Changing patterns

In the congested by-lanes of east Delhi, Pramod Tripathi, has a thriving business selling groceries and household provisions to a committed clientele that he has nurtured over the years.

But today the 35-year-old shop owner is a worried man. Since the government opened up the doors for multi-brand retail last week to give a boost to the organized retail sector, he fears the future looks bleak.　

"Shops like mine give loan facilities to customers. It is not the case with supermarkets. Moreover, Indian labor will also lose out on jobs," he rues.　

Many share his sentiments. "We are petty traders, who make a living with marginal profits. If the multinationals come in we will have to think twice about continuing with this business," says Ramakant Khanna, who runs a small-scale toy shop.

The government’s decision to allow 51 percent Foreign Direct Investment (FDI) in the multi-brand retail market and 100 percent in single-brand retail, has stirred a huge controversy that has led to vociferous protests from opposition parties and led to a paralysis of parliament’s functioning.

Most apparel, fashion and luxury companies fall into the category of single-brand retail, whereas supermarkets and department store chains are categorized as multi-brand retail.

The government claims that an impressive 10 million jobs will emerge as a result over the next decade.　

However, critics fear massive job losses among small shopkeepers and warn that the policy could sound the death knell for over two million ‘kiranas,’ or neighborhood shops, in urban centers.

The main opposition Bharatiya Janata Party (BJP) and the Communist Party of India (Marxist) want nothing short of a rollback on this deeply contentious issue.　

"If Wal-Mart attempts to open any shop anywhere, then I will personally burn them down. I am ready to be arrested for that," said Bharatiya Janata Party (BJP) leader Uma Bharti on Tuesday.

Boon or bane for farmers?

However, commerce minister Anand Sharma defended the move and said that opposition parties have not read the fine print. He claimed farmers, who form an overwhelming majority of India’s working population, would gain significantly.

"The deal is good as it will mean the elimination of the middlemen from the equation," he argued. "The returns on the produce that the farmers would directly sell to the retailer may go up by as high as 30 percent."

Industrialist Manoj Chaturvedi was also excited that large retailers would now be able to buy directly from farmers. "Right now, vegetables pass through five intermediaries - the aggregator, the market trader, the wholesaler, the sub-wholesaler and the retailer," he pointed out.

For his part, Prime Minister Manmohan Singh added that FDI in retail would not only help the farmers by bringing in new technologies but also improve the country’s agricultural sector by saving farm produce from damage.

"It will curb inflation and the common man can get daily essential commodities at lesser rate," he told a Congress party conference on Tuesday.

Rajiv Kumar, the secretary general of the Federation of Indian Chambers of Commerce and Industry, also supports the policy. "FDI in retail will be a game-changer like in the telecoms sector. I only see a positive impact on employment."

‘We will be finished’

However, those who work in the sector are not convinced. "We will be finished if these foreign companies enter our markets," said Suresh Agarwal, the secretary of Rajasthan Kirana and Dry Fruits Committee. "These companies will dominate the market and create a monopoly."

"In the long run, consumers in India will not be given the freshest produce. Instead of eating fresh goods we will all be eating canned foods," warned Jagdish Khanna, a civil rights activist.

For now New Delhi has decided not to cave into pressure even in the face of virulent opposition. But given that crucial provincial elections are up-coming and that it needs to pass other important legislation, observers think the government could well put this issue on the backburner.

Author: Murali Krishnan
Editor: Anne Thomas