first post ebook the battle for retail ebook 20111202060049

8/3/2019 First Post eBook The Battle for Retail eBook 20111202060049

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The Battlefor

Retail


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What is FDI in retail?

Retail battle: Its nally about politics and numbers, not FDI 04

FDI in retail: Why it works for everyone 06

FDI neprint: Easing FDI doesnt ease problems plaguing retail 08

The verdict

FDI in retail: Why the politicians are illogical, and have got it wrong 11

Dont pity the kirana guy, he knows how to ght back 13

Economy, not kirana shops, is biggest loser in retail FDI debate 15

Why the kirana dukan doesnt care about Big Brother 17

GOVERNMENT

FDI in retail distinct and different: Sharma

Out on a limb: Govt says FDI in retail will immensely benet farmers

PUBLICReader debate: Is FDI in retail bane or boon?

INDUSTRYIndia Inc appeals political parties to support FDI in retail

India Inc divided over FDI in multi-brand retail

OPPOSITIONFDI in retail: Opposition, allies term it anti-people

Will not allow Parliament to function until FDI in retail is withdrawn: NDA

FarmersWhy some farmers are relieved to be dealing with Wal-Mart

AcademicsRetail FDI: The merits are over-hyped, say academics

Will FDI last?Cong meets over FDI in retail: Is a rollback on the cards?

The world is waitingFDI nod given, global retailers wait for more clarity

All sides of the debate


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What is

in retail?

FDI


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CPIs Gurudas Dasgupta said, The mattershould be reconsidered by the government.They have to withdraw the FDI decision andthen we will discuss.

We want a discussion in Parliament on ouradjournment motion on FDI in retail. Why isgovernment running away from a discussionfollowed by a vote in the House? said leader ofOpposition in Lok Sabha, Sushma Swaraj.

The resolution submitted for adjournment mo-tion is non-negotiable. The government shouldeither withdraw FDI in retail or agree to an ad-

journment motion to discuss the matter, seniorBJP leader SS Ahluwalia said.

Of course, the government cannot allow that.

It cannot afford to be seen ruling without anymoral authority. It has the option to back outfor now and take up the issue later. But it wouldamount to loss of face. Moreover, there is noguarantee that the other important and equallycontentious bills would not face similar resist-ance when they come for discussion.

Finance Minister Pranab Mukherjee and PrimeMinister Manmohan Singh are not keen on

going slow. On Tuesday, Singh, speaking at theYouth Congress convention, put up a stout de-fence for reform in the retail sector.

We have not taken this decision in any hastebut after a lot of consideration. It is our rmconviction that the decision will benet ourcountry It will get us modern technology, notlet crops get damaged, get farmers good pricesand bridge gaps, he said, hinting that he isready to ght it out. That Congress chief SoniaGandhi has not intervened in the matter sofar is clear indication that the party is keen onghting it out. Efforts are afoot already to bringin the numbers.

The DMK, though opposed to the governmentsproposal, has already announced that it would

back the UPA if theres a voting on the issue. Ifthe Congress manages to convince the Trina-mool Congress to shed its hard line position, itcould risk a voting. Getting Congress members

opposed to the bill would not be a big problemfor the party.

The government could dilute its present propos-al with retailer-friendly changes to allay fears inthe political class as an option. It might increasethe limit for procurement of goods from smalland medium enterprises by big retailers fromthe present 30 percent to 40 percent.

However, it is more of a battle for the numbersnow than for the retail sector.

The Congress is hell-bent on pushing through its proposal for foreign direct investment (FDI) in retail. PTI


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After years of dithering, the governmentnally eased up on foreign investmentrules in Indias booming retail sector.

...................................................................................

will the traditional mom-and-pop stores wither

away in the face of competition? The chances are

unlikely, because, at the end of the day, those that

evolve with the changing market will surviveCiam

endus rehenim fugitat lique rehent eaquodis

repudan dandunt ionsequ iasitatiam

.........................................................

On late Thursday evening, the government an-nounced that it would allow 51 percent foreigndirect investment (FDI) in the multi-brand re-tail segment and raise the cap on foreign invest-ment in single-brand retailing to 100 percent

from 51 percent.

Multi-brand retail companies are those that sella variety of products under different brands,like supermarket and chain store operators.Examples of such companies include Wal-Martand Frances Carrefour. Single-brand retail arecompanies that sell products under one brand,such as Nike or Levis.

As expected, the announcement cheered the

organised retail industry; various companyofcials had been urging the government for along time to liberalise investment norms in thesector.

Indias retail market is worth an estimated $450billion, with more than 90 percent accountedfor by millions of mom-and-pop (kirana) stores.Organised retail makes up about 5-10 percent ofthe market.

So who gains?The biggest gainers will, obviously, be local or-ganised retail players as well as multinationals

whove been eyeing a foothold in this market fora long while now.

Not surprisingly, in the equity markets, retailstocksPantaloons Retail, Shoppers Stop andKoutons Retailended between 6 percent and12 percent higher at the end of trading yes-terday, as expectations mounted that the FDIproposal would be approved.

The easing of FDI norms will come a big re-lief to these companies because the fact is thatmost of them are actually struggling with dif-ferent nancial problems and will be more thanhappy to ink a deal with a partner who can

bring in some badly-needed cash.

For instance, the Future group, one of Indiasbigger organised retail players and owner of the

Big Bazaar chain of outlets, has debt of about Rs4,300 crore, according to The Economic Times,and is scrambling for ways to reduce that debt.Tie-ups will help improve investments in in-

FP Editors Nov 25, 2011

FDI in

retail:Why itworks

for

everyone
http://www.firstpost.com/business/fdi-in-retail-cabinet-approves-51-in-multi-brand-100-in-single-brand-139770.htmlhttp://www.firstpost.com/business/fdi-in-retail-cabinet-approves-51-in-multi-brand-100-in-single-brand-139770.htmlhttp://economictimes.indiatimes.com/news/economy/policy/fdi-in-retail-indian-retail-consumption-story-yet-to-begin-in-its-full-glory-says-kishore-biyani-ceo-future-group/articleshow/10863535.cmshttp://economictimes.indiatimes.com/news/economy/policy/fdi-in-retail-indian-retail-consumption-story-yet-to-begin-in-its-full-glory-says-kishore-biyani-ceo-future-group/articleshow/10863535.cmshttp://www.firstpost.com/business/fdi-in-retail-cabinet-approves-51-in-multi-brand-100-in-single-brand-139770.htmlhttp://www.firstpost.com/business/fdi-in-retail-cabinet-approves-51-in-multi-brand-100-in-single-brand-139770.html


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frastructure, especially cold storage facilities,according to analysts quoted by Business Stand-ard. In fact, these arrangements could alsocontribute to lower food ination in a countryin which up to 40 percent of fresh produce is

wasted because of poor storage systems.

The decision to allow FDI in multi-brand retailis expected to be announced formally in Parlia-ment today, and is expected to include riderssuch as a minimum investment of $100 millionto start retail operations in the country; 50 per-cent of that will have to be invested in back-endoperations such as food-processing units and

warehouses and supply chains as well.

There could also be restrictions on where retail-ers can open stores companies may only be al-

lowed to open stores in cities with a populationof more than one million.

According to experts, none of these presentany signicant hurdle for international retail-ers, who, struggling with saturating developedmarkets, are on the hunt for higher growth inemerging markets such as India, China, Russiaand Brazil.

More choices for consumers

Multi-national companies such as Wal-Mart,Carrefour, Metro and Tesco are already presentin India, but only in wholesale operations. Thatmeans they can only sell to bulk buyers such ashotels and other retailers.

Dont expect them to come sprinting into theretail segment in a hurry. Most experts believe

that it could take up to 12 months before a for-eign retail giant actually opens an outlet in theIndian market, given the investments needed inthe supply chain.

Plus, as The Economic Times notes, retailtrade is a state subject, which means all regula-tory approvals and clearances have to be pro-

vided by state governments. Not all of them willbe in a mood to oblige, considering there is stillstiff political opposition to 100 percent FDI.

