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RetailinginIndia
FromWikipedia,thefreeencyclopedia

RetailinginIndiaisoneofthepillarsofitseconomyandaccounts
forabout22percentofitsGDP.[1][2]TheIndianretailmarketis
estimatedtobeUS$500billionandoneofthetopfiveretail
marketsintheworldbyeconomicvalue.Indiaisoneofthefastest
growingretailmarketsintheworld,with1.2billionpeople.[3][4]
Asof2013,India'sretailingindustrywasessentiallyownermanned
smallshops.In2010,largerformatconveniencestoresand
supermarketsaccountedforabout4percentoftheindustry,and
thesewerepresentonlyinlargeurbancenters.India'sretailand
logisticsindustryemploysabout40millionIndians(3.3%ofIndian
population).[5]

AtextileretailstoreinIndia

Until2011,Indiancentralgovernmentdeniedforeigndirect
investment(FDI)inmultibrandretail,forbiddingforeigngroups
fromanyownershipinsupermarkets,conveniencestoresorany
retailoutlets.Evensinglebrandretailwaslimitedto51%ownership
andabureaucraticprocess.
InNovember2011,India'scentralgovernmentannouncedretail
reformsforbothmultibrandstoresandsinglebrandstores.These
marketreformspavedthewayforretailinnovationandcompetition
withmultibrandretailerssuchasWalmart,CarrefourandTesco,as
wellsinglebrandmajorssuchasIKEA,Nike,andApple.[6]The
announcementsparkedintenseactivism,bothinoppositionandin
supportofthereforms.InDecember2011,underpressurefromthe
opposition,Indiangovernmentplacedtheretailreformsonholdtill
itreachesaconsensus.[7]
InJanuary2012,Indiaapprovedreformsforsinglebrandstores
welcominganyoneintheworldtoinnovateinIndianretailmarket
with100%ownership,butimposedtherequirementthatthesingle
brandretailersource30percentofitsgoodsfromIndia.Indian
governmentcontinuestheholdonretailreformsformultibrand
stores.[8]
InJune2012,IKEAannouncedithadapplied
forpermissiontoinvest$1.9billioninIndiaand
setup25retailstores.[9]AnanalystfromFitch
Groupstatedthatthe30percentrequirement
waslikelytosignificantlydelayifnotprevent

AfoodstapleretailshopinPushkar,
India

ModernretailinginIndia

Punjab
https://en.wikipedia.org/wiki/Retailing_in_India

AfishretailstoreinWestBengal,
India

UttarPradesh

WestBengal
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mostsinglebrandmajorsfromEurope,USAand
Japanfromopeningstoresandcreating
associatedjobsinIndia.[10](subscriptionrequired)
On14September2012,thegovernmentofIndia
announcedtheopeningofFDIinmultibrand
retail,subjecttoapprovalsbyindividual
states.[11]Thisdecisionwaswelcomedby
economistsandthemarkets,butcausedprotests
andanupheavalinIndia'scentralgovernment's
politicalcoalitionstructure.On20September
2012,theGovernmentofIndiaformallynotified
theFDIreformsforsingleandmultibrand
retail,therebymakingiteffectiveunderIndian
law.[12][13][14]

Telangana

Karnataka

TamilNadu

MadhyaPradesh

Gujarat

Maharashtra

Delhi

Kerala

Haryana

On7December2012,theFederalGovernment
ofIndiaallowed51%FDIinmultibrandretail
inIndia.Thegovernmentmanagedtogettheapprovalofmultibrandretailintheparliamentdespiteheavy
uproarfromtheopposition(theNDAandleftistparties).Somestateswillallowforeignsupermarketslike
Walmart,TescoandCarrefourtoopenwhileotherstateswillnot.[15]

