FDI in retail - The SoftCopy

New retail policy feared to leave mom ’n’ pop shops high and dry

Central govt’s decision to allow 51% foreign direct investment in multibrand retail continues to face stiff opposition

Kirana shop owners fear they would lose all their customers.

By Nandita Raman

BANGALORE (Nov. 28)—The central government’s decision to allow 51 percent foreign direct investment (FDI) in multibrand retail has triggered a huge conflict between the local BJP government and industry bodies in Karnataka.

While the industry body like Confederation of Indian Industry is completely for this initiative, saying it will help improve the economy, the Bharatiya Janata Party-led government is contesting the idea.

“It is a right move initiated by UPA-II government and an important step in increasing access to the consumer,” said Dr. Vinod Nowal, president of the Bangalore Chamber of Industry and Commerce.

Industry bodies like CII is welcome to this initiative as they feel it will improve efficiency and delivery systems. “This move will definitely help people, scope for employment will improve tremendously,” said S. Chandrasekhar, chairman of CII Karnataka.

“If we want to be a superpower like the U.S.A., then we have to allow multinationals to set up shop,” he added. “This will give rise to Indian retail multinationals in a few years.”

Local shops beg to differ

“For us, it is about everyday money, and if such big shops come up, we will not have any customers and we will have to close down our shop,” said Faruq, a small spice shop owner in Malleswaram.

“When Big Bazaar and Spar came in, we faced a lot of problems and started losing customers. If more shops come in, it will really affect our sales,” said Shekar, owner of a wholesale rice shop in Seshadripuram.

According to BCIC, this will bring in high-end technological innovations, which will benefit domestic players who can change the outlook of the country.

Shoppers delighted

“I can’t wait for Walmart to come to India,” said Nischitha Rao, a college student. “I have been to the one in the U.S. and always wanted something like that here. I can get everything under one roof, and the prices are also cheap.”

Chandrasekhar said the move would benefit farmers as they can sell their produce to these big names and make more money. It will increase opportunities for them, he said.

In 2006, American giant Walmart and Sunil Mittal’s Bharti Enterprises signed a memorandum of understanding; and in 2008, Britain-based Tesco joined with Tata to set up stores in India. This move by the Union Cabinet will benefit them the most.

Although the Cabinet has given the green light for the FDI plan, it will be a long time before local shops accept the concept.