Of course, there will also be the usual cries offoreigners will take away market shareand

jobsfrom Indian companies. That oppositionmight delay some plans for foreign companies.

The question to ask here is, will the traditionalmom-and-pop stores wither away in the face ofcompetition? The chances are unlikely, because,at the end of the day, those that evolve with thechanging market will survive.

In addition, it still remains to be seen whetherIndians will actually shop at Wal-Mart anddesert their local around-the-corner stores,

which offer facilities of home deliveries and ex-tended credit periods to regular customers.

As Firstpost pointed out on Thursday, we re-ally shouldnt worry too much about the kiranashops. They are good enough to take care of

themselves. Just allow investments to come in they would in all probability make neighbour-hood shops still smarter and more efcient, thearticle noted.

So, hello Wal-Mart, Carrefour. Bring it on.
http://business-standard.com/india/news/too-early-to-celebrate-for-pantaloon-retail/456608/http://business-standard.com/india/news/too-early-to-celebrate-for-pantaloon-retail/456608/


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Shishir Asthana Nov 25, 2011

Is the market rejoicing the cabinet ap-proval for retail FDI (foreign direct invest-ment) a bit too soon? The ne print of the

proposal suggests so.

The Cabinet on Thursday approved 51 percentFDI by multi-brand retail companies and raisedthe limit for single-brand retailers to 100 per-cent from 51 percent.

Narayanan Ramaswamy, executive director,KPMG India, was quoted by Bloomberg as say-ing that the the moves offered one of the big-gest opportunities in the world right now. A$450 billion retail market has been opened forforeign investment.

Retail stocks have shot through the roof afterthe proposals received cabinet approval. Pan-taloon surged 16 percent higher, while VishalRetail hit the upper circuit of 20 percent at Rs

22.70. Trent is trading 9 percent higher at Rs1,064. Even single-brand retailers like Koutonsand Provogue have gained.

However, there is very little reason for single-brand stocks to go up. First of all, they have notbeen able to garner any FDI even when the limit

.....................................................................................

The move will benet farmers as they will get a

benet of better realisations. The few retail chains

that sell farm products, no doubt, sell their prod-

ucts at lower- than-market prices

.....................................................................................

was 51 percent. Secondly, with 100 percent FDIin the sector, these companies will be faced with

increased competition as foreign brands willnow be setting up outlets next to theirs.

As for multi-brand retailers, a number of issues

doesnt easeproblems plaguing retail

FDI fineprint: Easing FDI


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still remain to be tackled. The rst is that indi-vidual state governments have the power to vetoforeign retailers. Along with the opposition,even some members of the ruling Congress haveopposed the move. That leaves the market openfor investment in only a few states.

The second problem is the issue of the 51 per-cent stake in these companies. Currently, mostof these companies have stretched their nanc-es. Take Pantaloon for example, interest outgoaccounts for over 60 percent of its operatingprot, leaving very little free cash for growth.

A strategic investor (read a big retailer) will beunlikely to invest in such a company becausehis money will probably be used for paying offexcess debt without creating any new capaci-

ties. Also, they will be more willing to invest 51percent and take control of the operations. Veryfew Indian promoters, in contrast, will be will-ing to relinquish management control. Panta-loon, in fact, has a poor track record of manag-ing joint ventures.

Anand Sharma, minister of commerce andindustry, in his press conference said that themove will benet farmers as they will get a ben-

et of better realisations. The few retail chainsthat sell farm products, no doubt, sell

their products at lower- than-market prices;however, their procurement strategies are evenmore aggressive than those employed by tradersof the Agriculture Produce Market Committee(APMC). So its extremely unlikely that farmers

will actually benet from the FDI investments.

The only way the huge gap between the price atthe farm gate and at the shop can be bridged is

by allowing the farmer to sell his own produce.Currently, they have to pay a deposit of Rs 1crore, just to get a licence to sell in the bigger

APMCs.

But agriculture traders will ensure that farmersnever get the opportunity to sell on their own.In the past, some stores of Reliance Retail were,in fact, ransacked by traders, forcing the com-

pany to shelve their expansion plans in certainstates.

Players who, however, are just setting up theirretail chains or are in the nascent stage ofgrowth like Bharti will benet from this FDImove. In the case of current players, they can at

best hope to rope in a private equity player topick up a sizeable chunk of their equity.


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Chapter: 1

The verdict


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FDI in retail: Why the

politicians are illogical,

and have got it wrongFP Editors Nov 28, 2011

So much has been written and saidabout allowing 51 percent foreign directinvestment in multi-brand retailing. Over

the weekend, politicians have been frothing atthe mouth over the job losses and destructionto the local retail industry the central govern-ments decision will entail.

Frankly, those arguments seem more driven bypolitical expediency than any economic logic.

According to a PTI report, 28 out of 53 citiesare expected to place hurdles to foreign retailerssetting up shop. Thats because these cities arelocated in 11 states ruled by political parties op-posed to the decision to ease FDI rules in multi-

brand retail.

........................................................................

We have every kind of foreign retailer in thecountry. Consumers can choose to have a

Pepsi or a Thums Up, a coffee from Barista

or Cafe Coffee Day or ice cream from Amul

or Baskin Robbins. No foreign company has

managed to come into India and wipe out

the entire competition.

........................................................................

Tamil Nadu J Jayalalitha has already

announced that she will not allow for-eign retailers into the state; so have UttarPradeshs Mayawati and Bihars NitishKumar. The cities in which global giantslike Wal-Mart and Carrefour might not

be allowed entry include Bangalore, Kolkata,Ahmedabad, Patna, Allahabad and Bhopal.While the central government gave the nod tothe FDI proposal, retail trade is still a statesubject and, therefore, the nal authority togrant licenses and clearances still lies with state

governments.

The biggest argument against liberalisation ofthe multi-brand sector is that there will be a

wholescale loss of jobs and foreign retailers willcharge in and crush the business out of the localneighbourhood, or kirana, stores.

A must-read opinion piece in The EconomicTimes by Rama Bijapurkar offers some interest-ing counter-arguments.

One, given the condition that foreign retailerscan only open outlets in cities with a populationof one million or more, more than 75 percent ofIndias eight million consumer-goods stockingkiranas will be protected from the foreign inva-sion, since they are located in rural India.

Two, for those claiming an adverse impact onthe growth of the local industry (more than 90percent of the industry is accounted for by kira-na stores), the fact is kirana stores are alreadynot participating in the growth offered in newersettlements like Gurgaon or Powai, because

without their advantage of historically-pricedreal estate, they are not viable.Three, the concerns about loss of jobs in thesector seem overblown. The truth is, a younger


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generation of better-educated Indians are in-creasingly looking to branch out of their fam-ilys retail business and are themselves lookingto exit sitting in the shop, just as farmersschildren are exiting farming.

Four, most hypermarkets and supermarketstypically cater to upper middle-class consumers.Foreign retail outlets are likely to open up a newmarket segment, not take away custom fromexisting ones.

Firstpostalso recently argued that there reallyis no reason to pity the kirana store, becausethey are pretty capable of taking care of them-selves. Indeed, most marketing experts ac-knowledge that they offer some advantages thatsimply cannot be matched by the best and the

biggest of foreign giants, including the provi-sion of door-to-door delivery, extending creditto regular customers and delivering even thesmallest of orders.

What about consumers?

In addition, in this whole debate of kiranastores versus foreign retailers, why does noone seem to care about what Indian consumers

want?

Consumers have the right to choose if theywant to visit Wal-Mart or the local kirana store.Chances are, theyll patronise both. The point is,they, not politicians and producers, should de-cide who they want to buy their groceries from.

The local retail industry is too well establishedto be wiped out by foreigners. In fact, if any-

thing, it should make the sector stronger.

Today, apart from the foreign multi-brandretailer, we have every kind of foreign retailerin the country. Consumers can choose to havea Pepsi or a Thums Up, a coffee from Baristaor Cafe Coffee Day or ice cream from Amul orBaskin Robbins. No foreign company has man-aged to come into India and wipe out the entirecompetition.