Contents
1Localterms
2Growth
2.1Growthover19972010
2.2Growthafter2011
3TheIndianretailmarket
4Challenges
5Indiaretailreforms
5.1Indianretailreformsonhold
5.2Singlebrandretailreformsapproved
6Socialimpactandcontroversywithretailreforms
6.1ControversyoverallowingForeignretailers
6.2Oppositiontoretailreforms
6.3Supportforretailreforms
6.3.1Farmergroups
6.3.2Economistsandentrepreneurs
6.3.3Allowedinsomestates,bannedinothers
6.3.3.12013stateElections
6.3.4Currentsupermarkets
7Seealso
8References
9Externallinks

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Localterms
Organisedretailing,inIndia,referstotradingactivitiesundertakenbylicensedretailers,thatis,thosewho
areregisteredforsalestax,incometax,etc.Theseincludethepubliclytradedsupermarkets,corporate
backedhypermarketsandretailchains,andalsotheprivatelyownedlargeretailbusinesses.
Unorganisedretailing,ontheotherhand,referstothetraditionalformatsoflowcostretailing,forexample,
thelocalcornershops,ownermannedgeneralstores,paan/beedishops,conveniencestores,handcartand
pavementvendors,etc.[16]
OrganisedretailingwasabsentinmostruralandsmalltownsofIndiain2010.Supermarketsandsimilar
organisedretailaccountedforjust4%ofthemarket.[6]
MostIndianshoppinghappensinopenmarketsornumeroussmallgroceryandretailshops.Shoppers
typicallywaitoutsidetheshop,askforwhattheywant,andcannotpickorexamineaproductfromthe
shelf.[17]Accesstotheshelforproductstorageareaislimited.Oncetheshopperrequeststhefoodstapleor
householdproducttheyarelookingfor,theshopkeepergoestothecontainerorshelfortothebackofthe
store,bringsitoutandoffersitforsaletotheshopper.Oftentheshopkeepermaysubstitutetheproduct,
claimingthatitissimilarorequivalenttotheproducttheconsumerisaskingfor.Theproducttypicallyhas
nopricelabelinthesesmallretailshopsallpackagedproductsmustdisplaythemaximumretailprice
abovewhichtheproductcannotbesold.Itisacriminaloffencetodoso..Theshopkeepercanpricethe
foodstapleandhouseholdproductsarbitrarily,andtwoconsumersmaypaydifferentpricesforthesame
productonthesamedaybutneverwillthosepricebeabovethemaximumretailprice.Priceisrarely
negotiatedbetweentheshopperandshopkeeper.Theshoppersusuallydonothavetimetoexaminethe
productlabel,anddonothaveachoicetomakeaninformeddecisionbetweencompetitiveproducts.[18]
India'sretailandlogisticsindustry,organisedandunorganisedincombination,employsabout40million
Indians(3.3%ofIndianpopulation).[19]ThetypicalIndianretailshopsareverysmall.Over14million
outletsoperateinthecountryandonly4%ofthembeinglargerthan500sqft(46m2)insize.Indiahas
about11shopoutletsforevery1000people.VastmajorityoftheunorganisedretailshopsinIndiaemploy
familymembers,donothavethescaletoprocureortransportproductsathighvolumewholesalelevel,
havelimitedtonoqualitycontrolorfakeversusauthenticproductscreeningtechnologyandhaveno
trainingonsafeandhygienicstorage,packagingorlogistics.Theunorganisedretailshopssourcetheir
productsfromachainofmiddlemenwhomarkuptheproductasitmovesfromfarmerorproducertothe
consumer.Theunorganisedretailshopstypicallyoffernoaftersalessupportorservice.Finally,most
transactionsatunorganisedretailshopsaredonewithcash,withallsalesbeingfinal.
Untilthe1990s,regulationspreventedinnovationandentrepreneurshipinIndianretailing.Someretails
facedcomplyingwithoverthirtyregulationssuchas"signboardlicenses"and"antihoardingmeasures"
beforetheycouldopendoors.Therearetaxesformovinggoodstostates,fromstates,andevenwithin
statesinsomecases.Farmersandproducershadtogothroughmiddlemenmonopolies.Thelogisticsand
infrastructurewasverypoor,withlossesexceeding30percent.
Throughthe1990s,Indiaintroducedwidespreadfreemarketreforms,includingsomerelatedtoretail.
Between2000to2010,consumersinselectIndiancitieshavegraduallybeguntoexperiencethequality,
choice,convenienceandbenefitsoforganisedretailindustry.
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Growth
Growthover19972010
Indiain1997allowedforeigndirectinvestment(FDI)incashand
carrywholesale.Then,itrequiredgovernmentapproval.The
approvalrequirementwasrelaxed,andautomaticpermissionwas
grantedin2006.Between2000to2010,Indianretailattractedabout
$1.8billioninforeigndirectinvestment,representingaverysmall
1.5%oftotalinvestmentflowintoIndia.[20][21]
Singlebrandretailingattracted94proposalsbetween2006and
2010,ofwhich57wereapprovedandimplemented.[22]Fora
countryof1.2billionpeople,thisisaverysmallnumber.Some
claimoneoftheprimaryrestraintinhibitingbetterparticipationwas
thatIndiarequiredsinglebrandretailerstolimittheirownershipin
Indianoutletsto51%.Chinaincontrastallows100%ownershipby
foreigncompaniesinbothsinglebrandandmultibrandretail
presence.

