51 percent FDI? Not interested: Retailers
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Bangalore: The government of India considers 51 percent of FDI in multi brand retail. Opening up of the retail sector is not an easy game-play for the government. The industry is giving a mixed reaction to the proposal. While a lobby of retailers are appreciating the platform that would be provided to the foreign entry in the Indian business arena, the other section of retailers, which remarkably is huge in width, feels that Indian retailers would be left as mere puppets with their strings controlled by foreign management who would have an additional share of two percent compared to their Indian partners. Threatened existence of traditional retailers would be further challenged. According to the department of Industrial Policy and Promotion (DIPP), Foreign Direct Investment (FDI) inflows as on September 2009, in single-brand retail trading, stood at approximately $47.43 million. Given that India's retail market is the fifth largest retail destination globally, it continues to be among the most attractive for global retailers. Chandrakant Sanghvi, Chairman of Foreign Trade Committee, Federation of Associations of Maharashtra said, "We have been fighting against the FDI entry in retail for the last 10 years. It's not required because the profit made by these MNCs will be transferred to their own country, second a large number of retailers in India would be displaced. The government must know that countries like the US, UK and Canada had to pay huge cost of allowing the entry of MNCs in their markets. In the US especially in the year 1960, retail was dominated by street corner retailers who constituted 95 percent of the industry, but with retails like Wal-Mart and others coming in almost 70-80 percent business of small retail businesses were taken over. Similar scenario is impending for Indian retail." Sanghvi says that FDI would wash away the 1.25 crore small stores in the country and the 15-20 crore people directly or indirectly depended on them would be deprived of livelihood. The proposal is also unfair to a large section of Indian population which resides in villages. The MNCs or the organized retail corporations are not able to cover this population because of reasons like poor infrastructure, operational difficulties, and remoteness of markets. For the affluent class too, organized retail markets are more a place of family hangout for exotic buying and the regular shopping is strictly depended on the nearby kiranas. It is also apparent that it takes a lot of time and money for an organized retailer to show decent profits in Indian market conditions. This is probably the reason that some of the big names in the organized retail are comfortable with the idea of foreign money coming in India, feels Kumar Rajagopalan, CEO, Retailer's Association of India. He says, "FDI coming in is a welcome step as it would bring in players who understand the retail business and also the funds and technical know-how to the sector." RAI has been demanding FDI in multi-brand retail during the last two years.

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