Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 73
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 74
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
Notice (8): Undefined variable: urlPrefix [APP/Template/Layout/printlayout.ctp, line 8]latest-news-updates/devil-in-the-retail-by-lola-nayar-6654.html"/> LATEST NEWS UPDATES | Devil In The Retail by Lola Nayar | Im4change.org
Resource centre on India's rural distress
 
 

Devil In The Retail by Lola Nayar
By all indications, FDI in multi-brand retail is a fait accompli. Or so we have been told time and again by everyone, the PM downward. The “question is at what point of time it should be done”. This remark from Pranab Mukherjee in a post-budget TV interview may have revealed that the debate has moved beyond whether to permit FDI in multi-brand retailing—the lifeline of small- and medium-sized neighbourhood stores. But just how the government will do so remains a mystery.

For, it’s not just the opposition parties but also a section within the Congress that perceives a threat to the mom-and-pop stores in the vicinity of hypermarkets/supermarkets—and no gains for farmers. “We need to handle the issue very cautiously. In our experience, MNCs are initially liberal to attract consumers. Once they swallow all the small stores in the neighbourhood, they show their real face,” says K.V. Thomas, minister of state for food and consumer affairs.

Drawing a parallel with futures trade, the minister cites the example of how commodity exchanges are booking profits while rubber and guar farmers are hit by crashing prices. The view of the food and consumer ministry is critical as it has been asked to vet the responses to the FDI draft proposal of the department of industrial policy and promotion (DIPP). It is also in consultations with state governments for improving the food supply chain.

No wonder the prime minister’s office is proceeding carefully. PMO sources admit that there exist “diametrically opposite groups”. “The PMO is treading with caution as these are not things you can experiment with, as rollback after a year or two...will not be possible,” the sources point out. Instead, some sort of regulation of the sector is one of the options being explored.

So, what model can be adopted that would bring in foreign investments without raising a political storm? Initially, the talk centred around investment limits and geographical restrictions. Now, there’s a new tack: a senior industry advisor to the government indicates that “there is a move afoot to let the states (which issue trade licences) decide on the model”. Union commerce minister Anand Sharma’s support for lifting the restriction on foreign wholesale companies from selling only 25 per cent of turnover to group companies is another sign of change in the offing.

The next revised FDI guidelines are due in April. An opening could see foreign players like WalMart, Carrefour, Metro and Tesco make a bigger entry into the retail scene through Indian joint ventures, owned by big business houses.

But the nervousness at the ground level is evident. Bharath Shah of the Karnataka Chamber of Commerce and Industry cites the case of Metro Cash & Carry, which was granted a licence on January 18 to operate close to an agri wholesale market. Following protests by traders that the Metro business was a violation of the Bangalore Agriculture Produce Marketing Committee (APMC) legislation and was hurting the livelihood of over 3,000 traders, the state government cancelled the licence on February 28. This has been challenged by Metro.

There’s more. Critical of the “predatory practices” of MNCs, Shah points to what he calls the anomaly of allowing a wholesaler to sell small quantities of rice and pulses. DIPP’s FDI notification here spells out that it is the type of customer and not the quantity sold that would determine a wholesale or retail transaction. That means a wholesaler can sell even half a kilo of pulses or grains so long as it is to a trade licence-holder.

In September last year, it was reported that the Punjab excise and taxation department was investigating Best Price, the wholesale joint venture of Bharti and WalMart, for retail sales in Jalandhar through bogus wholesalers. All told, these are ample reasons for small traders to fear the arrival of more big players. Out of 175 comments received by the DIPP to the draft paper on FDI in multi-brand, 109 respondents had opposed the move. Three-fourths of the opponents are regional groups and ngos associated with millions of small traders and manufacturers.

While trader lobby CAIT (Confederation of All-India Traders) is still banking on the prime minister’s “promise” of not permitting FDI in multi-brand retailing, it now seems that political pressure may swing the final decision soon. As Suman Bery of NCAER states, “The recent inflation trend does provide an opening that we need immense investment in retail supply chains.” The search then continues for a politically savvy solution for the Holy Grail of FDI.