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AtextileretailstoreinIndia

AfishretailstoreinWestBengal,India

AfoodstapleretailshopinPushkar,India

ModernretailinginIndia

Punjab UttarPradesh WestBengal

RetailinginIndiaFromWikipedia,thefreeencyclopedia

RetailinginIndiaisoneofthepillarsofitseconomyandaccountsforabout22percentofitsGDP.[1][2]TheIndianretailmarketisestimatedtobeUS$500billionandoneofthetopfiveretailmarketsintheworldbyeconomicvalue.Indiaisoneofthefastestgrowingretailmarketsintheworld,with1.2billionpeople.[3][4]

Asof2013,India'sretailingindustrywasessentiallyownermannedsmallshops.In2010,largerformatconveniencestoresandsupermarketsaccountedforabout4percentoftheindustry,andthesewerepresentonlyinlargeurbancenters.India'sretailandlogisticsindustryemploysabout40millionIndians(3.3%ofIndianpopulation).[5]

Until2011,Indiancentralgovernmentdeniedforeigndirectinvestment(FDI)inmultibrandretail,forbiddingforeigngroupsfromanyownershipinsupermarkets,conveniencestoresoranyretailoutlets.Evensinglebrandretailwaslimitedto51%ownershipandabureaucraticprocess.

InNovember2011,India'scentralgovernmentannouncedretailreformsforbothmultibrandstoresandsinglebrandstores.ThesemarketreformspavedthewayforretailinnovationandcompetitionwithmultibrandretailerssuchasWalmart,CarrefourandTesco,aswellsinglebrandmajorssuchasIKEA,Nike,andApple.[6]Theannouncementsparkedintenseactivism,bothinoppositionandinsupportofthereforms.InDecember2011,underpressurefromtheopposition,Indiangovernmentplacedtheretailreformsonholdtillitreachesaconsensus.[7]

InJanuary2012,IndiaapprovedreformsforsinglebrandstoreswelcominganyoneintheworldtoinnovateinIndianretailmarketwith100%ownership,butimposedtherequirementthatthesinglebrandretailersource30percentofitsgoodsfromIndia.Indiangovernmentcontinuestheholdonretailreformsformultibrandstores.[8]

InJune2012,IKEAannouncedithadappliedforpermissiontoinvest$1.9billioninIndiaandsetup25retailstores.[9]AnanalystfromFitchGroupstatedthatthe30percentrequirementwaslikelytosignificantlydelayifnotprevent



Telangana Karnataka TamilNadu

MadhyaPradesh Gujarat Maharashtra

Delhi Kerala Haryana

mostsinglebrandmajorsfromEurope,USAandJapanfromopeningstoresandcreatingassociatedjobsinIndia.[10](subscriptionrequired)

On14September2012,thegovernmentofIndiaannouncedtheopeningofFDIinmultibrandretail,subjecttoapprovalsbyindividualstates.[11]Thisdecisionwaswelcomedbyeconomistsandthemarkets,butcausedprotestsandanupheavalinIndia'scentralgovernment'spoliticalcoalitionstructure.On20September2012,theGovernmentofIndiaformallynotifiedtheFDIreformsforsingleandmultibrandretail,therebymakingiteffectiveunderIndianlaw.[12][13][14]

On7December2012,theFederalGovernmentofIndiaallowed51%FDIinmultibrandretailinIndia.Thegovernmentmanagedtogettheapprovalofmultibrandretailintheparliamentdespiteheavyuproarfromtheopposition(theNDAandleftistparties).SomestateswillallowforeignsupermarketslikeWalmart,TescoandCarrefourtoopenwhileotherstateswillnot.[15]

Contents

1Localterms2Growth

2.1Growthover199720102.2Growthafter2011

3TheIndianretailmarket4Challenges5Indiaretailreforms

5.1Indianretailreformsonhold5.2Singlebrandretailreformsapproved

6Socialimpactandcontroversywithretailreforms6.1ControversyoverallowingForeignretailers6.2Oppositiontoretailreforms6.3Supportforretailreforms

6.3.1Farmergroups6.3.2Economistsandentrepreneurs6.3.3Allowedinsomestates,bannedinothers

6.3.3.12013stateElections6.3.4Currentsupermarkets

7Seealso8References9Externallinks



Localterms

Organisedretailing,inIndia,referstotradingactivitiesundertakenbylicensedretailers,thatis,thosewhoareregisteredforsalestax,incometax,etc.Theseincludethepubliclytradedsupermarkets,corporatebackedhypermarketsandretailchains,andalsotheprivatelyownedlargeretailbusinesses.

Unorganisedretailing,ontheotherhand,referstothetraditionalformatsoflowcostretailing,forexample,thelocalcornershops,ownermannedgeneralstores,paan/beedishops,conveniencestores,handcartandpavementvendors,etc.[16]

OrganisedretailingwasabsentinmostruralandsmalltownsofIndiain2010.Supermarketsandsimilarorganisedretailaccountedforjust4%ofthemarket.[6]

MostIndianshoppinghappensinopenmarketsornumeroussmallgroceryandretailshops.Shopperstypicallywaitoutsidetheshop,askforwhattheywant,andcannotpickorexamineaproductfromtheshelf.[17]Accesstotheshelforproductstorageareaislimited.Oncetheshopperrequeststhefoodstapleorhouseholdproducttheyarelookingfor,theshopkeepergoestothecontainerorshelfortothebackofthestore,bringsitoutandoffersitforsaletotheshopper.Oftentheshopkeepermaysubstitutetheproduct,claimingthatitissimilarorequivalenttotheproducttheconsumerisaskingfor.Theproducttypicallyhasnopricelabelinthesesmallretailshopsallpackagedproductsmustdisplaythemaximumretailpriceabovewhichtheproductcannotbesold.Itisacriminaloffencetodoso..Theshopkeepercanpricethefoodstapleandhouseholdproductsarbitrarily,andtwoconsumersmaypaydifferentpricesforthesameproductonthesamedaybutneverwillthosepricebeabovethemaximumretailprice.Priceisrarelynegotiatedbetweentheshopperandshopkeeper.Theshoppersusuallydonothavetimetoexaminetheproductlabel,anddonothaveachoicetomakeaninformeddecisionbetweencompetitiveproducts.[18]

India'sretailandlogisticsindustry,organisedandunorganisedincombination,employsabout40millionIndians(3.3%ofIndianpopulation).[19]ThetypicalIndianretailshopsareverysmall.Over14millionoutletsoperateinthecountryandonly4%ofthembeinglargerthan500sqft(46m2)insize.Indiahasabout11shopoutletsforevery1000people.VastmajorityoftheunorganisedretailshopsinIndiaemployfamilymembers,donothavethescaletoprocureortransportproductsathighvolumewholesalelevel,havelimitedtonoqualitycontrolorfakeversusauthenticproductscreeningtechnologyandhavenotrainingonsafeandhygienicstorage,packagingorlogistics.Theunorganisedretailshopssourcetheirproductsfromachainofmiddlemenwhomarkuptheproductasitmovesfromfarmerorproducertotheconsumer.Theunorganisedretailshopstypicallyoffernoaftersalessupportorservice.Finally,mosttransactionsatunorganisedretailshopsaredonewithcash,withallsalesbeingfinal.

