How did the producer, wholesaler, retailer and the consumer react to the Central Government’s announcement to relax the investment norms for foreign direct investment in retail? Did they have awareness about FDI?, Did they believe it will augment local economy, lead to competitive prices?. All this and many more inputs were derived by students.
The perceptions of the four stakeholders in Coimbatore, Tiruchi, Madurai and Salem were found out by students of PSG Institute of Management (PSGIM) through a survey. Under the present guidelines, only Chennai, Coimbatore, Tiruchi, Salem and Madurai qualified for entry of foreign retail stores. The survey was with special focus on grocery and fresh produce since the first line impact would be seen in these sectors. The survey excluded Chennai because of the high urbanisation index.
A group of 25 management students visited the four cities and collected data from 1,000 subjects. Sharing their experience, the students said that the consumers demonstrated high awareness about FDI in retail, though there were wide variations in the responses across the four cities.
Impact of modern retail was strongly felt in Coimbatore. While Tiruchi believed that FDI retail would mean cheaper price, Coimbatore did not perceive any price advantage though it was eager to explore more foreign retail options.
As regards retailers, they did not perceive FDI in retail as helpful to the economy. Wholesalers feared that FDI retailers would bypass them for procurements. Producers are not aware of the FDI in retail regulation and believe that the Government would control the FDI in retail developments.
Presenting the results of the survey in front of a panel here on Monday, the students’ inference was that each city had a different maturity level for each stakeholder in terms of retail environment, urbanisation and cross-cultural impacts. Educating the stakeholder would be required to help them make an informed judgement.
The panel consisting of C.R. Baskaran, spices and nuts wholesale and retail business executive, Thuran Nambi, journalist in Pasumai Vikatan, K. Kathirmathiyon, secretary, Coimbatore Consumer Cause, D. Srinivasan, and managing trustee of Dr. K. Damodharaswamy Naidu Charitable Trust, deliberated on ‘Foreign Direct Investment in Retail – Boon or Bane’.
Moderating the discussion, P. Kanagasabapathi, author of management books, said: “That the entry of foreign retail shops will not affect the business of small local retailers is a fallacy. It is difficult for local businesses to compete with the foreign retail shops. The entry of foreign retail shops will bring in more jobs is also a wrong premise. There are also other false promises that infrastructure will improve and post-harvest losses will be curtailed,” he said.
The efforts of the students did not stop with making a presentation. R. Nandagopal, director of PSGIM, said the survey with recommendations from the experts would be sent to policy makers at the Centre.