In retail stores, youll nd products from Nestleand Hindustan Unilever sitting besides thosefrom Godrej Consumer Products and Dabur.Competition forces companies to evolve andadapt to consumer tastes. Those that learn todo that survive, whether they are local or for-eign. If Indians nd they dont like shopping at

Wal-Mart, they wont. And if were afraid thatsuppliers might be squeezed by giant foreign

retailers, we need to create rules to prevent thatfrom happening, not stop foreigners enteringthe market altogether.

Two decades ago, we heard the same criesagainst liberalisation of the Indian economy.

Well, 20 years on, most of Indian industry hassurvived and even thrived. In fact, our IT indus-try, one of the most exposed to global competi-tion, ranks among the best in the world.

Certainly, a few industries have fallen by thewayside but those were the ones that failed toevolve with the changing times.

The hue and cry about foreign retailers is morereective of a political mindset resistant tochange, and unbecoming of a nation aspiring to

become an economic superpower.

So, let the foreigners come in. And may the bestlocal and foreign retailers win.
http://www.firstpost.com/business/don%E2%80%99t-pity-the-kirana-guy-he-knows-how-to-fight-back-139760.htmlhttp://www.firstpost.com/business/don%E2%80%99t-pity-the-kirana-guy-he-knows-how-to-fight-back-139760.html


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Dont pity the

kirana guy,

he knows how

fight backAkshaya Mishra Nov 24, 2011

Never underestimate the resilience of

the kirana shop owner. Rest assured,competition wont kill him.

The hullabaloo over 51 percent FDI in multi-brand retail is a bit off-focus. The argumentis that it would bring global players with deeppockets such as Walmart, Carrefour and Tescointo the picture and subsequently drive theneighbourhood mom-and-pop stores out of themarket.

The apprehension was similar, though far lessintense, when the country went for 51 percentFDI in single-brand retail in 2006. The localplayers there are more than 14 million ofdifferent shapes and sizes have not gone outmarket; they have instead, turned smarter and

better.

If FDI in retail sector is allowed, small traderswill lose their jobs as their products or services

will not be able to compete with foreign trad-ers, said senior BJP leader Murli ManoharJoshi. Both the contentions dont wash.

Despite the emergence of domestic organised

retail activity kirana shops at street corners still

account for 90 percent of $590 billion retailtrade in the country. And theres no possibilitythat they could be replaced easily.

...................................................................................

It is not easy to compete to with the kirana stores.

Just because you are a big guy with a lot of money,

it doesnt mean that you can compete. Kirana stores

have a lot of benets that established retailers dont

have

.....................................................................................

Despite the rise of the modern trade in thecountry, the traditional kirana store too contin-ues to be strong. The main factors driving thisstrength are the convenience of access, avail-ability of home delivery, and trusted relation-ships between the shopper and local grocer,says the latest Nielsen Shopper Trend IndiaReport.

On whether they could stand in competitionwith foreign traders, it could be said that theyface the same threat from the organised retailsector in the country and so far, they havemanaged to hold their own, remarkably well.


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According to the Nielsen study, shoppers alsoperceive that they get better price value fromtheir local grocer.

No competition can take away the advantageskirana stores enjoy. Proximity is one of them.

Where do you rush for a shaving blade whichyou need fast to get ready for ofce? Where doyou run to when you realise that you need apacket of milk immediately? To the kirana storeround the corner, of course.

Theres no standing in the queue and no needto carry the money immediately too. The air ofinformality is something special to our kiranastores. The manufactured suaveness of the su-permarket cannot just compete with it.Customer loyalty is something the kirana store

can always bank on the small customer baseand scope for personal interaction ensures that.Supermarkets will never have that unique ben-et.

The kirana stores have a lot of advantages vis-a-vis the established rms. From the conven-ience standpoint, kirana stores are not goingaway at all, actually. To the extent that they

help you take care of the daily needs, thatsan opportunity that will still be there for thekirana store,Rajiv Lal, Stanley Roth, Senior Professor of Re-tailing at Harvard Business School, toldDNA.

It is not easy to compete to with the kiranastores. Just because you are a big guy with alot of money, it doesnt mean that you can com-

pete. Kirana stores have a lot of benets thatestablished retailers dont have rst of all,location. What rents do they pay versus whatestablished companies have to pay? Employ-ees, same story, he added.

And they are keeping up with the times and in-novating too. Theres quick home delivery (theamount of purchase is not important here), you

can place your order on the phone and yes, theshop owner is trying to make the shelves lookpresentable too.

So dont worry about the kirana shops. They aregood enough to take care of themselves. Justallow investments to come in they would inall probablity make neighbourhood shops stillsmarter and more efcient.
http://www.dnaindia.com/money/interview_it-is-not-easy-to-compete-with-kirana-stores-rajiv-lal_1416054http://www.dnaindia.com/money/interview_it-is-not-easy-to-compete-with-kirana-stores-rajiv-lal_1416054


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Venky Vembu Nov 25, 2011

Uma Bhartis

demonisationof Wal-Mart

is

self-serving

BJP leader Uma Bharti has respondedto the proposal to permit FDI in multi-

brand retail stores with her character-istic subtlety of expression. She will, she says,personally set re to any Wal-Mart store thatmay set up shop anywhere in India.

Her party says it opposes multinational retailgiants because they will suck up the business ofsmall, neighbourhood stores and create unem-ployment.

At the other end of the political spectrum, theLeft parties too have opposed the FDI in retail

on ideological grounds.

Wal-Mart is of course a lightning rod for criti-cism and ideological bashing in many parts ofthe world, not least in the country of its origin,

the US. Much of this criticism relates to its busi-ness and labour practices and wage policy, andon at least a few counts, the criticism is justied.

Uma Bharti, president of India's Bharatiya Ja-nashakti Party (BJSP), addresses a public rally .Reuters

But in equal measure, some of the grounds onwhich Indian political leaders criticise Wal-Mart dont apply in an Indian context or if

they do, the criticism is entirely without merit,and serves only to keep the parties own gravytrains running.

For instance, the BJPs criticism that the Wal-Marts of the world will suck up the business ofkirana stores is, as Firstpost has argued, an ex-aggerated fear. It brings to mind the campaignagainst KFC in the late 1990s by the anti-glo-

balisation leader from Karnataka, MD Nanjun-daswamy, which too fed on the swadeshi senti-ment momentarily, but has since been proved

wrong. The advent of multinational fast-foodjoints hasnt exactly wiped out the famed Udupirestaurants, as had been feared.

In fact, a 2008 study by Russell Sobel andAndrea Dean at West Virginia University estab-lished that contrary to popular belief, Wal-Marthad not caused any signicant harm to the tra-

ditional, small mom and pop business sector.Even if, as happened in some cases, the entry ofa specic Wal-Mart store caused some individu-al, small mom-and-pop businesses to fail, thesefailures, the researchers concluded, were

completely offset by the entry of other newsmall businesses elsewhere in the economy.

On this count, the BJPs opposition appearsonly calculated to protect its own constituency

of traders.

Likewise, the advent of multi-brand retail out-lets will, if anything, open up jobs in the service

...............................................................................

Sure, Wal-Mart is no corporate angel. But the

opposition by the BJP and the Left to its entry

reects an anachronistic political posturing.

.............................................................................


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sector and help facilitate a cold-storage chainthat will benet the farm sector.

Similarly, the Left parties opposition to the en-try of the Wal-Marts of the world springs prin-cipally from the fact that Wal-Mart has a policyof not permitting labour unions. (That policyhas, of course, been violated in China, where

workers are unionised under the ofcial andfar from independent labour union, as one ofthe conditions for Wal-Mart to operate in thatcountry.)

But the Left has already lost that battle overunions in the IT sector in India, which perhapsaccounts for the sectors good showing.

While labour unions may have served a social

purpose in an earlier time when workplaceswere a lot more exploitative, given todays la-bour dynamics where skills are in enormousshortage and skilled workers can vote with theirfeet the demand for unionisation is in a bearmarket. Having missed its gravy train, the Leftis clutching at straws on this one.