Untilthe1990s,regulationspreventedinnovationandentrepreneurshipinIndianretailing.Someretailsfacedcomplyingwithoverthirtyregulationssuchas"signboardlicenses"and"antihoardingmeasures"beforetheycouldopendoors.Therearetaxesformovinggoodstostates,fromstates,andevenwithinstatesinsomecases.Farmersandproducershadtogothroughmiddlemenmonopolies.Thelogisticsandinfrastructurewasverypoor,withlossesexceeding30percent.

Throughthe1990s,Indiaintroducedwidespreadfreemarketreforms,includingsomerelatedtoretail.Between2000to2010,consumersinselectIndiancitieshavegraduallybeguntoexperiencethequality,choice,convenienceandbenefitsoforganisedretailindustry.



AnorganisedretailstoreinAhmedabad(ca.2009)

CustomersinsidearetailstoreinKolkata(ca.2011)

Growth

Growthover19972010

Indiain1997allowedforeigndirectinvestment(FDI)incashandcarrywholesale.Then,itrequiredgovernmentapproval.Theapprovalrequirementwasrelaxed,andautomaticpermissionwasgrantedin2006.Between2000to2010,Indianretailattractedabout$1.8billioninforeigndirectinvestment,representingaverysmall1.5%oftotalinvestmentflowintoIndia.[20][21]

Singlebrandretailingattracted94proposalsbetween2006and2010,ofwhich57wereapprovedandimplemented.[22]Foracountryof1.2billionpeople,thisisaverysmallnumber.SomeclaimoneoftheprimaryrestraintinhibitingbetterparticipationwasthatIndiarequiredsinglebrandretailerstolimittheirownershipinIndianoutletsto51%.Chinaincontrastallows100%ownershipbyforeigncompaniesinbothsinglebrandandmultibrandretailpresence.

Indianretailhasexperiencedlimitedgrowth,anditsspoilageoffoodharvestisamongstthehighestintheworld,becauseofverylimitedintegratedcoldchainandotherinfrastructure.Indiahasonly5386standalonecoldstorages,havingatotalcapacityof23.6millionmetrictons.However,80percentofthisstorageisusedonlyforpotatoes.Theremaininginfrastructurecapacityislessthan1%oftheannualfarmoutputofIndia,andgrosslyinadequateduringpeakharvestseasons.Thisleadstoabout30%lossesincertainperishableagriculturaloutputinIndia,onaverage,everyyear.[20][23]

Indianlawsalreadyallowforeigndirectinvestmentincoldchaininfrastructuretotheextentof100percent.Therehasbeennointerestinforeigndirectinvestmentincoldstorageinfrastructurebuildout.Expertsclaimthatcoldstorageinfrastructurewillbecomeeconomicallyviableonlywhenthereisstrongandcontractuallybindingdemandfromorganisedretail.Theriskofcoldstoringperishablefood,withoutanassuredwaytomoveandsellit,putstheeconomicviabilityofexpensivecoldstorageindoubt.Intheabsenceoforganisedretailcompetitionandwithabanonforeigndirectinvestmentinmultibrandretailers,foreigndirectinvestmentsareunlikelytobeginincoldstorageandfarmlogisticsinfrastructure.

Until2010,intermediariesandmiddlemeninIndiahavedominatedthevaluechain.DuetoanumberofintermediariesinvolvedinthetraditionalIndianretailchain,normsarefloutedandpricinglackstransparency.SmallIndianfarmersrealiseonly1/3rdofthetotalpricepaidbythefinalIndianconsumer,asagainst2/3rdbyfarmersinnationswithahighershareoforganisedretail.[20]The60%+marginsformiddlemenandtraditionalretailshopshavelimitedgrowthandpreventedinnovationinIndianretailindustry.



Indiahashadyearsofdebateanddiscussionsontherisksandprudenceofallowinginnovationandcompetitionwithinitsretailindustry.[24]NumerouseconomistsrepeatedlyrecommendedtotheGovernmentofIndiathatlegalrestrictionsonorganisedretailmustberemoved,andtheretailindustryinIndiamustbeopenedtocompetition.Forexample,inaninvitedaddresstotheIndianparliamentinDecember2010,JagdishBhagwati,ProfessorofEconomicsandLawattheColumbiaUniversityanalysedtherelationshipbetweengrowthandpovertyreduction,thenurgedtheIndianparliamenttoextendeconomicreformsbyfreeingupoftheretailsector,furtherliberalizationoftradeinallsectors,andintroducinglabormarketreforms.SuchreformsProfessorBhagwatiarguedwillaccelerateeconomicgrowthandmakeasustainabledifferenceinthelifeofIndia'spoorest.,[25][26]

A2007reportnotedthatanincreasingnumberofpeopleinIndiaareturningtotheservicessectorforemploymentduetotherelativelowcompensationofferedbythetraditionalagricultureandmanufacturingsectors.Theorganisedretailmarketisgrowingat35percentannuallywhilegrowthofunorganisedretailsectorispeggedat6percent.[27]

TheRetailBusinessinIndiaiscurrentlyatthepointofinflection.Asof2008,rapidchangewithinvestmentstothetuneofUS$25billionwerebeingplannedbyseveralIndianandmultinationalcompaniesinthenext5years.ItisahugeindustryintermsofsizeandaccordingtoIndiaBrandEquityFoundation(IBEF),itisvaluedataboutUS$395.96billion.Organisedretailisexpectedtogarnerabout1618percentofthetotalretailmarket(US$6575billion)inthenext5years.

IndiahastoppedtheA.T.KearneysannualGlobalRetailDevelopmentIndex(GRDI)forthethirdconsecutiveyear,maintainingitspositionasthemostattractivemarketforretailinvestment.TheIndianeconomyhasregisteredagrowthof8%for2007.Thepredictionsfor2008is7.9%.[28]Theenormousgrowthoftheretailindustryhascreatedahugedemandforrealestate.Propertydevelopersarecreatingretailrealestateatanaggressivepaceandby2010,300mallsareestimatedtobeoperationalinthecountry.[29]

Growthafter2011

Before2011,Indiahadpreventedinnovationandorganisedcompetitioninitsconsumerretailindustry.SeveralstudiesclaimthatthelackofinfrastructureandcompetitiveretailindustryisakeycauseofIndia'spersistentlyhighinflation.Furthermore,becauseofunorganisedretail,inanationwheremalnutritionremainsaseriousproblem,foodwasteisrife.Wellover30%offoodstaplesandperishablegoodsproducedinIndiaspoilsbecausepoorinfrastructureandsmallretailoutletspreventhygienicstorageandmovementofthegoodsfromthefarmertotheconsumer.,[30][31][32]

Onereportestimatesthe2011Indianretailmarketasgeneratingsalesofabout$470billionayear,ofwhichaminuscule$27billioncomesfromorganisedretailsuchassupermarkets,chainstoreswithcentralizedoperationsandshopsinmalls.Theopeningofretailindustrytofreemarketcompetition,someclaimwillenablerapidgrowthinretailsectorofIndianeconomy.OthersbelievethegrowthofIndianretailindustrywilltaketime,withorganisedretailpossiblyneedingadecadetogrowtoa25%share.[32]A25%marketshare,giventheexpectedgrowthofIndianretailindustrythrough2021,isestimatedtobeover$250billionayear:arevenueequaltothe2009revenuesharefromJapanfortheworld's250largestretailers.,[33][34]

TheEconomistforecaststhatIndianretailwillnearlydoubleineconomicvalue,expandingbyabout$400billionby2020.[35]TheprojectedincreasealoneisequivalenttothecurrentretailmarketsizeofFrance.



