Any right-thinking person has the right to be concerned about foreign direct investment (FDI) in the retail sector. Quite clearly, there should be a focus on the ‘livelihood security’ of those involved in similar activities on a small scale. So the question is: what is going to happen to the mom-and-pop shops and those who depend on them for their survival? This is not taking an ideological line against foreign investors, as the Left parties seem to be doing. It is fundamentally about seeking safeguards to ensure that big brothers with financial muscle, technological prowess and humongous purchasing power in the wholesale market do not steamroll old-world shopkeepers. This is a pragmatic question that needs to be tackled and not flung aside as part of an ‘eggs-must-be-broken-to-make-an-omelette’ argument.
Just as the government is now heading towards a rehabilitation policy to help farmers who may be displaced or shortchanged in the building of special economic zones (SEZs), the government may enact similar safeguards in welcoming foreign retailers — either in terms of locational restrictions, or in terms of co-opting local shopkeepers. Mukesh Ambani’s Reliance Retail already has a model in place under which small shopkeepers can become partners to his larger empire. From what it appears, the Wal-Marts and Carrefours of the world will eventually be allowed into India but, as in the case of insurance, local interests will be somewhat fortified. At the very least, we can expect a headstart for local retail giants like Reliance and Pantaloons in a competitive market before global multi-brand retailers come in. Single-brand retailers are already allowed, but it looks like it would be a while before the giant grocers come marching in.
What the government could do to live up to its promise of setting a level-playing field is to hurry up with the FDI policy on retail. Putting safeguards in place is completely justifiable. But foot-dragging is not.