Companies & Sectors
FDI in Retail: Kirana shops will not close!

Even the so-called middle-class regularly depends upon street corner kirana shops, as much as they trust and buy from push-cart vendors who make door-to-door sales

According to the recent government estimates, blocking of retail foreign direct investment (FDI) in India will actually rob the country of more than 10 million jobs. This has been the response of the central government when the Aam Aadmi Party (AAP) took a stand to write to the Department of Industrial Policy and Promotion (DIPP) of their opposition to the setting up of multi-brand retail stores in the state.

 

Delhi is the first state to withdraw its approval for retail store entry by FDI, as they feel that such a move hurt small shop keepers of their livelihood. The previous government of Sheila Dikshit had given approvals to global giants like Tesco and Walmart. AAP government says it will not allow them to set shop in the city, even if they manage to get clearance from the Centre to do so.

 

In a lightening response, Anand Sharma, commerce and industry minister, made it clear that the Centre was not ready to accept any state jeopardising the decision, as this will be reflecting badly on the government, and foreign investors will lose confidence. In any case, the federal states have the option of having FDI retails in their State, and those who had committed to have retail FDI in their State cannot back out now.

 

It may be pointed out that the FDI in multi-brand retail was actually notified some 18 months ago in September 2012, and Andhra Pradesh, Haryana, Himachal Pradesh, Karnataka, Maharashtra, Manipur and Rajasthan, besides Delhi had agreed to allow retailers to open their stores. International operators, like Walmart and Tesco have been planning their entry accordingly. It is, therefore, unlike Indian culture to renege a commitment already made.

 

Moneylife, in the past, has carried detailed story on FDI and it has been pointed out that, in fact, multibrand retail will help to check rising food prices, because they will be establishing supply chains throughout the country; establish well constructed warehouses, cold storages and efficient transport system to ensure that goods are available at competitive prices. The farmer will get his dues on time while the blood-sucking legion of moneylenders will be eliminated, if not reduced.

 

Most of them will also help in giving farmers advice on various matters and may also eventually assist in supplying seeds, fertilisers and farm equipment and other services. They will also assist in quality control, packaging and undamaged delivery.

 

The general fear is that FDI retailers, will, in the long run, totally replace the corner Kirana shops that most people are accustomed to depend upon urgent day-to-day supplies. FDI retail generally tends to market those of the products in which they have "interest" while Kirana shop keepers will keep all sorts of products that a household needs on a day-to-day basis, on "urgent" demands, and are generally, located in street corners at a short walking distance from the consumer's home. FDI retailers tend to have their own large outlets, mostly located at motorable distances and are actually designed to attract the middle class and rich. In any case, even this so-called middle-class regularly depend upon street corner kirana shops, as much as they trust and buy from push-cart vendors who make door-to-door sale.

 

Lastly, most FDI retailers, not owning their own sprawling sales complexes, tend to take selling space in Malls. But this mall culture, which is predominantly a process of ‘Westernising’, is slowing down in many parts of the country and in many cities, a great number of them have shut down for lack of profits and footfalls.

 

FDI in retail has come to stay in India, and there is no fear that such a move will hurt small shop keepers or take away employment of 10 million or more. In fact, such trained workers from kirana shops will find employment in FDI retail at more beneficial returns in terms of wages, work-timing, medical insurance and other related facilities.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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COMMENTS

nagesh kini

3 years ago

Neither have the 5-Star corporate Hospital chains replaced the friendly next-door general practic family doctor, nor the MNC Big 4 accounting firms done away with your tax consultant. both continue to carry on merrily. so also the next door mom-n-pop corner kirana stores that mumbaikars call 'vanis' who home your stuff and also offer lines of credit that walmart won't do.

REPLY

Prakash Bhate

In Reply to nagesh kini 3 years ago

Rightly said. India is a vast country. FDI in retail is welcome because it will make non-adulterated food stuffs available, which will force the local vendors (especially milk vendors) to clean up their act.

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