Aspicemarket

Checkoutlanes,organisedretailinMalad,Mumbai

In2011,foodaccountedfor70%ofIndianretail,butwasunderrepresentedbyorganisedretail.A.T.KearneyestimatesIndia'sorganisedretailhada31%shareinclothingandapparel,whilethehomesuppliesretailwasgrowingbetween20%to30%peryear.[36]ThesedatacorrespondtoretailprospectspriortoNovemberannouncementoftheretailreform.

ItmightbetruethatIndiahasthelargestnumberofshopsperinhabitant.HowevertherearedetailedfiguresforBelgium,theNetherlandsandLuxemburg.InBelgium,thenumberofoutletsisapproximately8per1,000andintheNetherlandsitis6.SotheIndiannumbermustbefarhigher.

TheIndianretailmarket

Traditionalretailformat

Modernretailformat

CountryModernRetail(in2011,%of

total)[37]

India 7%China 20%Thailand 40%United

States 85%

Indianmarkethashighcomplexitiesintermsofawidegeographicspreadanddistinctconsumerpreferencesvaryingbyeachregionnecessitatinganeedforlocalizationevenwithinthegeographiczones.Indiahashighestnumberofoutletsperperson(7perthousand)Indianretailspacepercapitaat2sqft(0.19m2)/personislowestintheworldIndianretaildensityof6percentishighestintheworld.[38]1.8millionhouseholdsinIndiahavean

annualincomeofover4.5million(US$70,192.80).[39]

WhileIndiapresentsalargemarketopportunitygiventhenumberandincreasingpurchasingpowerofconsumers,therearesignificantchallengesaswellgiventhatover90%oftradeisconductedthroughindependentlocalstores.Challengesinclude:Geographicallydispersedpopulation,smallticketsizes,complexdistributionnetwork,littleuseofITsystems,limitationsofmassmediaandexistenceofcounterfeitgoods.[40]

AnumberofmergerandacquisitionshavebeguninIndianretailmarket.PWCestimatesthemultibrandretailmarkettogrowto$220billionby2020.[41]

Indianretailers



A2012PWCreportstatesthatmodernretailinghasa5%marketshareinIndiawithabout$27billioninsales,andisgrowingat15to20%peryear.[41]TherearemanymodernretailformatandmallcompaniesinIndia.Someexamplesareinthefollowingtable.

IndianRetailGroup MarketReachin2011andNotes

[41]

PantaloonRetail 65storesand21factoryoutletsin35cities,2millionsquarefeetspaceShoppersStop 51storesin23cities,3.2millionsquarefeetspaceSpencersRetail 200storesin45cities,1millionsquarefeetspace

RelianceRetail708martandsupermarkets,20wholesalestoresin15cities,508fashionandlifestyle1206crore(US$190million)permonthsalesin2013[42]

BhartiRetail 74Easydaystores,planstoadd10millionsquarefeetby2017BirlaMore 575storesnationwideTataTrent 59Westsidemallstores,13hypermarketsLifestyleRetail 15lifestylestores,8homecenters

FutureGroup 193storesin3cities,[43]oneofthreelargestsupermarketsretailerinIndiabysales

916crore(US$140million)permonthsalesin2013[42]

Challenges

AMcKinseystudyclaimsretailproductivityinIndiaisverylowcomparedtointernationalpeermeasures.Forexample,thelaborproductivityinIndianretailwasjust6%ofthelaborproductivityinUnitedStatesin2010.India'slaborproductivityinfoodretailingisabout5%comparedtoBrazil's14%whileIndia'slaborproductivityinnonfoodretailingisabout8%comparedtoPoland's25%.[44]

TotalretailemploymentinIndia,bothorganisedandunorganised,accountforabout6%ofIndianlaborworkforcecurrentlymostofwhichisunorganised.ThisaboutathirdoflevelsinUnitedStatesandEuropeandabouthalfoflevelsinotheremergingeconomies.AcompleteexpansionofretailsectortolevelsandproductivitysimilartootheremergingeconomiesanddevelopedeconomiessuchastheUnitedStateswouldcreateover50millionjobsinIndia.Traininganddevelopmentoflaborandmanagementforhigherretailproductivityisexpectedtobeachallenge.

[45]

InNovember2011,theIndiangovernmentannouncedrelaxationofsomerulesandtheopeningofretailmarkettocompetition.

Indiaretailreforms

Until2011,Indiancentralgovernmentdeniedforeigndirectinvestment(FDI)inmultibrandIndianretail,forbiddingforeigngroupsfromanyownershipinsupermarkets,conveniencestoresoranyretailoutlets,tosellmultipleproductsfromdifferentbrandsdirectlytoIndianconsumers..



ThegovernmentofManmohanSingh,primeminister,announcedon24November2011thefollowing:[30][46]

Indiawillallowforeigngroupstoownupto51percentin"multibrandretailers",assupermarketsareknowninIndia,inthemostradicalproliberalisationreformpassedbyanIndiancabinetinyearssinglebrandretailers,suchasAppleandIkea,canown100percentoftheirIndianstores,upfromthepreviouscapof51percentbothmultibrandandsinglebrandstoresinIndiawillhavetosourcenearlyathirdoftheirgoodsfromsmallandmediumsizedIndiansuppliersallmultibrandandsinglebrandstoresinIndiamustconfinetheiroperationsto53oddcitieswithapopulationoveronemillion,outofsome7935townsandcitiesinIndia.Itisexpectedthatthesestoreswillnowhavefullaccesstoover200millionurbanconsumersinIndiamultibrandretailersmusthaveaminimuminvestmentofUS$100millionwithatleasthalfoftheamountinvestedinbackendinfrastructure,includingcoldchains,refrigeration,transportation,packing,sortingandprocessingtoconsiderablyreducethepostharvestlossesandbringremunerativepricestofarmerstheopeningofretailcompetitionwillbewithinIndia'sfederalstructureofgovernment.Inotherwords,thepolicyisanenablinglegalframeworkforIndia.ThestatesofIndiahavetheprerogativetoacceptitandimplementit,ortheycandecidetonotimplementitiftheysochoose.Actualimplementationofpolicywillbewithintheparametersofstatelawsandregulations.

