Sunday, Dec 07, 2003
Sunday, Dec 07, 2003 |
| Business | ||||
|
News:
Front Page |
National |
Southern States |
Other States |
International |
Opinion |
Business |
Sport |
Miscellaneous |
Advts: Classifieds | Employment | Obituary | Business
By Harichandan A. A.
The petitioners — grocery store owners, workers, and other local retailers — were worried that Metro's two `cash and carry' outlets on the outskirts of the city, were only the beginning of the end of their business. When Metro said it only sold to retailers here, and not directly to retail customers — not allowed under extant rules governing foreign investment — the traders were simply not convinced. The `MNC' had issued `membership cards', they said, `to some two lakh people many of whom were simply retail customers, including employees of IT companies in the city'. One member of an `action committee' of grocery store owners formed with the express purpose of dealing with Metro said the `MNC' would `directly hit on our bellies'. Metro AG, represented by former Union Finance Minister, P. Chidambaram, has maintained that it was not doing any retail business, but was sticking to the terms under which it was allowed entry into the market: sell B2B, after verifying sales tax registrations, among other things. So, was Metro AG breaking the law or even bending it? The courts will decide that. Will allowing FDI into the retail sector in the country hurt local traders and employment? `Yes', insist a host of people. Apart from the traders, these include activists from political organisations such as the Swadeshi Jagran Manch. Its National Convenor, Muralidhara Rao, made a vehement anti-Metro presentation to the Federation of Karnataka Chambers of Commerce and Industry recently. Mr. Rao said that `our market is an asset' which could not be `sold away to multinationals'. The result he said would be catastrophic, the wiping out of the country's `kirana' shops and with that, the livelihood of millions of poorly educated workers with no alternative sources of income. Grocery shop owners were not the only ones worried, as Metro sold a whole range of non-food items, at a markdown of up to 30 per cent. These include washing machines, refrigerators and laptop computers. There are industry voices also against FDI in retail trade: One member of a small scale industry association said that organised retail at 2 per cent of the total retail market in the country had not hurt small and medium Indian retailers precisely because of the small share. Globally, the experience was, as the chains gained market share, the independent small stores went away. In Western Europe, large retail chains with deep pockets were responsible for some four lakh small retailers closing down, he said. Results of an AC Nielsen study for the period 1993-99, published in 2000 showed `independent retailers' declined by 21 per cent while `multiple retailers' increased by 18.5 per cent. Thailand and Malaysia, which allowed FDI in retail trade, had to pass laws to stop the uncontrolled expansion of large foreign chains. Thailand had to create funds to rehabilitate small retailers, after `foreign chains acquired' 40 per cent share of the Thai retail market. The Wall Street Journal financial daily reported four months back that China was looking at passing laws to check indiscriminate spread of large multinational retail chains, in the country.
Ranged in the opposite camp are those who say, at $180 billion and growing, the Indian retail market was robust and attractive. Organised retail, at 2 per cent, is expected to reach 10 per cent by 2010 — over $20 billion, allowing for growth of the total market. So a ban on FDI in retail hadn't stopped MNCs: While Metro got a kind of publicity it didn't need, other MNCs have chosen different routes. The U.K.'s Marks & Spencer and South Africa's grocery store chain, Shoprite, are here through franchises. One economist put it like this: "We have a large and growing urban population. People are moving to suburbs, buying cars and are therefore willing to travel a bit to a large store where they can get everything under one roof, for good prices". Food, accounting for 70 per cent of the retail market, had cast the `kirana' shop as David, against Goliath's impersonal but efficient chain store. The community store, where the grocer knew his customers by name was as much a tradition in the U.K., as it still is in large parts of India. In the U.K., large supermarket stores made the corner shop an endangered species. Many fear that it will now happen in India, on a much larger scale. Was the fear well founded? Will small shop owners continue to find it difficult to get good bank credit to expand and compete? "Would it be okay if a large Indian retail chain forced a number of corner shop grocery stores out of business?"
Printer friendly
page
News:
Front Page |
National |
Southern States |
Other States |
International |
Opinion |
Business |
Sport |
Miscellaneous |
|
|
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2003, The
Hindu. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu
|
