Friday, July 16, 2010


Retail business in India is dominated by millions of small grocery shops, mostly owned by families, trying to earn a livelihood and many of them are inherited business entities with vast experience in material sourcing and friendly consumer oriented approach. Not being exposed to modern management technology, they are often blamed for "not keeping with time", opening up opportunities for large investors to set up retail chains with regional and national foot prints. During the last two decades since the opening up of the economy several national retail chains had sprung up co-existing with the small bit players. GOI policy so far has restricted foreign investments in retailing for multi brands, supposed to be for protecting the unorganized sector from annihilation. There is a rethink on this score is reflected by the recent consultation meetings on the subject at Delhi.

"Apart from representatives from Icrier, Ficci and CII and Confederation of All India Traders, among others, the meeting was attended by an under secretary-level from the Department Of Industrial Policy and Promotion (DIPP) that released a discussion paper on opening up multi-brand retail to foreign investors. A person present at the meeting said a major issue on the agenda was discussion on ways to reduce the difference between farm-gate and consumer prices. The ministry has the industry's views on this. Economists believe opening foreign direct investment (FDI) in multi-brand retail is likely to help lower the prices of food products by reducing wastage and direct sourcing from farmers. The consumer affairs ministry sought industry and DIPP views on what are the issues in traditional retail and what can be done to address these issues. It said the govt would have a nationwide discussion on this soon. Covertly, the discussion relates to FDI in multi-brand retail. The govt is keen to allow foreign players in food grain retail also, as the leakage in PDS has become a pain in its neck. The ministry asked attendees' views on how to modernise the existing (traditional) retailers and bring them under the organised bracket so that leakages in PDS can be reduced. The industry said the suggested retail promotional board should be formed, which can train small retailers and make them understand the benefits of modern retail and also make them technology-friendly and thus transparent. "It is very positive that the government has started discussion of opening up FDI in multi-brand retail".

It is true that very little has been done to upgrade the skills and capabilities of small traders besides raising awareness amongst them about their social responsibility. The National Small Traders' Association is supposed to have a training program for these traders precisely to train them to face the competition from the retail giants expected to be a standard fixture in Indian retail landscape sooner or later. How far the program is effective, practical or successful is not known. Probably GOI must direct its attention to small traders for enabling them to modernize their operations and make them more viable and stable.


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