TheopeningofretailindustrytoglobalcompetitionisexpectedtospuraretailrushtoIndia.Ithasthepotentialtotransformnotonlytheretailinglandscapebutalsothenation'sailinginfrastructure.,[30][47]

AWallStreetJournalarticleclaimsthatfreshinvestmentsinIndianorganisedretailwillgenerate10millionnewjobsbetween20122014,andaboutfivetosixmillionoftheminlogisticsaloneeventhoughtheretailmarketisbeingopenedtojust53citiesoutofabout8000townsandcitiesinIndia.[47]

Indianretailreformsonhold

AccordingtoBloomberg,on3December2011,theChiefMinisteroftheIndianstateofWestBengal,MamataBanerjee,whoisagainstthepolicyandwhoseTrinamoolCongressbrings19votestotherulingCongresspartyledcoalition,claimedthatIndiasgovernmentmayputtheFDIretailreformsonholduntilitreachesconsensuswithintherulingcoalition.Reutersreportsthatthisriskedapossibledilutionofthepolicyratherthanachangeofheart.,[48][49][50]

Severalnewspapersclaimedon6December2011thatIndiaparliamentisexpectedtoshelveretailreformswhiletherulingCongresspartyseeksconsensusfromtheoppositionandtheCongressparty'sowncoalitionpartners.Suspensionofretailreformson7December2011wouldbe,thereportsclaimed,anembarrassingdefeatfortheIndiangovernment,suggestingitisweakandineffectiveinimplementingitsideas.[51]

AnandSharma,India'sCommerceandIndustryMinister,afterameetingofallpoliticalpartieson7December2011said,"Thedecisiontoallowforeigndirectinvestmentinretailissuspendedtillconsensusisreachedwithallstakeholders."[7]

On19Feb2013TamilNadubecamethefirststateinthecountrytostoutlyresistMNC'invasion'intothedomesticretailsector.InChennai,TamilNaduCMDAauthoritiesplacedasealonthemassivewarehousespreadingacross7acresthathadreportedlybeenbuiltforoneoftheworldsleadingmultinationalretail



giants,Walmart.[52]

InFebruary2014,VasundharaRajelednewlyelectedRajasthanGovernmentreversedtheearlierGovernment'sdecisionofallowingFDIinretailinthestate.Itreasonedthatthesourcesofdomesticretailareprimarilylocalwhereasinternationalretailaffectsdomesticmanufacturingactivityandhencereducesemploymentopportunities.[53]

Singlebrandretailreformsapproved

On11January2012,Indiaapprovedincreasedcompetitionandinnovationinsinglebrandretail.[54]

Thereformseekstoattractinvestmentsinoperationsandmarketing,improvetheavailabilityofgoodsfortheconsumer,encourageincreasedsourcingofgoodsfromIndia,andenhancecompetitivenessofIndianenterprisesthroughaccesstoglobaldesigns,technologiesandmanagementpractices.Inthisannouncement,Indiarequiressinglebrandretailer,withgreaterthan51%foreignownership,tosourceatleast30%ofthevalueofproductsfromIndiansmallindustries,villageandcottageindustries,artisansandcraftsmen.

MikaelOhlsson,chiefexecutiveofIKEA,announcedIKEAispostponingitsplantoopenstoresinIndia.HeclaimedthatIKEA'sdecisionreflectsIndiasrequirementsthatsinglebrandretailerssuchasIKEAsource30percentoftheirgoodsfromlocalsmallandmediumsizedcompanies.ThiswasanobstacletoIKEA'sinvestmentinIndia,andthatitwilltakeIKEAsometimetosourcegoodsanddevelopreliablesupplychainsinsideIndia.IkeaannouncedthatitplanstodoublewhatitsourcesfromIndiaalreadyforitsglobalproductrange,toover$1billionayear,withinthreeyears.IKEAinthenearterm,planstofocusexpansioninsteadinChinaandRussia,wheresuchrestrictionsdonotexist.[10]

On19Feb2013TamilNadubecamethefirststateinthecountrytostoutlyresistMNC'invasion'intothedomesticretailsector.InChennai,TamilNaduCMDAauthoritiesplacedasealonthemassivewarehousespreadingacross7acresthathadreportedlybeenbuiltforoneoftheworldsleadingmultinationalretailgiants,Walmart.[52]

Socialimpactandcontroversywithretailreforms

TheNovember2011retailreformsinIndiahavesparkedintenseactivism,bothinoppositionandinsupportofthereforms.

ControversyoverallowingForeignretailers

CriticsofderegulatingretailinIndiaaremakingoneormoreofthefollowingclaims:,[55][56]

Independentstoreswillclose,leadingtomassivejoblosses.WalmartemploysveryfewpeopleintheUnitedStates.IfallowedtoexpandinIndiaasmuchasWalmarthasexpandedintheUnitedStates,fewthousandjobsmaybecreatedbutmillionswillbelost.Walmart'sefficiencyatsupplychainmanagementleadstodirectprocurementofgoodsfromthesupplier.Inadditiontoeliminatingthe"middleman",duetoitsstatusastheleadingretailer,suppliersofgoodsarepressuredtodroppricesinordertoassureconsistentcashflow.Thesmallretailerandthemiddlemanpresentintheretailindustryplayalargepartinsupportingthelocaleconomy,sincetheytypicallyprocuregoodsandservicesfromtheareatheyhavetheirretail



AhorticulturalproduceretailmarketinKolkata,Indiaproducelossintheseretailformatsisveryhighforperishables

shopsin.Thisleadstoincreasedeconomicactivity,andwealthredistribution.Withlarge,efficientretailers,goodsareacquiredinotherregions,hencereducingthelocaleconomy.Walmartwilllowerpricestodumpgoods,getcompetitionoutoftheway,becomeamonopoly,thenraiseprices.Itisarguedthiswasthecaseofthesoftdrinksindustry,wherePepsiandCocaColacameinandwipedoutallthedomesticbrands.Indiadoesn'tneedforeignretailers,sincehomegrowncompaniesandtraditionalmarketshavebeenabletodothejob.WorkwillbedonebyIndians,profitswillgotoforeigners.LiketheEastIndiaCompany,WalmartcouldenterIndiaasatraderandthentakeoverpolitically.TherewillbesterilehomogeneityandIndiancitieswilllooklikecitiesanywhereelse.Thegovernmenthasn'tbuiltconsensus.Thegovernmentclaimsmodernretailwillcreate4millionnewjobs.ThiscannotbetruebecauseWalmart,withover9000storesworldwide,hasonly2.1millionemployees.[57]TheDemocraticstaffoftheU.S.HouseCommitteeonEducationandtheWorkforceReportWalMartslowwagesandtheireffectontaxpayersandeconomicgrowth.[58]

Supportersclaimnoneoftheseobjectionshasmerit.Theyclaim:[56]

Organisedretailwillneedworkers.Walmartemploys1.4millionpeopleinUnitedStatesalone.[59]WithUnitedStatespopulationofabout300million,andIndia'spopulationofabout1200million,ifWalmartlikeretailcompaniesweretoexpandinIndiaasmuchastheirpresenceintheUnitedStates,andthestaffinglevelinIndianstoreskeptatthesamelevelasintheUnitedStatesstores,Walmartalonewouldemploy5.6millionIndiancitizens.Walmarthasa6.5%marketshareofthetotalUnitedStatesretail.Adjustedforthismarketshare,theexpectedjobsinfutureIndianorganisedretailwouldtotalover85million.Inaddition,millionsofadditionaljobswillbecreatedduringthebuildingofandthemaintenanceofretailstores,roads,coldstoragecenters,softwareindustry,electroniccashregistersandotherretailsupportingorganisations.Insteadofjoblosses,retailreformsarelikelytobemassiveboosttoIndianjobavailability.KPMGoneoftheworld'slargestauditcompaniesfindsthatinChina,theemploymentinbothretailandwholesaletradeincreasedfrom4%in1992toabout7%in2001,postChinaopeningitsretailtoforeignanddomesticinnovationandcompetition.Inabsoluteterms,Chinaexperiencedthecreationof26millionnewjobswithin9years,postChinaannouncingFDIretailreforms.Additionally,contrarytosomeconcernsinChina,postretailreforms,thenumberoftraditionalsmallretailersalsogrewby30%over5years.[20]Indianeedstrillionsofdollarstobuilditsinfrastructure,hospitals,housingandschoolsforitsgrowingpopulation.TheIndianeconomyissmall,withlimitedsurpluscapital.Thegovernmentisalreadyoperatingonbudgetdeficits.ItissimplynotpossibleforIndianinvestorsorthegovernmenttofundthisexpansion,jobcreationandgrowthattherateIndianeeds.GlobalinvestmentcapitalthroughFDIisnecessary.Beyondcapital,theIndianretailindustryneedsknowledgeandglobalintegration.Globalretailleaders,someofwhicharepartlyownedbypeopleofIndianorigin,[60]canbringthisknowledge.GlobalintegrationcanpotentiallyopenexportmarketsforIndianfarmersandproducers.Walmart,forexample,expectstosourceandexportsome$1billionworthofgoodsfromIndiaeveryyear,sinceitcameintoIndianwholesaleretailmarket.[61]Walmart,Carrefour,Tesco,Target,Metro,Cooparesomeofover350globalretailcompanieswith