Anorganisedretailstorein
Ahmedabad(ca.2009)

Indianretailhasexperiencedlimitedgrowth,anditsspoilageof
foodharvestisamongstthehighestintheworld,becauseofvery
limitedintegratedcoldchainandotherinfrastructure.Indiahasonly
5386standalonecoldstorages,havingatotalcapacityof23.6
Customersinsidearetailstorein
millionmetrictons.However,80percentofthisstorageisusedonly
Kolkata(ca.2011)
forpotatoes.Theremaininginfrastructurecapacityislessthan1%
oftheannualfarmoutputofIndia,andgrosslyinadequateduring
peakharvestseasons.Thisleadstoabout30%lossesincertainperishableagriculturaloutputinIndia,on
average,everyyear.[20][23]
Indianlawsalreadyallowforeigndirectinvestmentincoldchaininfrastructuretotheextentof100percent.
Therehasbeennointerestinforeigndirectinvestmentincoldstorageinfrastructurebuildout.Experts
claimthatcoldstorageinfrastructurewillbecomeeconomicallyviableonlywhenthereisstrongand
contractuallybindingdemandfromorganisedretail.Theriskofcoldstoringperishablefood,withoutan
assuredwaytomoveandsellit,putstheeconomicviabilityofexpensivecoldstorageindoubt.Inthe
absenceoforganisedretailcompetitionandwithabanonforeigndirectinvestmentinmultibrandretailers,
foreigndirectinvestmentsareunlikelytobeginincoldstorageandfarmlogisticsinfrastructure.
Until2010,intermediariesandmiddlemeninIndiahavedominatedthevaluechain.Duetoanumberof
intermediariesinvolvedinthetraditionalIndianretailchain,normsarefloutedandpricinglacks
transparency.SmallIndianfarmersrealiseonly1/3rdofthetotalpricepaidbythefinalIndianconsumer,as
against2/3rdbyfarmersinnationswithahighershareoforganisedretail.[20]The60%+marginsfor
middlemenandtraditionalretailshopshavelimitedgrowthandpreventedinnovationinIndianretail
industry.

