Supermarkets Invade India

There are roughly 12 million small traders in India -- they sell everything from spices to shoelaces. But competition has arrived -- in the form of massive foreign supermarkets. Metro, Walmart and Carrefour all have stores in India’s big cities.

Some customers are happy about the development -- especially those from the middle class, for whom it is a status symbol to be able to shop at a supermarket.

One customer, for example, thinks they are very convenient: “Whatever you want you can get here. That’s why I like Big Bazaar. I get all my every household things from here.”

1 percent of food products sold by supermarkets

At the moment, only 1 percent of food products are bought in supermarkets and there are still considerable restrictions on foreign companies.

For example, the German group Metro is only allowed to have wholesale stores in cities with over one million inhabitants and to sell products to licensed retailers. Until recently, the sale of fruit and vegetables was banned.

Marita Wiggerthale, a trade and agriculture expert at Oxfam warned that the consequences could be catastrophic if the restrictions were lifted rapidly and without careful regulation policies being put in place to ensure salaries are fair and working conditions are good.

She did not think that small farmers would benefit at all from a freeing up of the market: “The problem is that supermarket chains tend to work with bigger and medium-sized companies. This has to do with the fact that the gap between the demands of the supermarket chains and the capacities of agricultural smallholdings is widening.”

Government policies have not benefitted population

Dharmendra Kumar, the director of India FDI Watch, a coalition of trade unions, professional associations and NGOs that has been campaigning against the liberalisation of foreign direct investment in India, explained that government policies had not benefitted the whole population.

“The growth that India witnessed did create some kind of middle class but it also created, on the other hand, a vast majority of extremely poor people and pushed them further into extreme poverty. Unemployment pushed people out of agriculture and since there was a process of deindustrialisation going on people couldn’t find another job other than retail, other than selling groceries on the streets.”

Thus, if the supermarkets take their business, small traders who sell groceries on the streets might not be able to find other jobs at all.

However, not all customers are embracing the supermarkets. A woman insisted she would continue to buy her fruit and vegetables from her local, familiar trader: “I find it more convenient. At Big Bazaar there is normally a long queue. If I have about ten minutes to pick up fruit, it’s much quicker here and the quality is better.”

In the end, quality is one of the few weapons India's small traders have to ensure that global recession, supermarkets and liberalisation policies do not take away their customers.

Author: Anne Thomas
Editor: Thomas Bärthlein