In a move that could bring the biggest supermarket chains of the world, like Wal-Mart and Carrefour, to the bazaar near your home, the government has made a strong pitch for foreign direct investment in the retail sector.
Though it’s only an initial step, if it goes through, Indians will also be able to shop in deep discount mega stores like abroad. These multi-brand supermarkets are so far not allowed in the country since it’s considered a political hot potato. The fear is that it will put the local shopkeeper out of business.
To find a way around this argument, the Department of Industrial Policy and Promotion in a discussion paper has said multi-brand retail outlets could mean more efficient ways of helping farmers and consumers.
Organised retailers cheered the move, but small traders fear it would affect the livelihood of neighbourhood kirana stores and street vendors.
“We have been opposing FDI in the multi-brand retail sector as it will affect the approximately 100 million enterprises in unorganised retail sector across India,” said Pravin Khandelwal, general secretary, Confederation of All India Traders.
“There are self-employed people and they have their own shops; their protection should be thought of in a manner that they don’t get wiped off,” said Viren Shah, president, Federation of Retail Traders Welfare Association (Mumbai).
The government may thus have to negotiate before opening up the gates even as global retailers clamour to set up shop in India.
A BJP leader said a decision cannot be taken unless a study is carried out on the likely impact on the livelihood of millions of small traders and businessmen.
The government said the discussion paper should not be construed as its official position. It has sought views of stakeholders by July 31. It did not propose a cap for FDI in retail firms.
At present, FDI in multi-brand retail is prohibited. But the government allows 51 per cent FDI in single brand retailing and 100 per cent in wholesale trade.
The Congress said it would “peruse the document and evolve an appropriate response”.