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Indiahashadyearsofdebateanddiscussionsontherisksandprudenceofallowinginnovationand
competitionwithinitsretailindustry.[24]Numerouseconomistsrepeatedlyrecommendedtothe
GovernmentofIndiathatlegalrestrictionsonorganisedretailmustberemoved,andtheretailindustryin
Indiamustbeopenedtocompetition.Forexample,inaninvitedaddresstotheIndianparliamentin
December2010,JagdishBhagwati,ProfessorofEconomicsandLawattheColumbiaUniversityanalysed
therelationshipbetweengrowthandpovertyreduction,thenurgedtheIndianparliamenttoextend
economicreformsbyfreeingupoftheretailsector,furtherliberalizationoftradeinallsectors,and
introducinglabormarketreforms.SuchreformsProfessorBhagwatiarguedwillaccelerateeconomic
growthandmakeasustainabledifferenceinthelifeofIndia'spoorest.,[25][26]
A2007reportnotedthatanincreasingnumberofpeopleinIndiaareturningtotheservicessectorfor
employmentduetotherelativelowcompensationofferedbythetraditionalagricultureandmanufacturing
sectors.Theorganisedretailmarketisgrowingat35percentannuallywhilegrowthofunorganisedretail
sectorispeggedat6percent.[27]
TheRetailBusinessinIndiaiscurrentlyatthepointofinflection.Asof2008,rapidchangewith
investmentstothetuneofUS$25billionwerebeingplannedbyseveralIndianandmultinationalcompanies
inthenext5years.ItisahugeindustryintermsofsizeandaccordingtoIndiaBrandEquityFoundation
(IBEF),itisvaluedataboutUS$395.96billion.Organisedretailisexpectedtogarnerabout1618percent
ofthetotalretailmarket(US$6575billion)inthenext5years.
IndiahastoppedtheA.T.KearneysannualGlobalRetailDevelopmentIndex(GRDI)forthethird
consecutiveyear,maintainingitspositionasthemostattractivemarketforretailinvestment.TheIndian
economyhasregisteredagrowthof8%for2007.Thepredictionsfor2008is7.9%.[28]Theenormous
growthoftheretailindustryhascreatedahugedemandforrealestate.Propertydevelopersarecreating
retailrealestateatanaggressivepaceandby2010,300mallsareestimatedtobeoperationalinthe
country.[29]

Growthafter2011
Before2011,Indiahadpreventedinnovationandorganisedcompetitioninitsconsumerretailindustry.
SeveralstudiesclaimthatthelackofinfrastructureandcompetitiveretailindustryisakeycauseofIndia's
persistentlyhighinflation.Furthermore,becauseofunorganisedretail,inanationwheremalnutrition
remainsaseriousproblem,foodwasteisrife.Wellover30%offoodstaplesandperishablegoodsproduced
inIndiaspoilsbecausepoorinfrastructureandsmallretailoutletspreventhygienicstorageandmovement
ofthegoodsfromthefarmertotheconsumer.,[30][31][32]
Onereportestimatesthe2011Indianretailmarketasgeneratingsalesofabout$470billionayear,ofwhich
aminuscule$27billioncomesfromorganisedretailsuchassupermarkets,chainstoreswithcentralized
operationsandshopsinmalls.Theopeningofretailindustrytofreemarketcompetition,someclaimwill
enablerapidgrowthinretailsectorofIndianeconomy.OthersbelievethegrowthofIndianretailindustry
willtaketime,withorganisedretailpossiblyneedingadecadetogrowtoa25%share.[32]A25%market
share,giventheexpectedgrowthofIndianretailindustrythrough2021,isestimatedtobeover$250billion
ayear:arevenueequaltothe2009revenuesharefromJapanfortheworld's250largestretailers.,[33][34]
TheEconomistforecaststhatIndianretailwillnearlydoubleineconomicvalue,expandingbyabout$400
billionby2020.[35]TheprojectedincreasealoneisequivalenttothecurrentretailmarketsizeofFrance.
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In2011,foodaccountedfor70%ofIndianretail,butwasunderrepresentedbyorganisedretail.A.T.
KearneyestimatesIndia'sorganisedretailhada31%shareinclothingandapparel,whilethehomesupplies
retailwasgrowingbetween20%to30%peryear.[36]Thesedatacorrespondtoretailprospectspriorto
Novemberannouncementoftheretailreform.
ItmightbetruethatIndiahasthelargestnumberofshopsperinhabitant.Howevertherearedetailedfigures
forBelgium,theNetherlandsandLuxemburg.InBelgium,thenumberofoutletsisapproximately8per
1,000andintheNetherlandsitis6.SotheIndiannumbermustbefarhigher.