Its one thing to argue in favour of protectingones interests when one permits the Wal-Martsof the world to come in. But the grounds on

which the BJP and the Left have opposed theproposal in its entirety and in the BJPs case,invoking incendiary language is blatantly self-serving.

Their language of demonisation of the Wal-Marts of the world is an anachronism that haslong outlived its political utility.


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Lets face it: Big Brother as far as thekirana is concerned has been here forsome time now, and is here to stay. For-

get, for the moment, the nuance of who ownsthe organised retail outlets; they already existand do not bother the kirana a whit.

To understand why, I thought Id take a look atwhere my neighbours and I buy our daily re-

quirements from. I stay on Mount Mary Road,in Bandra, Mumbai, about halfway up a hill.Bang opposite the building, Vindhyachal, is thearchetypical kirana shop, about 30-40 squarefeet. Its here that all of us buy immediate needs bread, butter, eggs, biscuits, milk, tea, cof-fee, water, soda, beverages, juices, dahi, soap,shampoo, detergents, a ball-point pen, pencils,

batteries, candles, etc. You get the drift. All theday-to-day stuff.

You get condoms, too, of course.

The shop is open from about 6.30 am to mid-night, which is wonderfully convenient if, as

I often do, you run out of cigarettes or need afew sodas and Cokes at short notice when unex-pected guests drop in. Or packs of playing cardsif the old ones get sticky halfway through the

bridge session.

...................................................................................

Alcohol? Jude Wines is on my speed dial and deliv-

ers within 20 minutes. Oh, and they can supplyPerfect ice and cigarettes as well.

Theres no real need for me to go to organised

retail. With the solutions that are available, Ive got

a kirana across the road that works in all the hours

that matter to me.

..................................................................................

And you dont even have to leave the house. Youcall the watchman on the intercom, he strollsacross the road, picks up the requisites, hands itover to the liftman who rings your doorbell.

What about the payment, you ask? Thats the

Why the

kirana dukandoesnt care about

Big BrotherAnant Rangaswami Nov 29, 2011


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magic of the kirana, the extraordinary under-standing of consumer needs and wants. You getcredit. Some square up the next time they godown, some do it once a week (every Sunday ismy pattern), some once a month.

My neighbourhood kirana doesnt stock pulses,rice, imported toiletries, vegetables, and so on.For such needs, we can walk down to Patels,

which is about 500 metres from the building.Theyve got everything that one might needfor daily consumption that my kirana doesntstock . Or, of course, if Im super organised, wecan call and have them delivered. If one doesnt

want to pay the premium for the fruit and veg-etables at Patels, make a longer trudge to Palimarket. Lazy? Call the vendors they all havemobile phones and they all deliver.

Medicines? Walk down to Asian Chemist. Orcall them, they deliver, too.

Alcohol? Jude Wines is on my speed dial anddelivers within 20 minutes. Oh, and they cansupply Perfect ice and cigarettes as well.Theres no real need for me to go to organisedretail. With the solutions that are available, Ivegot a kirana across the road that works in all

the hours that matter to me, Ive got a medi-cal store, an upmarket kirana in Patels and analcohol shop accessible on phone and homedelivery.

Organised retail in the sense that it is being spo-ken about today promises bigger and better and possibly cheaper. But to truly benet fromthese megastores, its buying in higher volumesthat will matter. Buy two of something, get onefree. Buy a case of a beverage, get 3 bottles free,and so on.

But for all those who live in Mumbai or,indeed, in any large city, where is the space athome to store all the stuff youve got to benetfrom the deals?

As importantly, all the shopping Ive describedcan be done by me without having to travelhalfway across town. There are two attendantcosts to this the cost of the travel and the cost

of the time taken.

Of course, one will go to the mega store everyonce in a while and spend money one doesnthave on things one doesnt need. But I cant seehow Ill manage without my kirana-across-the-road, Patels, Asian Chemist and Jude.

Theyll all survive. Theyll prosper and ourish and no amount of FDI will change that.


19/48

Chapter: 2

sides of the debate:

GOVERNMENT


20/48

Unfazed by a storm of protests overallowing 51 per cent FDI in multi-brandretail, the Centre today said the new

policy is distinct and different and interest ofsmall retailers has been taken into considera-tion.

The FDI policy is distinct and different and hasthe Indian signature, Commerce and Indus-try Minister Anand Sharma told reporters inChennai. The interest and sensitivities of smallretailers have been taken into consideration andthey are part of the policy embrace, he said

when asked whether the government would takesteps to allay fears over the measure, which hasdrawn sharp reactions from the political partiesand retailers.

Sharma said the political parties would cer-tainly realise the benets of the governments

bold move, and added that such opposition wascommon. He recalled that previous Congressgovernments in the 80s and 90s, led by the late

Rajiv Gandhi and late P V Narasimha Rao had

gone ahead with reforms in IT and communica-

tion and economy, only to reap benets now.

The minister said the government has notrushed the FDI policy and it took one year and

10 days before it reached a committee of secre-taries, after intense consultations with states,retailers, industries and farm associations andother stake-holders.

...............................................................................Holding that only 53 Indian cities with a popula-

tion of 10 lakh and over would attract FDI propos-

als by virtue of the policy provisions, he assured

that small retailers would not only coexist with big

players, but also grow by 13 per cent in the coming

years.

.....................................................................................

The government came under a sharp attackinside and outside Parliament over its decisionto open the multi-brand retail to foreign invest-ment. The criticism came not only from the

Opposition but also from Trinamool Congress, akey UPA ally at the Centre.

Sharma insisted that the decision on FDI wasnot an overnight policy and said no policy roll-

out would be without opposition and criticism.He added that a sincere effort had been put in totake on board concerns of all stakeholders.

Claiming that the decision would help farmersand consumers alike, he said peasants were notgetting remunerative price for their produce.

Sharma

FDI in retail

distinctand

different:

PTI Nov 26, 2011


21/48

The policy envisages to bring down post-harvestlosses and aims to create better rural infrastruc-ture like cold storages, Sharma said.This was an enabling policy, wherein thestate government can take a call on its imple-mentation and he said states such as Punjab,Haryana and Maharashtra had welcomed it andexpressed the hope that other states, includingthose in the South, are favourable towards it.

In respect of proposals involving more than 51per cent, 30 per cent of the sourcing would haveto be done from village and cottage industries as

well as small and medium enterprises, so as tobenet this sector, he said.

Holding that only 53 Indian cities with a popu-lation of 10 lakh and over would attract FDI

proposals by virtue of the policy provisions,he assured that small retailers would not onlycoexist with big players, but also grow by 13 percent in the coming years. Further, every inves-tor had to work with Indian people and within

the ambit of the strong Indian laws, includinglabour laws, Sharma assured adding that cor-ner stores would be protected. No one can sellproducts at predatory prices, he said.

Sharma expressed condence that the FDIpolicy will result in billions of dollars of invest-ment, but declined to speculate on a specicgure. On consensus in the Cabinet over theFDI policy, he declined to respond to media re-ports but said there would be discussions anddebate.


22/48


Commerce and Industry Minister AnandSharma formally announced the newforeign direct investment policy norms

for the multi-brand retail industry and providedthe governments reasons on why it has decidedto relax the rules.

Sharma said the move to allow 51 percent FDIin multi-brand retail and raise the limit for sin-

gle-brand retail to 100 percent from 51 percentwould immensely help Indian farmers and cre-ate jobs in the agricultural and food-processingindustry.

Presenting the arguments for allowing moreinvestments into the retail industry, the minis-ter said India currently did not have adequateinfrastructure or value chains in place to sup-port the agricultural sector. Despite the fact thatIndia is one of the largest producers of farmproduce in the world, it loses 40-50 percent ofthat output after harvest due to poor storagefacilities, Sharma said. In fact, up to 80 percentof the limited cold storage facilities are used to

store potatoes, he added.

.....................................................................................

Presenting the arguments for allowing more

investments into the retail industry, Commerce and

Industry Minister Anand Sharma said India

currently did not have adequate infrastructure or

value chains in place to support the agricultural

sector.

.....................................................................................

