M. Shanmugam recently upgraded his grocery store to a supermarket to withstand competition and also suit customers’ preferences. He is now worried about the future of his business if foreign investors step into the retail trade.

Though the State government has announced that it would not allow foreign direct investment in retail trade, many shopkeepers like Shanmugam expressed their concern about the possibility of business getting affected owing to the Central government’s move.

The trend of neighbourhood grocery stores transforming to supermarkets is slowly catching up in the city to cater to the changing taste of the customers. “I had to invest Rs.20 lakh, which is three-fold investment, to redesign my shop to compete with other stores. If the foreign multi-brand players step into the retail trade, small traders like me will have little choice but to close shop,” Mr. Shanmugam said.

S. Baskar, who runs a textile shop, said initially, customers may benefit from the competitive price offered by the foreign companies. But, the companies would soon monopolise the market and customers may not have a choice than to purchase products at a price quoted by the large companies.

Traders also said that purchase on credit system that is being practised in small shops may completely vanish.

Meanwhile, traders’ welfare organisations plan to shut shop on September 20 across the State to protest against multi-brand foreign direct investment.

K. Mohan, state general secretary of Tamil Nadu Vanigar Sangankalin Peramaippu, said that though some States, including Tamil Nadu, have decided not to implement the centre’s decision, they cannot control the growth of foreign businesses.

In Chennai alone, there are three lakh traders and nearly 15 lakh labourers depend on the retail business. The trade is already suffering from many problems such as labour shortage and increasing competition. Allowing FDI would only worsen the situation, he added.

Manish Parmar, vice president of The Madras Kirana Merchants Association, said that the move to allow FDI in retail business would affect the wholesalers too. While 60 per cent of the customer base is retailers, people also directly purchase from wholesale stores in and around Sowcarpet and Kothvalchavadi.

“If the government also decides to levy general sales tax, which allows sales of goods anywhere in the country, it would severely affect the traders,” he added.

More In: Chennai