annualsalesover$1billion.Theseretailcompanieshaveoperatedforover30yearsinnumerouscountries.Theyhavenotbecomemonopolies.CompetitionbetweenWalmartlikeretailershaskeptfoodpricesincheck.CanadacreditstheirverylowinflationratestoWalmarteffect.[62]Antitrustlawsandstateregulations,suchasthoseinIndianlegalcode,havepreventedfoodmonopoliesfromforminganywhereintheworld.Priceinflationinthesecountrieshasbeen5to10timeslowerthanpriceinflationinIndia.ThecurrentconsumerpriceinflationinEuropeandtheUnitedStatesislessthan2%,comparedtoIndia'sdoubledigitinflation.ThePepsiandCocaColaexampleismeaninglessinthecontextofIndianbeveragemarket.Morecompetitionislackingbecauseoflimiteddemand.Indianconsumerhaslimitedinterestinsoftdrinks.Softdrinksrepresentlessthan5%ofIndianbeveragemarket.[63]Indianconsumersprefermilkbased,teaandcoffeeandtheseaccountfor90%ofIndianbeveragemarket,withplentyofcompetingdomesticbrandsandevenEuropeanbrandslikeNestl.ThenextmostimportantmarketinIndiaisbottledwater,whichoutsellsthecombinedsoftdrinksalesofthePepsiandCocaCola.Organisedretailtoowillhavenumerousbrandsandstrongcompetition.Comparingthe21stcenturytothe18thcenturyisinappropriate.Conditionstodayaredifferent.Indiawasn'tademocracythen.Globalawarenessandnewsmediahavealsochanged.Forexample,Chinahasover57millionsquarefeetofretailspaceownedbyforeigners,employingmillionsofChinesecitizens.Yet,Chinahasn'tbecomeavassalofimperialists,enjoyingrespectfromallglobalpowers.OtherAsiancountrieslikeMalaysia,Taiwan,ThailandandIndonesiaseeforeignretailersascatalystsofnewtechnologyandpricereductionandtheyhavebenefitedbywelcomingFDIinretail.Indiatoowillbenefitbyintegratingwiththeworld,ratherthanisolatingitself.[64]With51%FDIlimitinmultibrandretailers,nearlyhalfofanyprofitswillremaininIndia.Anyprofitswillbesubjecttotaxes,andsuchtaxeswillreduceIndiangovernmentbudgetdeficit.Manyyearsago,ChinaadoptedtheretailreformpolicyIndiahasannouncedallowingFDIinitsretailsector.FDIfinancedretailersinChinatookbetween5to10yearstopostprofits,inlargepartbecauseofhugeinvestmentsinitiallymade.LikeChina,itisunlikelyforeignretailerswillearnanyprofitsinIndiaforthefirst5to10years.[35]Ultimately,retailcompaniesmustearnprofitsbycreatingvalue.StateshavearighttosaynotoretailFDIwithintheirjurisdiction.[46]Stateshavetherighttoaddrestrictionstotheretailpolicyannouncedbeforetheyimplementthem.Thus,theycanplacelimitsonnumber,marketshare,style,diversity,homogeneityandotherfactorstosuittheirculturalpreferences.Finally,infuture,statescanalwaysintroduceregulationsandIndiacanchangethelawtoensurethebenefitsofretailreformsreachthepoorestandweakestsegmentsofIndiansociety,freeandfairretailcompetitiondoesindeedleadtosharplylowerinflationthancurrentlevels,smallfarmersgetbetterprices,jobscreatedbyorganisedretailpaywell,andhealthierfoodbecomesavailabletomorehouseholds.Inbuiltinefficienciesandwastageindistributionandstorageaccountforwhy,accordingtosomeestimates,asmuchas40%offoodproductiondoesn'treachconsumers.FiftymillionchildreninIndiaaremalnourished.[56]Foodoftenrotsinfarms,intransit,orinantiquatedstaterunwarehouses.Costconsciousorganisedretailcompanieswillavoidwasteandloss,makingfoodavailabletotheweakestandpoorestsegmentofIndiansociety,whileincreasingtheincomeofsmallfarmers.Walmart,forexample,sinceitsarrivalinIndianwholesaleretailmarket,hassuccessfullyintroducedthe"DirectFarmProject"atHaiderNagarnearMalerkotlainPunjab,where110farmershavebeenconnectedwithBhartiWalmartforsourcingfreshvegetablesdirectly,therebyreducingwasteandbringingfresherproducetoIndianconsumers.[61]Indiansmallshopsemployworkerswithoutpropercontracts,makingthemworklonghours.Manyunorganisedsmallshopsdependonchildlabour.Awellregulatedretailsectorwillhelpcurtailsomeoftheseabuses.[56]Organisedretailhasenabledawiderangeofcompaniestostartandflourishinothercountries.For



example,intheUnitedStates,retailerWholeFoodshasrapidlygrowntoannualrevenuesof$9billionbyworkingcloselywithfarmers,delightingcustomersandcaringaboutthecommunitiesithasstoresin.[65]Theclaimsthatthereisnoconsensusiswithoutmerit.About10yearsago,whenoppositionformedthecentralgovernment,theyhadproposedretailreformsandsuggestedIndiaconsiderFDIinretail.Retailreformsdiscussionsarenotnew.Morerecently,retailreformsannouncedevolvedafteraprocessofintenseconsultationsandconsensusbuildinginitiative.In2010,theIndiangovernmentcirculatedadiscussionpaperonFDIretailreforms.[20]On6July2011,anotherversionofthediscussionpaperwascirculatedbythecentralgovernmentofIndia.[66]CommentsfromawidecrosssectionofIndiansocietyincludingfarmers'associations,industrybodies,consumerforums,academics,traders'associations,investors,economistswereanalysedindepthbeforethematterwasdiscussedbytheCommitteeofSecretaries.ByearlyAugust2011,theconsensusfromvarioussegmentsofIndiansocietywasoverwhelminginfavourofretailreforms.[67]ThereformoutlinewaspresentedinIndia'sRajyaSabhainAugust2011.Theannouncedreformsaretheresultofthisconsensusprocess.Thecurrentoppositionisnothelpingtheconsensusprocess,sinceconsensusisnotbuiltbythreatsanddisruption.Thosewhoopposecurrentretailreformsshouldhelpbuildconsensuswithideasandproposals.TheoppositionpartiescurrentlydisruptingtheIndianparliamentonretailreformshavenotofferedevenoneideaorasingleproposalonhowIndiacaneliminatefoodspoilage,reduceinflation,improvefoodsecurity,feedthepoor,improvetheincomesofsmallfarmers.AstudybyGlobalInsightsresearchfoundthatmodernretailerssuchasWalmartcreatejobsdirectly,indirectlyandbyinducedeffects.InDallasFortWorthareaoftheUnitedStates,withapopulationofabout2millionpeople,GlobalInsightsfoundthatWalmartalonehadhelpedcreateabout6,300newnetjobswithanaveragesalaryofover$21,000each.[68]ForIndia'surbanpopulationofover400million,anaveragesalaryoflessthan$2,100peryear,thisscalestoover12millionnewjobs.Othermultibrandretailers,suchasMitsukoshiofJapan,employamuchhighernumberofsalessupportemployeeperstore,thanWalmart,tosuitlocalconsumerculture.TheGlobalInsightsstudyalsofoundthatthemodernretailsuchasWalmartwereakeycontributorincreatingnewnetjobsandmaintaininglowconsumerpriceinflationratesfrom1985to2005.