Even farmers are getting a raw deal under thecurrent agricultural system, he pointed out.Farmers only received one-third of the purchaseprice paid by consumers for food grains andin the case of fruits, it was even lower at 12-15percent of the purchase price, he said.

The minister also announced the conditionsunder which FDI would be allowed:

Fifty percent of the investment has to be madein rural infrastructure, including cold storagefacilities.

Out on a limb:Govt says FDI in retail will

immensely

benefit farmers


23/48

Thirty percent of the entire sourcing has to bemade from small and medium enterprises.

Multi-brand retail stores, funded by foreign gi-ants, can be opened only in cities with a popula-tion of one million and above.

These conditions were already known by themarkets and came as no surprise.

Sharma also said he expected foreign invest-ments in the retail sector to create 4-5 million

jobs in the agricultural and food-processing/in-dustrial sector over the next three years. He alsoexpected enormous amounts of FDI to pour in

because of the changes to the sector regulations.


24/48

Chapter: 3


PUBLIC


25/48


The governments decision to openup Foreign Direct Investment (FDI) inthe retail sector has created an uproar

of opposition in the political arena. Howeverthere seems to be a greater diversity of opin-ion among our readers at least. On Sunday 27November, Firstpost published an article titled,Manmohan Singhs big retail riskwhich has re-ceived a number of comments arguing both forand against FDI in the retail sector. We found

these comments extremely interesting andthought provoking in terms of the points theyraised, and have therefore decided to publish across section of them here.

Some readers such as Arul Prakash feel that themeasures will put farmers at a disadvantage andalso result in a situation where consumers arenot given the freshest produce. He writes, Oncethey come the farmers who now have severalmiddleman to sell their goods..will have only a

few retail stores to sell in future. Usually thatmeans price he gets will not be as competitiveas it is today. Second! the same supermarketsmay not actually give the best products grown

in India to Indians..third! they can allter thefood habits of the nation. Instead of eatingfresh foods we will all be eating canned foodssoon!

.....................................................................................

Good Moveby Government..Every good thing has

opposition in this world before the actual fools start

to see the benets of it.same happened when In-

dia was opened to foreign companies in 1992..now

see where is INDIA..at least the world recognize ustodayWait n Watch..INDIA

.....................................................................................

Guest, an anonymous commenter on the ar-ticle also feels that FDI will be more bane than

boon.

He says, Manmohan Singh and his team maybelieve that Walmart, Carrefour etc. are com-ing to India to uplift the condition of agricul-tural sector and will improve supply chainefciency. We believe they are coming for sheer

prot motives and if that means squeezing thebillion+ Indians, selling Chinese goods, killing

Reader debate:Is FDI in retail

bane or boon?
http://www.firstpost.com/politics/manmohan-singhs-big-retail-risk-141244.htmlhttp://www.firstpost.com/politics/manmohan-singhs-big-retail-risk-141244.htmlhttp://www.firstpost.com/politics/manmohan-singhs-big-retail-risk-141244.htmlhttp://www.firstpost.com/politics/manmohan-singhs-big-retail-risk-141244.html


26/48

indigeneous ventures - they will do that. To-days independent entreprenuer and business-men will become their salaried employees.

On the other side of the debate, Shiva Kakkardoes not believe that the entry of foreign play-ers such as Walmart will necessarily kill off thekirana stores, and says that Indias bad supplychain management could do with some prop-ping up. He says, Opening up of foreign storedoes guarantee one thing stiffer competi-tion and aggressive pricing and better qualityof service. But that doesnt mean that Kiranastore guys would die of hunger. They havetheir own clientele and I have seen that whencompetition stiffens they tend to adapt to it.

I come from a tier 2 city. When Reliance andBig Bazaar rst entered, there was the same

opposition but after that I have seen manysmall Kirana store owners turn their storesinto departmental format and they seem tohave maintained their clientele. Secondly, Ihave noted that they tend to have a better holdof tastes of the local public, for eg. which vari-ety of rice or wheat sells more than others etc.The one good thing was that it was only afterthe onslaught of retail chains, the kirana guysstarted valuing customers. I have seen men

who wouldnt give a damn if you stomped outof their shops change their attitude and givebetter service. Still, the return policies andcomplaints department happens to be a prob-lematic affair for local stores. Truly speaking, Iam thrilled how foreign retailers would handlethe Indian retail scenario.

Secondly, people arguing on supply lines beinghijacked by Walmart need to see the footage

rolling on Rice and Wheat rotting in rains thatwas ashing on every channel barely a monthago. Had efcient supply chain managementbeen there, thousands of tonnes of those grainscould have been saved. Accept it - India is BADat supply chain management, be it PDS or

private. We need expertise of foreign retailers.Maybe, it has a lesson or two for us too.

Meanwhile another reader, Catamaran saysthat the government decision is a brave one,and the opposition to the move should be ig-nored in the interest of Indias future. In hisown words, Good Moveby Government..

Every good thing has opposition in this worldbefore the actual fools start to see the benetsof it.same happened when India was openedto foreign companies in 1992..now see where is

INDIA..at least the world recognize us todayWait n Watch..INDIA will do much well bythese kind of brave decisions..

Yet other readers such as Sai, see both the posi-tives and negatives of the FDI move. On thepositive side he cites Infrastructure buildup,more cold storages, less food rotting, for ur-bans and semi urbans its very good in terms

of creating new jobs for those who wanted towork but not nding it and also encourage for

part time jobs, introduction of new brands,its will be only allowed to 50-60 cities i.e only

20% of total population, 80% people still go forkiranas

However he sees negatives too. Walmart es-pecially has very bad track record in handlingits own employees, developed countries US

and Euros have negative statement that MultiBrand retails cut the jobs and give less returnsto the farmers from what they were gettingbefore they enter there market, might hamper

Kiranas where they will open store, may incoming years will lead to cane foods in Indiaand at higher prices so will lead to higher ina-tion. The biggest concern is that may change

peoples mentality, India is country wherepeople saves more, but after these multi brands

enter, people will spent more and save less(aswe all know how we behave when we enter ashopping mall).. thats the reason why US and

Euro went through 2008 melt down and stillwont be able to recover and might in 2-3 yearswill be declared bankrupts.


27/48


28/48

Chapter: 4


INDUSTRY


29/48

PTI Nov 28, 2011

New Delhi: India Inc today said politi-cal parties should reach a consensus onthe governments decision to open the

multi-brand sector to foreign investment.

We will request political parties to support thegovernments decision as it would help SMEsThere should be a minimum sort of an agree-ment in such areas (FDI in multi-brand retail),CII Director General Chandrajit Banerjee told

reporters.

....................................................................................

India Inc today said political parties should reach a

consensus on the governments decision to open the

multi-brand sector to foreign investment.

....................................................................................

Making a similar appeal, FICCI Secretary Gen-eral Rajiv Kumar said this move would have a

positive impact on the small and medium en-terprises (SMEs) and on employment. IndianSMEs can expect additional orders of $60 bil-lion annually from large retailers. This will be allip to SMEs, he said.

Chairman of CII National Committee on Retailand CEO of Aditya Birla Retail, Thomas Var-ghese said that state governments should lookat the long-term benets. I would urge (state)governments not to look at this issue from anarrow prism, but to look at it from the point of

view of beneting consumers, SMEs and em-ployment, he said.

He expressed hope that progressive states which

are concerned about consumers and ination,will give licenses to retailers. At the end of theday, the framework of the Indian Constitutionprovides each state for taking its own decision,he added.

Assocham too supported the government, stat-ing FDI in retail would create lakhs of new jobsand help reduce ination.

Anand Sharma, Indias commerce minister, onhis part sought to reach out to opposition par-ties by writing a letter to them and appealed tothem to rise above petty partisanship on theissue.

India Inc appealsto

political parties:support FDI in retail


30/48

The entire Opposition, barring BJP ally AkaliDal, put the blame on the government for Par-liaments disruption saying they were not notconsulted on such a vital issue. The unity amongthe Opposition has also surprised the govern-ment.

Notices for an adjournment motion on the is-sue, under consideration of Speaker Meira Ku-mar, were tabled by leaders of several parties inthe Lok Sabha. Similar notices were also tabledin the Rajya Sabha.

