The Union Cabinet's approval for 51 per cent Foreign Direct Investment (FDI) in multi-brand retail and 100 per cent FDI in single brand retail has evoked mixed response in Tirupur knitwear cluster.
While hosiery manufacturers have come up with their dissent as they fear shrinkage in market share for their products if the foreign brands flowed in, consumers and market experts are of the opinion that arrival of competition will help the end-consumers in getting products at cheaper prices.
South India Hosiery Manufacturers Association (SIHMA) president A. C. Eswaran told The Hindu that allowing FDI in retail sector would affect the predominant small and medium scale textile producers in the country since they could not compete with the foreign companies primarily because their brand marketing are very much advanced vis-à-vis that by the Indian companies.
“Due to lack of adequate growth in brand concept in the country, our manufacturers in return can not go to the foreign company to set up stores and hence, the apprehension,” he said.
According to him, the textile sector is already reeling under various operational problems and any further reduction in market opportunities could be catastrophic for the many lakhs of workers who are dependent on the sector.
K.C.M. Balasubramaniam, president of Tirupur Consumer Voice, is of the opinion that FDI in retail as well as opening of super markets by local entrepreneurs would only be beneficial in easing the prices for the consumers.
“This apart, the big chain stores will increase job opportunities as they would post hundreds of employees whereas majority of the groceries have just one owner to manage it.
On the price front, while some of the groceries are selling refrigerated products like soft drinks above the MRP (maximum retail prices) levying extra charges for ‘cooling', these hyper market stores are able to give the products at even below MRP across the product portfolio,” he pointed out.
S. Dhananjayan, a market analyst and chartered accountant, feels that allowing FDI will only increase the competitiveness of the local producers against the apprehensions with consumers going to be the major beneficiaries.