Oppositiontoretailreforms

Withinaweekofretailreformannouncement,Indiangovernmenthasfacedapoliticalbacklashagainstitsdecisiontoallowcompetitionand51%ownershipofmultibrandorganisedretailinIndia.

DespitethefactthatSalmanKhurshid,Indiaslawminister,claimingthatmanyoppositionparties,includingtheBharatiyaJanataParty,hadprivatelyencouragedthegovernmenttopushthroughtheretailreform,theintensecriticismnowtargetsCongressledcoalitiongovernment,anditsdecisiontopushthroughoneofthebiggesteconomicreformsinyearsforIndia.Oppositionpartiesclaimsupermarketchainsareilladvised,unilateralandunwelcome.[69]

Theoppositionclaimstheentryoforganisedretailerswouldleadtotheirdominancethatwoulddecimatelocalretailersandforcemillionsofpeopleoutofwork.

MamataBanerjee,thechiefministerofWestBengalandtheleaderoftheTrinamoolCongress,announcedheroppositiontoretailreform,claiming"Somepeoplemightsupportit,butIdonotsupportit.YouseeAmericaisAmericaandIndiaisIndia.Onehastoseewhatonescapacityis".[70]



OtherstateswhoseChiefMinistershaveeitherpersonallyannouncedoppositionorannouncedreluctancetoimplementtheretailreforms:TamilNadu,UttarPradesh,BiharandMadhyaPradesh.

ChiefMinistersofmanystateshavenotmadeapersonalstatementinoppositionorsupportofIndianeedingretailreforms.Gujarat,Kerala,KarnatakaandRajasthanareexamplesofthesestates.Bothsideshavemadeconflictingclaimsaboutthepositionofchiefministersfromthesestates.

AWallStreetJournalarticlereportsthatinUttarPradesh,UmaBharti,aseniorleaderoftheoppositionBharatiyaJanataParty(BJP),threatenedto"setfiretothefirstWalMartstorewheneveritopens"withhercolleagueSushmaSwarajbusytweetingupastormofmisinformationabouthowWalMartallegedlyruinedtheU.S.economy.[71][72]

On1December2011,anIndiawide"bandh"(closeallbusinessinprotest)wascalledbypoliticalpartiesopposingtheretailreform.Whilemanyorganisationsresponded,thereachoftheprotestwasmixed.[73]TheTimesofIndia,anationalnewspaperofIndia,claimedpeopleappeareddividedoverthebandhcallandinternalrivalryamongtradeassociationsledtoamixedresponse,leavingmanystoresopendaylongandothersopeningforbusinessasusualinthesecondhalfoftheday.EvenPurtiGroup,anetworkofstoresownedandoperatedbyNitinGadkariwereopenforbusiness,ignoringthecallforbandh.GadkariisthepresidentofBJP,thekeypartycurrentlyorganisingoppositiontoretailreform.[74]

TheHindu,anotherwidelycirculatednewspaperinIndia,claimedtheopposition'scallforanationwideshutdownon1December2011,inprotestofretailreformreceivedamixedresponse.Somestateshadstrongsupport,whilemostdidnot.Eveninstateswhereoppositionpoliticalpartiesareinpower,manyignoredthecallfortheshutdown.InGujarat,Bihar,Delhi,AndhraPradesh,Haryana,PunjabandAssamthecallevokedapartialresponse.Whileanumberofwholesalemarketsobservedtheshutdown,thenewspaperclaimedamajorityofkiranastoresandneighborhoodsmallshopsforwhomapparentlythetradebandhhadbeencalledremainedopen,ignoringtheshutdowncall.Conflictingclaimsweremadebytheorganisersofthenationwideshutdown.Contrarytoeyewitnessreports,oneTraderunion'ssecretarygeneralclaimedtradersacrossthecountryparticipatedwholeheartedlyinthestrike.[75]

ThepoliticalpartiesopposingtheretailreformsphysicallydisruptedandforcedIndia'sparliamenttoadjournagainonFriday2December2011.TheIndiangovernmentrefusedtocavein,initsattempttoconvincethroughdialoguethatretailreformsarenecessarytoprotectthefarmersandconsumers.Indianparliamenthasbeendysfunctionalfortheentireweekof28November2011overtheoppositiontoretailreforms.[76]

Supportforretailreforms

InapanIndiansurveyconductedovertheweekendof3December2011,overwhelmingmajorityofconsumersandfarmersinandaroundtenmajorcitiesacrossthecountrysupporttheretailreforms.Over90percentofconsumerssaidFDIinretailwillbringdownpricesandofferawiderchoiceofgoods.Nearly78percentoffarmerssaidtheywillgetbetterpricesfortheirproducefrommultiformatstores.Over75percentofthetradersclaimedtheirmarketingresourceswillcontinuetobeneededtopushsalesthroughmultiplechannels,buttheymayhavetoacceptlowermarginsforgreatervolumes.[77]



AstudyinIndiaontitle'ForeignDirectInvestmentInIndianRetailSector:Drawinglessonsfromtheinternationalexperience',concludedthattheentryofFDIinmultibrandretailinIndiacanbegrowthenhancingonlyifpropersafeguardsareinplaceandthemarketenvironmentisregulated.Firstly,theresourcesshouldbededicatedforacomprehensivestudyofretailanditsrelatedindustries.Secondly,thenumberofbigretailoutletsinaparticularcityshouldbedecidedonthebasisofpopulationcriterionandtheemploymentleveloflocalyouthintheretailbusiness.Thirdly,theformatoftheseretailchainsshouldalsoberegulatedasisdoneinMalaysiancase.Theyshouldnotbeintheformofneighborhoodconveniencestoreandthereshouldbeminimumandmaximumlimitofthesizeofthesestores.Fourthly,itisimportanttoensurethatnosingleretailermonopolizestheprocurementoperationsinanarea,districtorstateinordertoprotectthelocalsuppliers.Lastly,thepredatorypricingandtheanticompetitivepracticesoftheseinternationalretailersshouldbeprohibitedinordertocreateaplayingfieldforlocalretailersSOURCE(http://ijtemt.org/vol2issue5/Foreign_Direct_Investment.html).[78]