Leader of the Opposition Sushma Swaraj tolda press conference, Scrap the decision by thenight. Parliament can function tomorrow.JD(U) leader Sharad Yadav said the Congresstook the FDI deliberately to sabotage Parlia-ment at a time when it was scheduled to discusscrucial issues like price rise and black money.

Yadav, who is NDA convener and BJP spokes-person Shahnawaz Hussain, said the questionof allowing Parliament to function does not notarise till government reverses the decision. TheOpposition has said that the decision wouldsound the death knell for millions of small trad-ers and cause huge unemployment in the ruralareas.


31/48

New Delhi: India Inc today appearedto be divided on allowing FDI in multi-

brand retail, an issue which has rockedParliament and drawn stiff opposition fromUPA ally Trinamool Congress.

While FICCI extended an all-out support to thegovernment, CII recommended a calibratedapproach for introducing FDI in the retail sectorin terms of the percentage and minimum capi-talisation requirements.

Addressing a press conference, FICCI SecretaryGeneral Rajiv Kumar said opening of the retailsector would create big employment opportuni-

ties in the country.

Without naming, he said those industry as-sociations that are opposing the foreign directinvestment in multi-brand retail have a vestedinterest.

This is just a fear that has been created forsome vested interest. FDI in retail will be agame-changer like telecom. I see only positiveimpact on employment, he said.

CII, on the other hand, said while it stronglysupports the introduction of FDI in multi-brandretail trading, it recommends a calibrated ap-proach for introducing FDI in the retail sectorin terms of the percentage and minimum capi-talisation requirements.

Kumar said associations which are raising con-cerns that global retail chains like Walmart andTesco would wipe out mom-and-pop stores arefollowing a politically motivated argument.

Some traders associations are arguing thatabout 40 million employed in this sector wouldloose their earnings because of opening of big

foreign retail stores. In fact, foreign stores willgenerate employment and that will be higher

quality employment. Small stores would alsoincrease their employment to compete with thebig retailers, he said.

PTI Nov 28, 2011

India Incdivided over FDI inmulti-brand

retail....................................................................

While FICCI extended an all-out

support to the government, CII

recommended a calibrated approach for

introducing FDI in the retail sector.

....................................................................


32/48

Chapter: 5


OPPOSITION


33/48

anti-people

FDI in retail:

Opposition, allies term it

FP Staff Nov 25, 2011

Following governments nod to For-eign Direct Investments (FDIs) in theretail sector, the Opposition and allies

within the Congress-led UPA have slammed thegovernments move as anti-people.

Anand Sharma, Cabinet Minister for Commerceand Industry, while speaking to the media onthe reasons to allow FDI in retail said the move

will immensely help Indian farmers and cre-ate jobs in the agricultural and food-processingindustry. Countering Sharmas claim the BJPtoday said that the proposed move will createunemployment in the country and adverselyaffect thousands oftraders in the sector.

FDI is not requiredin retail sector. Cold

storage facility is notrocket science that

you need FDI for it,BJP spokespersonPrakash Javdekar

told reporters outside Parliament House today.

Sharma had insisted that despite being one ofthe largest producers of farm produce in the

world, India loses 40-50 percent of that outputafter harvest due to poor storage facilities. Infact, up to 80 percent of the limited cold storagefacilities are used to store potatoes, he added.

Presenting the arguments for allowing moreinvestments into the retail industry, Sharmahad said India currently did not have adequateinfrastructure or value chains in place to sup-port the agricultural sector. Government has

maintained that farmerswill get higher remuner-ation and the FDI willhelp developing logisticsand cold storage chains

in the country. Rub-bishing governmentsclaims, Javadekar said,On the contrary it willcreate unemployment

...............................................................................

While Anand Sharma is condent that allow-

ing FDI in retail will help develop infrastructure

and benet the farming sector, the opposition has

unanimously termed the move an anti-people

move that might increase unemployment.

...............................................................................


34/48

and adversely affect thousands of traders in thesector. We are against FDI in retail sector and

we will oppose it.

BJP leader SS Ahluwalia said, Two StandingCommittees have given reports against the FDIin retail sector. But still the government wentahead with FDI. It must be withdrawn.

The Left also slammed the move and criticisedthe government for not discussing the issue inParliament.

It is unprecedented. When Parliament is insession, a major decision was taken outside theHouse. It has never happened, CPI(M) leaderSitaram Yechury told reporters outside Parlia-ment House. We will not discuss the FDI issue

in Parliament unless government revokes thedecision. We will oppose it in the House andoutside also, he said.

Attacking Mamata Banerjee-led TrinamoolCongress contradictory stand, Yechury said,On one hand, they are allowing the Cabinet toclear the FDI proposal and on the other they areprotesting the decision in the House.

Sharma has contended that he expected for-eign investments in the retail sector to cre-ate 4-5 million jobs in the agricultural andfood-processing/industrial sectors over thenext three years. He also expected enormousamounts of FDI to pour in because of thechanges to the sector regulations.

Dubbing the decision as anti-people, he said itwould render many people jobless and increase

unemployment. CPI National Secretary D Rajatermed the move as most unwise particularlywhen Parliament was in session and said itwould lead to the displacement of millions ofpeople from jobs, adversely affect the servicessector and seriously harm the small and mar-ginal farmers.

Corporate Affairs Minister Veerappa Moily whowas opposed to the move until last evening,today said foreign investment in multi-brandretail will help improve supply and tame ina-tion.

It (FDI in multi-brand retail) will help tameination and (promote) growth rate. A good,systematic supply chain will help in bringingdown ination and help farmers.

Meanwhile, key UPA ally Trinamool Congresstoday opposed the governments decision toopen up the retail sector to FDI, while insistingthat it was not breaking the norms of the rulingalliance by doing so. It is a coalition govern-ment and not the rule of a single party. We areopposing this decision but not breaking any

norms of alliance. We have a right to protestsuch decisions, Minister of State for HealthSudip Bandopadhyay told reporters after lead-ing a protest inside Parliament on the issue.

Maintaining that the party would oppose themove when it comes to Parliament, he saidRailway Minister Dinesh Trivedi has alreadyregistered his dissent in the Cabinet meeting

yesterday.

Initially, the big bosses (multi-brand retailers)will buy goods and keep them in the godowns.After 3-4 years, they will dictate terms on ourprices when they have sufcient stocks. They

will also sell cheap India goods outside India,Bandopadhyay said.


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Will not allowParliament to function until

FDI in retail is withdrawn: NDA

PTI Nov 28, 2011

BJP-led NDA today accused the govern-ment of allowing FDI in retail with anaim of distracting and disrupting Parlia-

ment which was set to discuss crucial issues ofprice rise and black money. NDA Convenor andJD(U) President Sharad Yadav and BJP spokes-person Shahnawaz Hussain said the question ofallowing Parliament to function does not arisetill government withdraws the decision on FDI.

The question of parliament working does notarise until the government withdraws its deci-sion on FDI in retail, says Shahnawaz Hussainof the BJP

They also charged that Commerce MinisterAnand Sharma did not discuss the FDI issuewith the opposition before going ahead with theplan.

Anand Sharma has written to all that he hastalked to the stakeholders before taking thisdecision. Who are these stakeholders. Govern-ment should have talked to the political par-ties, Yadav told reporters outside ParliamentHouse. He alleged that if this policy is accepted,then traders will be adversely affected. It willalso lead to escalation in unemployment prob-lem in the country.

Asked if the opposition will allow Parliament tofunction if the FDI decision remains in place,

Yadav shot back, The question does not arise.

This is under a government plan not to allowParliament to function. They have allowed FDI

at a juncture when the Parliament was to dis-cuss price rise and black money, Yadav said,adding that the decision was hurried througheven though some of the Cabinet ministers wereopposed to the proposal. NDA demanded thatthe FDI decision be withdrawn immediately.

The entire opposition, other than ShiromaniAkali Dal, is demanding that FDI policy shouldbe withdrawn, Yadav said. Hussain charged

that due to the government bringing up the FDIissue, the price rise and black money issueshave been pushed back.