TheIndianretailmarket
Traditionalretailformat
Modernretailformat
Country

ModernRetail
(in2011,%of
total)[37]

India

7%

China

20%

Aspicemarket

Thailand 40%
United
States

85%

Indianmarkethashighcomplexitiesintermsofawidegeographicspread
anddistinctconsumerpreferencesvaryingbyeachregionnecessitatinga
needforlocalizationevenwithinthegeographiczones.Indiahashighest
Checkoutlanes,organised
numberofoutletsperperson(7perthousand)Indianretailspacepercapita
retailinMalad,Mumbai
at2sqft(0.19m2)/personislowestintheworldIndianretaildensityof6
percentishighestintheworld.[38]1.8millionhouseholdsinIndiahavean
annualincomeofover 4.5million(US$70,192.80).[39]
WhileIndiapresentsalargemarketopportunitygiventhenumberandincreasingpurchasingpowerof
consumers,therearesignificantchallengesaswellgiventhatover90%oftradeisconductedthrough
independentlocalstores.Challengesinclude:Geographicallydispersedpopulation,smallticketsizes,
complexdistributionnetwork,littleuseofITsystems,limitationsofmassmediaandexistenceof
counterfeitgoods.[40]
AnumberofmergerandacquisitionshavebeguninIndianretailmarket.PWCestimatesthemultibrand
retailmarkettogrowto$220billionby2020.[41]
Indianretailers

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A2012PWCreportstatesthatmodernretailinghasa5%marketshareinIndiawithabout$27billionin
sales,andisgrowingat15to20%peryear.[41]Therearemanymodernretailformatandmallcompaniesin
India.Someexamplesareinthefollowingtable.
IndianRetail
Group

MarketReachin2011andNotes[41]

PantaloonRetail

65storesand21factoryoutletsin35cities,2millionsquarefeetspace

ShoppersStop

51storesin23cities,3.2millionsquarefeetspace

SpencersRetail

200storesin45cities,1millionsquarefeetspace

RelianceRetail

708martandsupermarkets,20wholesalestoresin15cities,508fashionand
lifestyle
1206crore(US$190million)permonthsalesin2013[42]

BhartiRetail

74Easydaystores,planstoadd10millionsquarefeetby2017

BirlaMore

575storesnationwide

TataTrent

59Westsidemallstores,13hypermarkets

LifestyleRetail

15lifestylestores,8homecenters

FutureGroup

193storesin3cities,[43]oneofthreelargestsupermarketsretailerinIndiabysales
916crore(US$140million)permonthsalesin2013[42]

Challenges
AMcKinseystudyclaimsretailproductivityinIndiaisverylowcomparedtointernationalpeermeasures.
Forexample,thelaborproductivityinIndianretailwasjust6%ofthelaborproductivityinUnitedStatesin
2010.India'slaborproductivityinfoodretailingisabout5%comparedtoBrazil's14%whileIndia'slabor
productivityinnonfoodretailingisabout8%comparedtoPoland's25%.[44]
TotalretailemploymentinIndia,bothorganisedandunorganised,accountforabout6%ofIndianlabor
workforcecurrentlymostofwhichisunorganised.ThisaboutathirdoflevelsinUnitedStatesand
Europeandabouthalfoflevelsinotheremergingeconomies.Acompleteexpansionofretailsectorto
levelsandproductivitysimilartootheremergingeconomiesanddevelopedeconomiessuchastheUnited
Stateswouldcreateover50millionjobsinIndia.Traininganddevelopmentoflaborandmanagementfor
higherretailproductivityisexpectedtobeachallenge.
[45]

InNovember2011,theIndiangovernmentannouncedrelaxationofsomerulesandtheopeningofretail
markettocompetition.