Farmergroups

VariousfarmerassociationsinIndiahaveannouncedtheirsupportfortheretailreforms.Forexample:

ShriramGadhveofAllIndiaVegetableGrowersAssociation(AIVGA)claimshisorganisationsupportsretailreform.Heclaimedthatcurrently,itisthemiddlemencommissionagentswhobenefitatthecostoffarmers.Heurgedthattheretailreformmustfocusonruralareasandthatfarmersreceivebenefits.Gadhveclaimed,"Abettercoldstoragewouldhelpsincethiscouldhelppreventtheexistinglossof34%offruitsandvegetablesduetoinefficientsystemsinplace."AIVGAoperatesinninestatesincludingMaharashtra,AndhraPradesh,WestBengal,Bihar,Chhattisgarh,PunjabandHaryanawith2,200farmeroutfitsasitsmembers.[79]BharatKrishakSamaj,afarmerassociationwithmorethan75,000memberssaysitsupportsretailreform.AjayVirJakhar,thechairmanofBharatKrishakSamaj,claimedamonopolyexistsbetweentheprivateguildsofmiddlemen,commissionagentsatthesabzimandis(India'swholesalemarketsforvegetablesandfarmproduce)andthesmallshopkeepersintheunorganisedretailmarket.Giventheperishablenatureoffoodlikefruitandvegetables,withouttheoptionofsafeandreliablecoldstorage,thefarmeriscompelledtosellhiscropatwhateverpricehecanget.Hecannotwaitforabetterpriceandisthusexploitedbythecurrentmonopolyofmiddlemen.Jakharaskedthatthegovernmentmakeitmandatoryfororganisedretailerstobuy75%oftheirproducedirectlyfromfarmers,bypassingthemiddlemenmonopolyandIndia'ssabzimandiauctionsystem.[79]ConsortiumofIndianFarmersAssociations(CIFA)announceditssupportforretailreform.ChengalReddy,secretarygeneralofCIFAclaimedretailreformcoulddolotsforIndianfarmers.Reddycommented,"Indiahas600millionfarmers,1,200millionconsumersand5milliontraders.Ifailtounderstandwhypoliticalpartiesaretakinganantifarmerstandandworriedabouthalfamillionbrokersandsmallshopkeepers".CIFAmainlyoperatesinAndhraPradesh,KarnatakaandTamilNadubuthasagrowingmembersfromrestofIndia,includingShetkariSanghatanainMaharashtra,RajasthanKisanUnionandHimachalFarmerOrganisations.PrakashThakur,thechairmanofthePeopleforEnvironmentHorticulture&LivelihoodofHimachalPradesh,announcinghissupportforretailreformsclaimedFDIisexpectedtorolloutproducestoragecentersthatwillincreasemarketaccess,reducethenumberofmiddlemenandenhancereturnstofarmers.[80]Highlyperishablefruitslikecherry,apricot,peachesandplumshaveahugedemandbutareunabletotapthemarketfullybecauseoflackofcoldstorageandtransportinfrastructure.Saleswillboostwiththeopeningupofretail.EventhoughIndiaisthesecondlargestproduceroffruitsandvegetablesintheworld,itsstorageinfrastructureisgrosslyinadequate,claimedThakur.SharadJoshi,founderofShetkariSangathana(farmersassociation),hasannouncedhissupportfor



retailreforms.[81]JoshiclaimsFDIwillhelpthefarmsectorimprovecriticalinfrastructureandintegratefarmerconsumerrelationship.Today,theexistingretailhasnotbeenabletosupplyfreshvegetablestotheconsumersbecausetheyhavenotinvestedinthebackwardintegration.Whenthefarmers'producereachestheendconsumerdirectly,thefarmerswillnaturallybebenefited.JoshifeelsretailreformisjustafirststepofneededagriculturalreformsinIndia,andthatthegovernmentshouldpursueadditionalreforms.

Suryamurthy,inanarticleinTheTelegraph,claimsfarmergroupsacrossIndiadonotsupportstatusquoandseekretailreforms,becausewiththecurrentretailsystemthefarmerisbeingexploited.Forexample,thearticleclaims:[80]

Indianfarmersgetonlyonethirdofthepriceconsumerspayforfoodstaples,therestistakenascommissionsandmarkupsbymiddlemenandshopkeepersForperishablehorticultureproduce,averagepricefarmersreceiveisbarely12to15%ofthefinalpriceconsumerpaysIndianpotatofarmersselltheircropforRs.2to3akilogram,whiletheIndianconsumerbuysthesamepotatoforRs.12to20akilogram.[82]

Economistsandentrepreneurs

ManybusinessgroupsinIndiaarewelcomingthetransformationofalongprotectedsectorthathasleftIndianshoppersbereftofthescaleandvarietyoftheircounterpartsinmoredevelopedmarkets.[69]

B.Muthuraman,thepresidentoftheConfederationofIndianIndustry,claimedtheretailreformwouldopenenormousopportunitiesandleadtomuchneededinvestmentincoldchain,warehousingandcontractfarming.

Organisedretailerswillreducewastebyimprovinglogistics,creatingcoldstoragetopreventfoodspoilage,improvehygieneandproductsafety,reducecounterfeittradeandtaxevasiononexpensiveitempurchases,andcreatedependablesupplychainsforsecuresupplyoffoodstaples,fruitsandvegetables.TheywillincreasechoiceandreduceIndiasrampantinflationbyreducingwaste,spoilageandcuttingoutmiddlemen.Freshinvestmentinorganisedretail,thesupportersofretailreformclaimwillgenerate10millionnewjobsby2014,aboutfivetosixmillionoftheminlogisticsalone.[71]

OrganisedretailwillofferthesmallIndianfarmermorecompetingvenuestosellhisorherproducts,andincreaseincomefromlessspoilageandwaste.AFoodandAgriculturalOrganisationreportclaimsthatcurrently,inIndia,thesmallfarmerfacessignificantlossespostharvestatthefarmandbecauseofpoorroads,inadequatestoragetechnologies,inefficientsupplychainsandfarmer'sinabilitytobringtheproduceintoretailmarketsdominatedbysmallshopkeepers.TheseexpertsclaimIndia'spostharvestlossestoexceed25%,onaverage,everyyearforeachfarmer.,[83][84]

Unlikethecurrentmonopolyofmiddlemenbuyer,retailreformsofferfarmersaccesstomorebuyersfromorganisedretail.Morebuyerswillcompeteforfarmersproduceleadingtobettersupportforfarmersandtobetterbids.Withlessspoilageofstaplesandagriculturalproduce,globalretailcompaniescanfindandprovideadditionalmarketstoIndianfarmers.Walmart,sinceitsarrivalinIndia'swholesaleretailmarket,alreadysourcesandexportsabout$1billionworthofIndiangoodsforitsglobalcustomers.



