Therapy for Retail

Organised retail is a $20 billion business, growing at 30 per cent.

Allowing foreign direct investment (FDI) in organised retail has been one of the most agonising policy issues in the last one decade. It has remained a hot potato for politicians across the political spectrum who fear an electoral backlash from millions of small traders and mom-and-pop kirana store owners who will ostensibly be wiped out of business by the likes of Wal-Mart, once let in. For many, it continues to represent the last line of defence against the coming transnational marauders. The closest any government has got to freeing up the rapidly growing sector, now estimated at $20 billion, was during 2004 when the BJP-led NDA hinted that it could make India shine brighter by allowing global retail giants into India, if voted back to power. Since then, FDI-inretail has been the subject matter of think tank analyses, but anathema for a government with the aam admi at its heart. Delhi-based Icrier, through detailed studies, has been continually making a case for FDI to improve the farm-to-supermarket chain, and unlock the potential of Indian agriculture. The Centre’s decision last week to initiate a nationwide debate with all stakeholders by putting out a 21-page discussion paper on retail FDI online is seen by many as the first step towards a 49-per cent FDI regime in the sector. While veteran retail experts like Arvind Singhal of Technopak welcome the move, many remain sceptical about the outcome. For several years, global majors like Carrefour, Wal-Mart and Tesco have been eyeing the lucrative Indian market, one of the few blue-ocean markets that offer high growth. Nearly every year, consultancy firms like PricewaterhouseCoppers and AT Kearney put India on top of assorted retail competitiveness reports, almost as if they were egging the Government to punch their global clients’ tickets. Given that organised retail has been a disaster for many large Indian conglomerates, even the opponents of FDI should lower the pitch so that the Wal-Marts of the world suffer some retail pain.

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