KOCHI: Merchants in Ernakulam are opposed to foreign direct investment (FDI) in the retail sector. The Union Government has given the green signal for the arrival of single-brand retail in the country. The merchants are of the opinion that the decision will have a far-reaching impact on the economy of the country in general and traders in particular.

The Ernakulam Merchants' Union has several apprehensions on the proposal. The arrival of big foreign entities into the retail scene will adversely affect small and medium retail businessmen, says Noor Mohammed Mather, president of the union.

The strategy adopted by big foreign retailers will ultimately crush local businesses. The big players enter the consumer market by drastically reducing the prices of products. Once they dominate the market, the prices are increased unilaterally, hitting the common man very hard, he adds.

This apart, the FDI can affect the manufacture of a variety of products. Today, various substitute products are available in the market. Once the foreign retail agents hold sway over some products, the consumer support base of substitute products gets weakened before ultimately being wiped out of the market. Thus, the initial euphoria in the arrival of biggies will turn out to be a cause for mass unemployment and reduced purchasing power. The FDI in retail will also hit the rural masses as much of the buying done by the rural populace is in city centres because of the price advantage, he says.

Karthikeyan, a spare-parts merchant, says that the present retail chain consists of cargo handling agents, distributors, dealers and sub-dealers. Once the retail MNCs start operations, the existing set-up loses its relevance. This will devastate the occupational base of a large section of people. Even bricks and sand will be available in their marts, thus depriving the ordinary labourers of their livelihood, according to him. The prices will be low initially, but the established brands will dictate terms once they gain hold over the consumers, he says.

Some of the foreign business groups have already surveyed the scene and is getting ready for a foray into the market.

K. Venkitesh Pai, general secretary of the union, says that a majority of retailers in Kerala are small businessmen. Overseas retailers have annual turnovers exceeding the budget outlays of several States. Such huge entities can break the retail set-up in India. The profit they make out of their operations in India will not be spent within the country, Mr. Pai adds.

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