Shahnawaz Hussain of the BJP


36/48

Chapter: 6


Farmers


37/48

Wal-Mart

are relieved to

be dealing with

Why some

farmers

Hapur, western UP: Every day around8 pm, a text message arrives in Lalpur

village in Hapur, a district in westernUttar Pradesh, around 60-odd km from Delhi.

And it goes something like this: 30 Novemberorder Cabbage 450 kg, Beet 50 kg, Raddish300 kg, Tomato 1000 kg, Cauliower 1000 kg,

Thanks (Walmart). Villages such as Lalpurhave a population ranging between 1500-2000.

Early next morning, carts laden with vegeta-bles fresh from the eld arrive at the collectioncentre where a quick quality check of the veg-etables is done to separate out those that dontfulll Walmarts criteria, and then weighed,loaded on to a truck, and dispatched to Delhi all before 1 pm.

From the two collection centres there is an-other at Shyampur village farmers sell vegeta-

bles worth Rs 30,000 (3 tonnes). A demand thatis set to raise to 10 tonne by the end of the week.

It is quite a dramatic rise in demand, given thatthe rst truck that left Hapur on November 5,carried only 800 kg of vegetables.

Says Beena, a farmer from Lalpur village whogrows cabbage on her one acre of land, If the

demand here picks up even more, we wonthave to go out of the village or to the local man-di to sell our vegetables. At the mandi a sack(60-70kgs) fetches Rs 150. (That is about Rs 3per kg). Then I have to give two percent com-mission to the arthi (middlemen who facilitatesthe sale between the farmer and the buyer). Butat the collection centre, I get Rs 3.50 per kg inhand.

Beena is able to sell 300 kg of cabbage at thecollection centre. But the volumes of farmproduce are such that as much 1 tonne of herproduce she sells at the mandi. When there isno demand in the mandi, we have to go as far asDelhi and Agra to sell our vegetables.

The women farmers spoke of instances whenthey were forced to simply abandon their pro-duce in the cities for lack of buyers. Said Beena,

We have simply dumped our vegetables forcows to feed on because to bring them backmeans more loss for us. Unlike foodgrains, veg-etables cant be stored in homes. They rot withindays. It is heartbreaking for a farmer who after

...............................................................................

Without the middleman the farmer now has an

avenue that reduces chances of wastage and

assures a better price.

...............................................................................

Pallavi Polanki Dec 1, 2011


38/48

working so hard in the eld is not able to sellthe vegetables or has to sell them at a loss.

Beena says, selling directly saves her time,transportation and labour costs.

Funded by Walmart Foundation, SunharaWalmart has set up Self Help Groups (SHGs)of women farmers from eight villages in Hapur

who have since last month begun supplying veg-etables to retail stores. The project is in collabo-ration with Agribusiness Systems International(ASI), a Washington-based consulting organiza-tion that runs Sunhara India projects. Sunhara

Walmart is a two-year $350,000 initiative.According to ASI, Hapur was chosen because asurvey conducted by them showed that farmers

there suffered most from poor rates for theirproduce.

Speaking to Firstpost a company ofcial fromWalmart said, After farmers were trained incrop management and post-harvest techniquesto minimize crop losses, our buyers got in touch

with them. We did the quality checks and guid-ed them on the specications and we startedprocuring from them. The payment is made

directly to the womens federation account.

We have another programme running herecalled the Direct Farm programme, which is acompletely business-driven, unlike this, whichis a social initiative. At the co-op centre, wecollect the farm produce. Right now, I cannotcomment on where the vegetables (from Hapur)are supplied to from the co-op centre. I need tocheck if they go to the wholesale stores or not.

(Walmart in a joint venture partnership withBharti Enterprise operates Bharti Walmart BestPrice Modern Wholesale stores in India. Thereare 14 such stores, two of which operate in UttarPradesh in Meerut and Agra.)

In a matter of six months, the project has set up60 SHGs comprising 800-odd women farmersfrom eight villages. About 100 of these womenfarmers have been identied to supply to its twocollections centres. Women farmers have also

registered a federation called the Mahila KisanVikas Sanstha. The federation has applied tothe Agricultural Produce Market Committee(APMC) for a trading licence, said Neelima

Tyagi, secretary of the local NGO partner to theproject. Having an APMC license will allow thefederation to directly deal with prospective buy-ers.

Said the Walmart company ofcial, After NGOsupport is withdrawn from the project, thefederation will continue to function. And if theyget good prices from other buyers they will befree to sell it to them. We have only helped them

build the marketing linkages.

The rate that Bharti tells us, we minus the

transportation cost (Rs 1.50 per kg) and thecollection agents commission (10 paisa per kg).The rate for tomato at the Mandi is Rs 3 perkg. Here we give the farmers Rs 5.50-6, almostdouble the mandi rate. The collection agent isemployed by the federation, said Himanshufrom ASI who coordinates the Sunhara Walmartproject in Hapur.

Already, voices are being raised at the Hapur

mandi by traders at farmers having found analternate source to supply to. Raju is a commis-sion agent or a middleman who operates at theHapur Mandi. (A commission agent facilitatesthe transaction between farmer and buyers suchas vegetable vendors, hotels, hostels, kiranastores. He charges farmers a commission forhis service.)

I am forced to charge 5.5 per cent commission-3 percent is my commission and 2.5 percent tax

that I have to pay to the mandi samiti. Everyonehas to eat. And now there are two players in-stead of one in the market.

Raju, who is the middleman. Naresh Sharma/Firstpost


39/48

According to Raju, a crate of tomatoes 25 kgfetches the farmer Rs 11o at the Mandi. That isa little over Rs 2 per kg. No comparison to what

Walmart is currently offering to farmers.

The Hapur Mandi has about 30-35 commissionagents, says Raju. It caters to about 15-20 vil-lages. Should the volumes procured from thecollection centres, such as one set up Sunhara

Walmart and subsequently by the womensfarmers federation, grows to extents where it

begins to threaten the business of the Mandi,tensions are bound to grow.

When MNC retail chains begin to directly buyfrom farmers, a likely scenario with Walmartsand Tescos who now only operate in the whole-sale space entering the retail market the mid-

dlemen will be eliminated.

But, of course, these are initial days. Already,there are expressions of disappointment beingexpressed by some farmers over prices havingfallen from its highs. Said Dharmendra, whoowns 10 bighas (about two acres) of land inShyampur, and whose wife is part of the SHGset up under the Sunhara Walmart Project.When it rst started, we were getting very goodprices at the collection centre. But now, theprices they offer are the same as those we aregetting at the mandi. But we will continue to sellto them. After all, we have now formed a federa-tion and we have to make sure it is a success.

Women farmers have also registered a federation called the Mahila Kisan Vikas Sanstha. Naresh Sharma/Firstpost


40/48

Chapter: 7


Academics


41/48

The governments move to allow for-eign retailers 51 percent stake in multi-

brand retail ventures has sparked uproaramong politicians and some other sections ofsociety.

Advocates say relaxing investment rules forthe retail industry will promote investments inIndias poor supply chains and increase jobs,

while critics claim that foreign retailers will onlykill the livelihoods of small retail traders.

So are the merits of increased foreign in-vestment in multi-retailing really as rosy asclaimed? Firstpost presents some opposing ar-guments provided by academics to some of themost-common claims.

Claim 1: Organised retail chains like Wal-Mart will increase jobs.

Not necessarily true, argues a 2005 paper bythe Public Policy Institute of California titledThe effects of Wal-Mart on local labour mar-kets, authors David Neumark, Junfu Zhangand Stephen Ciccarella noted Wal-Mart reducedemployment in the retail sector by 2-4 percentin the neighbourhoods studied. Their study alsoindicated wages per worker declined by 3.5 per-

cent, although this conclusion was less robust.

The authors, however, acknowledged that theycould not pinpoint what was causing the earn-

ings declines, including the impact of changes inpart-time work and shifts to less-skilled work-ers.

