After that appalling “debate”
that turned out to be quite a tamasha over passing the bill of FDI in Indian parliament last week, there is still lot of noise around it.
Interestingly, arguments both by the ruling party and the opposition have been coloured with political interests. One needs to reflect and find clarity on the rhetorical question, "do we really need FDI in retail?" Why am I writing about FDI? I am not
even remotely connected with the retail sector except being a smart consumer. Well, it
seems everybody is deeply concerned with the issue. Whether you are at a party, office, social occasion or at home, people are talking about it. Even,
one of the caretakers of our house, Lata seemed deeply disturbed by the FDI retail bill!
She looked sullen and tense for few days. Last evening, she shocked me with her innocent question, “maidam, ye kiranewale ki dukaan sab band ho jayegi kya? News me bata rahe the, government koi phoren company India me la rahi hain jo chhote ganvme jaakar sabji, fal aur dhaan saste me lekar munafa karke bechenge?” (is it true that the local “kirana” stores are going to close down? I watched the news about government bringing some “foreign company" that would purchase vegetables, fruits and food grains from the smaller villages and sell it with huge profit?) Lata has studied only till 4th standard but is a very smart woman. She avidly watches the vernacular news and has strong opinions about everything under the Sun! It was quite a challenge for me to explain her what FDI in retail would mean to India in terms of economy and how it would influence our life in general. Not sure she was convinced by my brief but she is no more panicky about the "threat" lurking over the bania who allows credit for her grocery shopping and her siblings back home in village who are farmers.
She looked sullen and tense for few days. Last evening, she shocked me with her innocent question, “maidam, ye kiranewale ki dukaan sab band ho jayegi kya? News me bata rahe the, government koi phoren company India me la rahi hain jo chhote ganvme jaakar sabji, fal aur dhaan saste me lekar munafa karke bechenge?” (is it true that the local “kirana” stores are going to close down? I watched the news about government bringing some “foreign company" that would purchase vegetables, fruits and food grains from the smaller villages and sell it with huge profit?) Lata has studied only till 4th standard but is a very smart woman. She avidly watches the vernacular news and has strong opinions about everything under the Sun! It was quite a challenge for me to explain her what FDI in retail would mean to India in terms of economy and how it would influence our life in general. Not sure she was convinced by my brief but she is no more panicky about the "threat" lurking over the bania who allows credit for her grocery shopping and her siblings back home in village who are farmers.
Retail industry in India is amongst the fastest growing sectors and according to Investment Commission of India, is expected to grow three times by 2015. Organized retail in India is 8% which is very low compared to rest of the world. In India, organized retail sector caters to urban middle class consumer segment and it has evolved slowly for a simple reason that Indian households are used to flexibility and convenience of a kirana store.Then why all this hue and cry about FDI and its perceived threat to the ageold Indian kirana stores and rural economy? I am sure you remember the similar hue and cry two decades back when economic reforms started in 1991. We are all witness to how those very reforms helped India emerge as one of the fastest growing nations in the world and its sustained growth.
The entry of FDI in retail is a welcome step. However, it is neither a magic wand offering quick fix nor a doomsday conspiracy for our economy. The foreign retail companies invest hugely in logistics, supply chain enhancing required infrastructure for procuring, storing, shipping and delivering the products. If you have ever bought fresh vegetables and fruits from the farms on the highways or outskirts of any big city, you would know how farmers and many other rural producers are at the mercy of a few buyers and traders who reign over the procurement chain in most product categories and exploit the farmers. Organized retail helps bring in the necessary transparency in this process creating significant room for competition which in end would benefit the consumer. The arrival of foreign retail also opens up lot of opportunities for employment which can boost our economy. One very important factor to consider is that most retail transactions conducted in typical kirana stores are in cash. In most of the cases at such stores, tax evasion (VAT) becomes rampant and is very common. Not sure if we ever realize impact of this malpractice on our economy.
Organized retail and kirana stores both can coexist in perfect harmony as both cater to different niche. According to a research, with the advent of organized retail, the traditional kirana stores have grown substantially in past few years. With FDI entering retail in India, it would be interesting to watch how traditional kirana stores adapt to make maximum out of the opportunity the growing market provides. I am all for the organized retail as it saves lot of time and gives me much cleaner, transparent and better quality product compared to the traditional kirana store. I don't care if the lady at the billing counter knows me by my first name or exudes warmth. I need one stop shop where I have wider range of innovative products with world class quality, my shopping experience is comfortable and transactions honest.
My only concern is that Lata might ditch me for some retail job. I did see a glint of hope in her eyes when I talked about employment opportunities even for people like her who are not much educated!
Organized retail and kirana stores both can coexist in perfect harmony as both cater to different niche. According to a research, with the advent of organized retail, the traditional kirana stores have grown substantially in past few years. With FDI entering retail in India, it would be interesting to watch how traditional kirana stores adapt to make maximum out of the opportunity the growing market provides. I am all for the organized retail as it saves lot of time and gives me much cleaner, transparent and better quality product compared to the traditional kirana store. I don't care if the lady at the billing counter knows me by my first name or exudes warmth. I need one stop shop where I have wider range of innovative products with world class quality, my shopping experience is comfortable and transactions honest.
My only concern is that Lata might ditch me for some retail job. I did see a glint of hope in her eyes when I talked about employment opportunities even for people like her who are not much educated!