Indiaretailreforms
Until2011,Indiancentralgovernmentdeniedforeigndirectinvestment(FDI)inmultibrandIndianretail,
forbiddingforeigngroupsfromanyownershipinsupermarkets,conveniencestoresoranyretailoutlets,to
sellmultipleproductsfromdifferentbrandsdirectlytoIndianconsumers..
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ThegovernmentofManmohanSingh,primeminister,announcedon24November2011the
following:[30][46]
Indiawillallowforeigngroupstoownupto51percentin"multibrandretailers",assupermarkets
areknowninIndia,inthemostradicalproliberalisationreformpassedbyanIndiancabinetinyears
singlebrandretailers,suchasAppleandIkea,canown100percentoftheirIndianstores,upfromthe
previouscapof51percent
bothmultibrandandsinglebrandstoresinIndiawillhavetosourcenearlyathirdoftheirgoods
fromsmallandmediumsizedIndiansuppliers
allmultibrandandsinglebrandstoresinIndiamustconfinetheiroperationsto53oddcitieswitha
populationoveronemillion,outofsome7935townsandcitiesinIndia.Itisexpectedthatthese
storeswillnowhavefullaccesstoover200millionurbanconsumersinIndia
multibrandretailersmusthaveaminimuminvestmentofUS$100millionwithatleasthalfofthe
amountinvestedinbackendinfrastructure,includingcoldchains,refrigeration,transportation,
packing,sortingandprocessingtoconsiderablyreducethepostharvestlossesandbringremunerative
pricestofarmers
theopeningofretailcompetitionwillbewithinIndia'sfederalstructureofgovernment.Inother
words,thepolicyisanenablinglegalframeworkforIndia.ThestatesofIndiahavetheprerogativeto
acceptitandimplementit,ortheycandecidetonotimplementitiftheysochoose.Actual
implementationofpolicywillbewithintheparametersofstatelawsandregulations.
TheopeningofretailindustrytoglobalcompetitionisexpectedtospuraretailrushtoIndia.Ithasthe
potentialtotransformnotonlytheretailinglandscapebutalsothenation'sailinginfrastructure.,[30][47]
AWallStreetJournalarticleclaimsthatfreshinvestmentsinIndianorganisedretailwillgenerate10
millionnewjobsbetween20122014,andaboutfivetosixmillionoftheminlogisticsaloneeventhough
theretailmarketisbeingopenedtojust53citiesoutofabout8000townsandcitiesinIndia.[47]

Indianretailreformsonhold
AccordingtoBloomberg,on3December2011,theChiefMinisteroftheIndianstateofWestBengal,
MamataBanerjee,whoisagainstthepolicyandwhoseTrinamoolCongressbrings19votestotheruling
Congresspartyledcoalition,claimedthatIndiasgovernmentmayputtheFDIretailreformsonholduntil
itreachesconsensuswithintherulingcoalition.Reutersreportsthatthisriskedapossibledilutionofthe
policyratherthanachangeofheart.,[48][49][50]
Severalnewspapersclaimedon6December2011thatIndiaparliamentisexpectedtoshelveretailreforms
whiletherulingCongresspartyseeksconsensusfromtheoppositionandtheCongressparty'sowncoalition
partners.Suspensionofretailreformson7December2011wouldbe,thereportsclaimed,anembarrassing
defeatfortheIndiangovernment,suggestingitisweakandineffectiveinimplementingitsideas.[51]
AnandSharma,India'sCommerceandIndustryMinister,afterameetingofallpoliticalpartieson7
December2011said,"Thedecisiontoallowforeigndirectinvestmentinretailissuspendedtillconsensus
isreachedwithallstakeholders."[7]
On19Feb2013TamilNadubecamethefirststateinthecountrytostoutlyresistMNC'invasion'intothe
domesticretailsector.InChennai,TamilNaduCMDAauthoritiesplacedasealonthemassivewarehouse
spreadingacross7acresthathadreportedlybeenbuiltforoneoftheworldsleadingmultinationalretail
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giants,Walmart.[52]
InFebruary2014,VasundharaRajelednewlyelectedRajasthanGovernmentreversedtheearlier
Government'sdecisionofallowingFDIinretailinthestate.Itreasonedthatthesourcesofdomesticretail
areprimarilylocalwhereasinternationalretailaffectsdomesticmanufacturingactivityandhencereduces
employmentopportunities.[53]