However, the study also noted that the earn-ings declines associated with Wal-Mart do notnecessarily imply that Wal-Mart stores worsenthe economic fortunes of residents of the mar-kets that these stores enter. Wal-Mart entrymay also result in lower prices that increasepurchasing power, and if prices are lowered

not just at Wal-Mart, but elsewhere as well, thegains to consumers may be widespread.

Claim 2: Organised retail chains will nothurt small vendors.

Thats not true, according to a 2007 paper from

the Centre for Policy Alternatives entitled FDIin retail: Implications of Wal-Marts backdoorentry, which notes that 98 percent of Indiasretail trade is in the small and unorganised sec-tor.

With organised retailing growing at 37 percent,even as the total retailing industry growing onlyat 5.7 percent, the paper argues that the entryof foreign retailers is a case of bad timing (al-though this argument was made in 2007).

Our contention is not that Wal-Mart or othersimilar undertakings shouldnt ever be allowedto venture into Indian markets, but that this

Retail FDI:

The merits

over-hyped,say academics

are

...............................................................................

The governments move to allow foreign retailers

51 percent stake in multi-brand retail ventures

has sparked uproar but academicians differ........

........................................................................

FP Editors Dec 1, 2011


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is not the right time for them to be let in. Anumber of preconditions currently absent inthe Indian industrial and agricultural sectorsshould be met, before we permit foreign in-

vestment in retail. If we fail to do so our smallmanufacturers and the hundreds of vendors andsmall retail shops will bear the brunt of the blowand millions will be rendered jobless, it noted.

From 4.7 percent of the total retail marketnow, it (organised retail) is expected to reach9 percent by 2010. The current growth at 37percent of organised retail, when the total retailmarket is just growing at 5.7 percent is clearlyat the expense of the small retailer, the paperadded.

Claim 3: Organised retail will invest in

and improve supply chains.

So far, that hasnt been the case. According toa 2010 commentary paper by Sukhpal Singhfrom the Indian Institute of Management

Ahmedabad, food and vegetable-selling retailchains (barring a few exceptions) were foundto be procuring from farmers through informalarrangements and without any commitmentto buy regularly. In other words, supermarkets

were found to be unwilling to share in the risksof growers. This puts farming businesses underpressure which is passed on to the workers onthe farms, who are often women.

There was also little involvement on the part ofsupermarket chains with producers and im-provement in supply chain efciency was ab-sent, the paper noted.

The paper also cited studies that showed asignicant number of traditional food and

vegetable vendors reported declines in footfalls,sale and incomes across key cities such as Ban-galore, which had high levels of supermarketpenetration.

Claim 4: Organised retail improves com-petition.

The IIM paper noted that in 2007, ve majorchains accounted for more than 50 percent ofretail sales in most of European Union coun-

tries, as up to 80 percent of the retail markets inDenmark and Finland.

Own brands of these supermarkets accountedfor a major share of the total sales 43 percentin the UK, 40 percent in Denmark and 42 per-cent in Belgium. Rapid rise of supermarketchains would lead to concentration of marketpower, with upstream suppliers facing buyerpower in terms of lower prices and higher

private standards, and the downstream buyers(consumers) facing higher prices due to lowercompetition, it noted.


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Chapter: 8


Will FDI last?


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Cong meets

overFDI in retail:Is a rollback on

the cards?.............................................................

With the Opposition blaming the

government over the logjam in the

parliament, and standing rm on itsdemand to roll back the government's

decision in 51% FDI in retail, the

prime minister has called an

emergency meeting at his residence.

.............................................................

FP Staff Nov 28, 2011

Under attack from the oppositionand allies over FDI in retail, the Unioncabinet has called an emergency meet-

ing at 7 Race Course Road, Prime MinisterManmohan Singhs residence. The meeting,chaired by the prime minister, is being attended

by the Congress president Sonia Gandhi, Fi-nance Minister Pranab Mukherjee, CommerceMinister Anand Sharma and senior Congressleader Ahmed Patel.

The meeting follows an ultimatum from theBJP-led opposition asking the Congress-led

UPA to roll back its contentious decision to al-

low 51 percent FDI in multi-brand retail. Su-shma Swaraj, leader of opposition in the LokSabha, had demanded this afternoon that thedecision be revoked by this evening so as to al-low Parliament function normally.

No business has been conducted in both housesafter the beginning of the winter session on No-

vember 22. It is estimated that over the last sixdays nearly Rs 6.5 crore worth of public moneyhas been wasted due to the logjam in Parlia-

ment.

Speculations are rife that the government mightagree to a partial roll-back on FDI.

The government has so far contended that thedecision will boost the economy by bringing inmore investment, increasing infrastructure forfood storage and creating employment in thecountry.

The opposition on the other hand has beenarguing that the move will affect the small farm-ers and traders adversely, creating widespreadunemployment. Even allies within the UPA, likethe Trinamool and DMK, are arguing againstthe move.

Earlier today Sushma Swaraj had blamed the

government for the logjam in Parliament. Theopposition has been demanding a debate on theissue. The government on the other hand hasresisted any debate in the house which entails

voting.

The prime minister had met the presidentearlier today brieng her on the impasse. Hehas called for an all-party meeting tomorrowmorning before Parliament convenes at 11 in themorning.


45/48

Chapter: 9


The world is waiting


46/48

FDI nod given,global retailers wait for

more clarity

New Delhi: Global retail giants, in-cluding IKEA, Walmart and Carrefour,are studying the ner details of Indias

relaxed FDI norms for the sector as they look totap opportunities in the country.

In the meantime,while closely watch-ing developments

post the changes,these rms arestaying focussed ontheir current opera-tions in India thatincludes sourcing in case of IKEA, and cash andcarry businesses for Walmart and Carrefour.

Welcoming the governments move to allow100 percent foreign direct investment (FDI) insingle brand retail, IKEA said in an email con-

versation to Firstpost, We will now over thenext few days look into the details of the deci-sion and we expect to present more informationshortly about our intention to establish retail

operations.

India is since long a strong and growing pur-chase market us, IKEA added.

India is since long astrong and growingpurchase market forIKEA, the Scandina-

vian furniture retailersaid in an e-mailedstatement to PTI.

Even French multi-brand retailer Carrefour that has already en-tered India through the cash and carry route isclosely watching the developments taking placehere.

Carrefour will remain attentive to the nalisa-tion of this new regulation and continues thedevelopment of its cash and carry operations,the company said in a statement.

...............................................................................

Global retail giants are studying the ner details

of Indias relaxed FDI norms for the sector asthey look to tap opportunities in the country.

...............................................................................


47/48

The French retailer currently operates two cashand carry stores in India.

Carrefour welcomes the Indian Governmentsdecision to allow up to 51 percent foreign directinvestment in multi-brand retail, it added.

Echoing similar views, Walmart said it is will-ing to invest in back-end infrastructure that willhelp reduce wastage of farm produce, improvethe livelihood of farmers, lower prices of prod-ucts and ease supply-side ination.

We will need to study the conditions and thener details of the new policy and the impactthat it will have on our ability to do business inIndia, Walmart India President Raj Jain said.

Last week, the government approved 51 percentFDI in multi-brand retail, while completelyopening the single brand segment to foreigninvestors.

According to sector observers, the foreign retail-ers will prefer to adopt a wait and watch policy

before they make any announcements abouttheir plans in India.

The picture is not very clear on the multi-brandside, as there is confusion over 30 percentsourcing from SMEs. Whether it is allowed to

be done globally or only from India, Enrst &Young Partner Tax and Regulatory ServicesPrashant Khatore said.

Secondly, there is also ambiguity on the numberof cities in which these retailers can open stores

which is dependent on the veto power of the

states, Khatore added.

In case of single brand retail, it would vary fromcategory to category, how companies approachthis market.

Since the 30 percent sourcing clause also ap-plies to single-brand retail also, there has to bemore clarity, Khatore said.

Looking into the current situation, I do notthink there would be immediate rush to openstores here. Possibly people (foreign retailers)

would want to wait till the government comesout with a clear document, he added.

As per FICCI estimates, the Indian retail sectoris currently pegged at around $600 billion, withmodern retail accounting for about 5 percent.


48/48

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