 

the making of the dalit movement can be 

traced to capitalist development in India. 

But it is also true that capitalist development strengthened the traditionally dominant castes and accentuated the power 

asymmetry between dalits and non-dalits, 

making the former more vulnerable than 

before. The increased caste atrocities, in 

both qualitative and quantitative terms, 

are testimony to this  complex dynamics.

Globalisation undoubtedly benefi ts 

people, including dalits, but only a minuscule section. The majority, being "uncompetitive", is pushed to suffer ontological 

insecurities and existential uncertainties. 

Ideologically, the votaries of globalisation 

are favourably disposed tow ards extreme 

individualism, social Darwinist competition and belief in the free market as a 

panacea for social mobility. All that the 

poor are comforted with is "trickle down" 

theory, which is theoretically untenable 

and empirically false. Over the last three 

decades, globalisation has produced an 

alarming degree of inequality, a crisis of 

well-being for the world's poor, an 

upsurge of primordial identities and the 

decimation of demo cracy. Indeed, it has 

pushed the planet to the verge of extinction. Extreme concentration of wealth in 

the hands of the few can only be celebrated 

if one deliberately chooses to ignore the 

marginalisation of the multitude. 

From a methodological viewpoint, the 

CASI study is fraught with fl aws and 

smacks of motivated propaganda. Entrepreneurship is integral to the majority 

sub-caste of dalits (for instance, Mahars, 

Chamars, Malas and Parayas). These subcastes grabbed every opportunity that 

came their way. Although they are 

preponderantly farm labourers, there are 

also weavers, masons, carpenters, tailors, 

manufacturers, peddlers, shopkeepers, 

moneylenders, contractors, etc, in their 

ranks. It is thr ough such entrepreneurship 

that a section of dalits has amassed wealth.

One could easily fi nd hugely wealthy 

dalit individuals in every part of the 

country in the decades before 1990. As a 

matter of fact, it is precisely these entrepreneurs who constituted the base for the 

Ambedkar-led dalit movement. There fore, 

to attribute dalit enterprise or its success 

to globalisation is purely motivated. If at 

all dalit youths are impelled to entrepreneurship, the reason is the non-availability 

of job opportunities due to constriction of 

public sector jobs. In 1997, employment 

in the public sector peaked at 197 lakh, 

which consistently declined thereafter and 

came down to 180 lakh in 2007, spelling 

the virtual end of reservation. While 

entrepreneurship may be associated with 

risk-taking among the higher castes, it 

spells a reverse syndrome for dalits – 

that of risk-taking for sheer survival. As 

there are no jobs, dalit youth venture 

into starting something on their own and 

become so-called entrepreneur. The Economic Censuses of 1990, 1998, and 2005 

reveal a more truthful picture than motivated ad hoc studies since a census does 

not have any hypothesis to prove or disprove. Caste-wise data related to ownership of enterprises are available for 1990, 

1998 and 2005 and have been put 

together in a 2011 Harvard Business 

School study as summarised in Table 1. 

Average employment per enterprise 

for 2005 was 2.3, indicating that a vast 

majority of fi rms was a single-person 

enterprise. The incidence of such enterprises was far higher among the SC and 

ST categories. In the context of dalits, 

enterprise ranges from a roadside cobbler 

to a millionaire member of the DICCI. As 

the data (Table 1) clearly shows, over the 

globalisation period the share of dalit 

ownership of enterprises more or less 

remained the same, refuting the claim 

that globalisation has boosted dalit entrepreneurship. Even the Harvard Business 

School study cited above obser ved that 

the dalit millionaires claimed by the 

DICCI do not represent the broad swathe 

of SC/ST entrepreneurship. 

While the growth of ancillary industries 

or outsourcing has surely been accelerated 

by globalisation, it is presumptuous to 

assume that dalit entrepreneurs will beat 

others on price competitiveness to grab 

a share of outsourced processes or products. Given the intrinsic social handicap 

they suffer from, they can only do so by 

extra-exploitation of their employees and 

intoxicating them with caste identities. 

Prasad and Kamble's arguments make a 

mess of concepts. For instance, they 

claim dalit entrepreneurs succeed in the 

modern sectors – these businessmen 

build bridges, tunnels, machines, etc. 

Actually, dalit enterprises fall in the 

traditional (brick and mortar) sector in 

which dalits have operated for ages. The 

modern sector comprises knowledgebased enterprises in which dalit entrepreneurs still do not exist. The claimed 

success of dalits in the brick and mortar 

industry may perhaps indicate non-dalits 

moving up in the value chain, leaving 

the low end for dalits. Next, modernisation is erroneously under stood as undermining the caste system. It actually represents cultural hybridisation and coexists with tradition. Capitalist modernity 

coexists with the caste system but with 

globalisation, caste consciousness has 

deepened. The simplest example of such 

hybridisation can be seen in matrimonial advertise ments by highly educated 

Indian Americans working in frontier 

industries seeking brides from their 

own sub-castes. 

If globali sation has been such a facilitator of dalit enterprise, why should the 

DICCI seek "reservation", the non-market 

dole, for itself?

Table 1: Enterprise Ownership and Employment 

Generation by Caste Category (1990-2005, in %)

 1990 1998 2005

Population share

 Non-SC/ST 75.8  75.8 75.9

 SC 16.6  16.5  16.4

 ST 7.6 7.7  7.7

Share of enterprise ownership

 Non-SC/ST 87.5  87.3  86.4

 SC 9.9  8.5  9.8

 ST 2.6  4.2  3.7

Share of employment

 Non-SC/ST 90.6  89.4  88.5

 SC 7.4  6.9  8.1

 ST 2.0  3.8  3.4

Source: Lakshmi Iyer, Tarun Khanna, Ashutosh Varshney, 

"Caste and Entrepreneurship in India", Working Paper 12-028, 

Harvard Business School, 18 October 2011.