The huge potential in the organised retail that remains unexploited in India and the risks of allowing Foreign Direct Investment (FDI) though it may generate employment or benefit the end-user were part of the discussions of a meeting convened by the Madras Chamber of Commerce and Industry (MCCI) here on Saturday.
Though speakers felt that the FDI will take the retail sector to global standards in terms of pricing, product quality and link to global markets, the perception that organised retail had wiped out small traders in countries like Thailand was also stressed. The threat of retail majors making huge investments to capture and monopolise the market in the long run was one area of concern voiced by many.
“The FDI will come in and displace existing traders. There is no doubt that it will generate employment…but many will lose jobs too. There will be a global sourcing of products and loss of livelihood cannot be ruled out over a period of time. We have seen this happening in other countries,” Shekar Swamy, Chief Executive Officer, R.K. Swamy Hansa Group said.
The ‘farmer-will-benefit' propaganda was not true as it did not happen in the West. “If allowed, foreign retail majors will make huge investments and withstand losses for years. Ultimately they will wipe out small/medium traders and take over the market. Their core operating philosophy will usually be concentration and monopoly,” he said.
Terming the FDI in retail trade as “anti-national,” Mr. Swamy said three retailers had taken over 38 per cent of the market in Thailand where the local traders were displaced.
Retail Consultant and Trainer V. Rajesh sought to set aside the apprehensions saying that any well-regulated industry would serve the purpose greatly with or without FDI. Pointing out that there was no instance of any small trader closing down business following the entry of retail majors in metros, he said FDI would bring in finance, technology and efficient supply chain management systems.
G. Viswanathan, Senior General Manager (Operations), Vivek Ltd., said the share in India of organised retail was only 5 per cent whereas the same was 75 per cent in Brazil, 40 per cent in Thailand and 25 per cent in China. In his opening remarks, MCCI president T.T. Srinivasaraghavan explained the pros and cons of the move. “The views expressed by different quarters are polarized and extreme. The layman is at a loss to understand what this maze is about,” he said. MCCI Secretary General K. Saraswathi spoke.
