retail: Walmart and corner stores can co-exist
fierce debate is raging in cyberspace over the
cost and benefit of foreign direct investment (FDI)
in multi-brand retail as the Indian government has
once again begun working for its rollout as a
‘must do’ economic reform. And most say there is
enough room for global giants like Walmart and the
unorganised small retailers to co-exist.
think there is ample room for organised
large-scale retailers such as Walmart, as well as
the mom & pop round the corner stores,” said
Sudhir Gupta, managing director at Jaipur-based
Enterprise Development Associates.
“Walmart does not give credits and they do not
deliver small orders to your doorstep… the mom &
pop store will go miles to deliver a small order;
both have their advantages and both are necessary
for a large economy,” Gupta said.
November last year, the union cabinet decided to
allow up to 51 percent foreign direct investment
in multi-brand retail. But the move was kept in
abeyance following protests from opposition as
well as some of the allies of the ruling United
Progressive Alliance (UPA), especially the Mamata
Banerjee-led Trinamool Congress.
Majumdar, professor of technology strategy,
University of Texas, Dallas, says superior
technology and knowhow would come along with the
FDI which will benefit the Indian economy.
“Indian industry has a bi-polar structure, with
room for the large/very large firms, possibly all
foreign, and small/tiny firms. In retail, the
evolution of a similar structure can be very good
for consumer welfare, assuming real prices at the
check out actually drop because of presumed
capabilities and productivity,” Majumdar said.
Majumdar, author of “India’s Late, Late Industrial
Revolution: Democratising Entrepreneurship”, said
greater competition resulting from the FDI in the
retail sector would lead to lower prices, which
will ultimately benefit the consumers and common
retail trade, if because of FDI highly productive
and innovative firms come in, and lead to a drop
in prices, it is of positive value for consumer
welfare,” Majumdar said.
Vaidyanathan, professor of finance at the Indian
Institute of Management (IIM), Bangalore, however
said small kirana stores were quite efficient and
the notion of high wastage of food products
because of unorganised retail was not correct.
neighborhood kirana person starts shop at 6 am and
closes at 10 pm, remembers each customer
requirements, gives credit if needed, delivers
home any time; he is called unorganised since he
is not a big company ready to disappoint the
shareholders or banks,” Vaidyanathan said in an
online debate at live.in.
Vaidyanathan said small business units and non-corporates
utilise capital “very efficiently” while big
business wastes it since “both bank loans and
shareholders’ money can be written off.”
Jaipur-based businessman Girdhar Bajoria said the
neighbourhood kirana stores were more efficient
than the supermarket chains.
or no FDI, with the existing supply chain being
what it is, the so-called ‘unorganised sector’ is
far more efficient! They can give a run for their
money to the ‘organised sector’ any day,” Bajoria
K Batra, secretary general, South Asian
Association for Regional Cooperation (SAARC) in
Law, emphasised the need for allowing FDI in
retail as early as possible, saying some political
parties, driven by political considerations, were
opposing the move with a “short-sighted approach”.
consumer it’s always the more the merrier, the
greater the competition, better it is for the
consumers,” Batra said.
Kishore Khaitan, chairman of the Rajasthan unit of
the Confederation of Indian Industry (CII), said
considering the infrastructure bottlenecks and
uncompetitive manufacturing sector, India was not
yet ready to foreign competition in the retail
is a real danger of a surge of Chinese imports as
India is not equipped to compete with China on
cost, in spite of the increasing wages in China,”
Pradeep S Mehta, secretary general of the
Jaipur-based Consumer Unity & Trust Society (CUTS
International), said FDI was good for the economy
and opposition to the move was based on various
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