VK Singh
RETAILING in India is one of the pillars of its economy and accounts for about 15 per cent of its GDP. After Agriculture it is the largest sector, which employs the largest number of people in India. The Indian retail market is estimated to be US $450 billion or 2, 34,952.20 crore and one of the top five retail markets in the world by economic value. It is estimated that India's retail organised industry, employs directly about 40 million Indians (3.3 per cent of Indian population) or 4 crore people with around 1.3 retails organised outlets. If we include the unorganised sector and the employees of organised sector and their dependents this figure will sour to above 20 crore people. India has about 11 shop outlets for every 1000 people.
The organised retail market is growing at 35 per cent annually while growth of unorganised retail sector is pegged at 6 per cent. Organised retailing, absent in most rural and small towns of India in 2010, refers to trading activities undertaken by licenced retailers, that is, those who are registered for sales tax, income tax, etc. These include the publicly-traded supermarkets, corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local mom and pop store, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.
India has topped the AT Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment.
Foreign retailers have already started operations in India through various routes: (i) joint ventures where the Indian firm is an export house; (ii) franchising (eg. Kentucky Fried Chicken, Nike); (iii) sourcing of supplies from small-scale sector; (iv) ‘cash and carry’ operations (Giant in Hyderabad, Metro in Bangalore) 3; (v) non-store formats – direct marketing (Amway). Large international retailers of home furnishing and apparels such as Pottery Barn, the Gap and Ralph Lauren have made India one of their major sourcing hubs. Up to 100 per cent FDI is allowed in ‘cash and carry’ operations. The Great Wholesaling Club Ltd is one such example. In February 2002, the world’s largest retailer, Walmart, opened a global sourcing office in Bangalore. In November 2006, it announced its entry under a joint venture with the Indian corporation Bharti.
Economist Mohan Guruswamy of the Centre for Policy Alternatives warns that companies like WalMart will serve only to elite Indians. The average Walmart store will displace 11,200 people and replace them with 285 people.
Throughout the world it is known fact that huge investment is not required to open a retail shop. Investment is required to build infrastructure for shop, sophisticated technology is not required in retail trade.
Small retail shops provide more employment then large chain of retail stores. Big FDI companies, instead of developing under developed areas these stores capture prime commercial property in cities. If allowed in India they will first buy goods from producers in bulk and sell it at less margin and hence routing out small traders from trades. When small traders are out then they will monopolise the trade and charge exorbitant price for goods and commodities. Independent stores will close, leading to massive job losses. Walmart will lower prices to dump goods, get competition out of the way, become a monopoly, then raise prices. We have seen this in the case of the soft drinks industry. Pepsi and Coke came in and wiped out all the domestic brands. India doesn't need foreign retailers, since homegrown companies and traditional markets may be able to do the job.Work will be done by Indians, profits will go to foreigners. Remember, East India Company. It entered India as a trader and then took over politically.
Leave a Comment