Singlebrandretailreformsapproved
On11January2012,Indiaapprovedincreasedcompetitionandinnovationinsinglebrandretail.[54]
Thereformseekstoattractinvestmentsinoperationsandmarketing,improvetheavailabilityofgoodsfor
theconsumer,encourageincreasedsourcingofgoodsfromIndia,andenhancecompetitivenessofIndian
enterprisesthroughaccesstoglobaldesigns,technologiesandmanagementpractices.Inthisannouncement,
Indiarequiressinglebrandretailer,withgreaterthan51%foreignownership,tosourceatleast30%ofthe
valueofproductsfromIndiansmallindustries,villageandcottageindustries,artisansandcraftsmen.
MikaelOhlsson,chiefexecutiveofIKEA,announcedIKEAispostponingitsplantoopenstoresinIndia.
HeclaimedthatIKEA'sdecisionreflectsIndiasrequirementsthatsinglebrandretailerssuchasIKEA
source30percentoftheirgoodsfromlocalsmallandmediumsizedcompanies.Thiswasanobstacleto
IKEA'sinvestmentinIndia,andthatitwilltakeIKEAsometimetosourcegoodsanddevelopreliable
supplychainsinsideIndia.IkeaannouncedthatitplanstodoublewhatitsourcesfromIndiaalreadyforits
globalproductrange,toover$1billionayear,withinthreeyears.IKEAinthenearterm,planstofocus
expansioninsteadinChinaandRussia,wheresuchrestrictionsdonotexist.[10]
On19Feb2013TamilNadubecamethefirststateinthecountrytostoutlyresistMNC'invasion'intothe
domesticretailsector.InChennai,TamilNaduCMDAauthoritiesplacedasealonthemassivewarehouse
spreadingacross7acresthathadreportedlybeenbuiltforoneoftheworldsleadingmultinationalretail
giants,Walmart.[52]

Socialimpactandcontroversywithretailreforms
TheNovember2011retailreformsinIndiahavesparkedintenseactivism,bothinoppositionandinsupport
ofthereforms.