NotonlydotheselossesreducefoodsecurityinIndia,thestudyclaimsthatpoorfarmersandothersloseincomebecauseofthewasteandinefficientretail.OverUS$50billionofadditionalincomecanbecomeavailabletoIndianfarmersbypreventingpostharvestfarmlosses,improvingtransport,properstorageandretail.OrganisedretailisalsoexpectedtoinitiateinfrastructuredevelopmentcreatingmillionsofruralandurbanjobsforIndiasgrowingpopulation.OnestudyclaimsthatifthesepostharvestfoodstaplelossescouldbeeliminatedwithbetterinfrastructureandretailnetworkinIndia,enoughfoodwouldbesavedeveryyeartofeed70to100millionpeopleovertheyear.[85]

Supportersofretailreform,TheEconomistclaims,sayitwillincreasecompetitionandqualitywhilereducingpriceshelpingtoreduceIndia'srampantinflationthatisclosetothedoubledigits.Thesesupportersclaimthatunorganisedsmallshopkeeperswillcontinuetoexistalongsidelargeorganisedsupermarkets,becauseformanyIndianstheywillremainthemostaccessibleandmostconvenientplacetoshop.[86]

AmartyaSen,theIndianbornNobelPrizewinningeconomist,inaDecember2011interviewclaimsforeigndirectinvestmentinmultibrandretailcanbegoodthingorbadthing,dependingonthenatureoftheinvestment.Quiteoften,claimsProfessorSen,FDIisagoodthingforIndia.[87]

Allowedinsomestates,bannedinothers

Thegovernmentsofsomestates,particularlyCongressruledstateshavesaidtheywillallowforeignsupermarketstoopenintheirstate:

AndhraPradesh,Assam,Delhi,[88]Haryana,Kashmir,Maharashtra,Manipur,Uttarakhand,Daman&DiuandDadraandNagarHaveli,willallowforeignretailers.[15]

Otherstates,particularlyBJPruledstateshavesaidtheywillnotallowforeignsupermarketstoopenintheirstate,theseare:

WestBengal,[89]Gujarat,[89]Bihar,Karnataka,Kerala,MadhyaPradesh,Tripura,andOrissa,[15]Rajasthan

SupportersofretailreformwhohavevoicedtheneedtopromoteorganisedretailincludeChiefMinistersofseveralstatesofIndia,severalbelongingtopoliticalpartiesthathavenoaffiliationwithCongressledcentralgovernmentofIndia.ThelistincludestheChiefMinistersofMaharashtra,AndhraPradesh,TamilNaduandGujarat.Inareportsubmittedearlierin2011,theseChiefMinistersurgedthePrimeMinistertoprioritizereformstohelppromoteorganisedretail,shortentheretailpathfromfarmtoconsumer,alloworganisedretailtobuydirectfromfarmersatremunerativeproduceprices,andreducefarmtoretailcosts.[90]Similarly,theChiefMinisterofDelhihascomeoutinsupportoftheretailreform,[91]ashavetheChiefMinistersofthetwofarmingstatesofHaryanaandPunjabinnorthIndia.,[92][93]TheChiefMinistersofHaryanaandPunjabclaimthattheannouncedretailreformswillneverbenefitfarmersintheirstates.

TheChiefMinisterofthestateofMaharashtrathestatewiththebiggestGDPinIndiaandhometoitsfinancialcapitalMumbaihasalsowelcomedtheretailreform.,[94][95]



TarunGogoi,theChiefMinisterofAssam,aneasternstateinIndia,announcinghissupporttotheretailreform,claimed"thiswillgoalongwayinbringingaboutaseachangeinruraleconomy.Thedecisionwillboostagricultureandalliedsectors,manufacturing,logistics,integratedcoldchains,refrigeratedtransportationandfoodprocessingfacilitiesinabigway."CriticisingtheBJPorganisedopposition,GogoiclaimedthatthesepartieswhohadjustafewyearsagodubbedopeningupretailasgoodforIndia,arenowsingingadifferenttune.[96]

2013stateElections

InDecember2013electionswereheldinthestateofDelhiandanewpartycametopower.[97]ThenewChiefMinisterofDelhiopposesforeigninvestmentinretailandhaswrittentothefederalgovernmenttowithdrawpermissiongivenbythepreviousChiefMinistertoallowforeignretailerstoopenshopsinthestate.[88]ThefederalIndustryMinistryhasrespondedbysayingitdoesnotwantforeigninvestorstothinkofIndiaasan"unpredictablebananarepublic"thereforetherulesaresuchthatonceastategovernmentallowsforeignretailersinthatstate,theycannotdisallowtheforeignshopsifanewpartycomestopowerinthatstate.[88]

Currentsupermarkets

ExistingIndianretailfirmssuchasSpencer's,FoodworldSupermarketsLtd,Nilgiri'sandShopRitesupportretailreformandconsiderinternationalcompetitionasablessingindisguise.Theyexpectaflurryofjointventureswithglobalmajorsforexpansioncapitalandopportunitytogainexpertiseinsupplychainmanagement.Spencer'sRetailwith200storesinIndia,andwithretailoffreshvegetablesandfruitsaccountingfor55percentofitsbusinessclaimsretailreformtobeawinwinsituation,astheyalreadyprocurethefarmproductsdirectlyfromthegrowerstheinvolvementofmiddlemenortraders.Spencersclaimsthatthereisscopeforittoexpanditsfootprintintermsofstorelocationaswellasprocuringfarmproducts.Foodworld,whichoperatesover60stores,planstorampupitspresencetomorethan200locations.IthasalreadytiedupwithHongKongbasedDairyFarmInternational.WiththerelaxationininternationalinvestmentsinIndianretail,IndiasFoodworldexpectsitsglobalrelationshipwillonlygetstronger.Competitionandinvestmentinretailwillprovidemorebenefitstoconsumersthroughlowerprices,wideravailabilityandsignificantimprovementinsupplychainlogistics.[98]

Seealso

References

IndianroadnetworkAgricultureinIndiaIndianexpresswaysFishinginIndia

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Externallinks

TheEconomistDecember2011issueReforminIndia:LetWalmartin(http://www.economist.com/node/21541024)TheFinancialTimes:HowtoopenupIndiaseconomy(2December2011)(http://www.ft.com/intl/cms/s/0/374a30701cd911e1a13400144feabdc0.html#axzz1fPDXuO32)ReportonIndianRetail,KPMG2009(http://www.in.kpmg.com/TL_Files/Pictures/Indian_Retail_Mar09.pdf)TheGreatIndianRetailStoryAnErnst&YoungReport,2007(http://www.retailangle.com/documents/The_Great_Indian_Retail_Story.pdf)2011RetailReformCommentary:ExpectedimpactofFDIinRetailErnst&YoungIndiaViewpoint(http://www.ey.com/IN/en/Industries/Indiasectors/RetailWholesale/Retail_ExpectedimpactofFDIinRetail)TheOldKings...AndTheNew:Indianretailindustryisevolving.Areportthatlistssomeoftheevolutionoverlast20years.(http://www.businessworld.in/businessworld/businessworld/content/OldKingsAndNew.html)http://www.idcri.com/getdoc.jsp?containerId=AP9140604TIDCRetailInsightsReportonIndianRetailingandTrendsFDIinMultiBrandRetailTradeTheJourney,September2012DinodiaCapitalAdvisors(http://www.dinodiacapital.com/pdfs/FDI%20in%20Multi%20Brand%20Retail%20Trade%20%20The%20Journey,%20September%202012.pdf)ForeignDirectInvestmentInIndianRetailSector:Drawinglessonsfromtheinternationalexperience,October2013IJTEMT(http://ijtemt.org/vol2issue5/Foreign_Direct_Investment.html)

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