ControversyoverallowingForeignretailers
CriticsofderegulatingretailinIndiaaremakingoneormoreofthefollowingclaims:,[55][56]
Independentstoreswillclose,leadingtomassivejoblosses.Walmartemploysveryfewpeopleinthe
UnitedStates.IfallowedtoexpandinIndiaasmuchasWalmarthasexpandedintheUnitedStates,
fewthousandjobsmaybecreatedbutmillionswillbelost.
Walmart'sefficiencyatsupplychainmanagementleadstodirectprocurementofgoodsfromthe
supplier.Inadditiontoeliminatingthe"middleman",duetoitsstatusastheleadingretailer,
suppliersofgoodsarepressuredtodroppricesinordertoassureconsistentcashflow.
Thesmallretailerandthemiddlemanpresentintheretailindustryplayalargepartinsupportingthe
localeconomy,sincetheytypicallyprocuregoodsandservicesfromtheareatheyhavetheirretail
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shopsin.Thisleadstoincreasedeconomicactivity,and
wealthredistribution.Withlarge,efficientretailers,goodsare
acquiredinotherregions,hencereducingthelocaleconomy.
Walmartwilllowerpricestodumpgoods,getcompetitionout
oftheway,becomeamonopoly,thenraiseprices.Itisargued
thiswasthecaseofthesoftdrinksindustry,wherePepsiand
CocaColacameinandwipedoutallthedomesticbrands.
Indiadoesn'tneedforeignretailers,sincehomegrown
companiesandtraditionalmarketshavebeenabletodothe
job.
Ahorticulturalproduceretailmarket
WorkwillbedonebyIndians,profitswillgotoforeigners.
inKolkata,Indiaproducelossin
LiketheEastIndiaCompany,WalmartcouldenterIndiaasa
theseretailformatsisveryhighfor
traderandthentakeoverpolitically.
perishables
TherewillbesterilehomogeneityandIndiancitieswilllook
likecitiesanywhereelse.
Thegovernmenthasn'tbuiltconsensus.
Thegovernmentclaimsmodernretailwillcreate4millionnewjobs.Thiscannotbetruebecause
Walmart,withover9000storesworldwide,hasonly2.1millionemployees.[57]
TheDemocraticstaffoftheU.S.HouseCommitteeonEducationandtheWorkforceReportWal
Martslowwagesandtheireffectontaxpayersandeconomicgrowth.[58]
Supportersclaimnoneoftheseobjectionshasmerit.Theyclaim:[56]
Organisedretailwillneedworkers.Walmartemploys1.4millionpeopleinUnitedStatesalone.[59]
WithUnitedStatespopulationofabout300million,andIndia'spopulationofabout1200million,if
WalmartlikeretailcompaniesweretoexpandinIndiaasmuchastheirpresenceintheUnitedStates,
andthestaffinglevelinIndianstoreskeptatthesamelevelasintheUnitedStatesstores,Walmart
alonewouldemploy5.6millionIndiancitizens.Walmarthasa6.5%marketshareofthetotalUnited
Statesretail.Adjustedforthismarketshare,theexpectedjobsinfutureIndianorganisedretailwould
totalover85million.Inaddition,millionsofadditionaljobswillbecreatedduringthebuildingof
andthemaintenanceofretailstores,roads,coldstoragecenters,softwareindustry,electroniccash
registersandotherretailsupportingorganisations.Insteadofjoblosses,retailreformsarelikelytobe
massiveboosttoIndianjobavailability.
KPMGoneoftheworld'slargestauditcompaniesfindsthatinChina,theemploymentinboth
retailandwholesaletradeincreasedfrom4%in1992toabout7%in2001,postChinaopeningits
retailtoforeignanddomesticinnovationandcompetition.Inabsoluteterms,Chinaexperiencedthe
creationof26millionnewjobswithin9years,postChinaannouncingFDIretailreforms.
Additionally,contrarytosomeconcernsinChina,postretailreforms,thenumberoftraditionalsmall
retailersalsogrewby30%over5years.[20]
Indianeedstrillionsofdollarstobuilditsinfrastructure,hospitals,housingandschoolsforits
growingpopulation.TheIndianeconomyissmall,withlimitedsurpluscapital.Thegovernmentis
alreadyoperatingonbudgetdeficits.ItissimplynotpossibleforIndianinvestorsorthegovernment
tofundthisexpansion,jobcreationandgrowthattherateIndianeeds.Globalinvestmentcapital
throughFDIisnecessary.Beyondcapital,theIndianretailindustryneedsknowledgeandglobal
integration.Globalretailleaders,someofwhicharepartlyownedbypeopleofIndianorigin,[60]can
bringthisknowledge.GlobalintegrationcanpotentiallyopenexportmarketsforIndianfarmersand
producers.Walmart,forexample,expectstosourceandexportsome$1billionworthofgoodsfrom
Indiaeveryyear,sinceitcameintoIndianwholesaleretailmarket.[61]
Walmart,Carrefour,Tesco,Target,Metro,Cooparesomeofover350globalretailcompanieswith
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annualsalesover$1billion.Theseretailcompanieshaveoperatedforover30yearsinnumerous
countries.Theyhavenotbecomemonopolies.CompetitionbetweenWalmartlikeretailershaskept
foodpricesincheck.CanadacreditstheirverylowinflationratestoWalmarteffect.[62]Antitrust
lawsandstateregulations,suchasthoseinIndianlegalcode,havepreventedfoodmonopoliesfrom
forminganywhereintheworld.Priceinflationinthesecountrieshasbeen5to10timeslowerthan
priceinflationinIndia.ThecurrentconsumerpriceinflationinEuropeandtheUnitedStatesisless
than2%,comparedtoIndia'sdoubledigitinflation.
ThePepsiandCocaColaexampleismeaninglessinthecontextofIndianbeveragemarket.More
competitionislackingbecauseoflimiteddemand.Indianconsumerhaslimitedinterestinsoftdrinks.
Softdrinksrepresentlessthan5%ofIndianbeveragemarket.[63]Indianconsumersprefermilk
based,teaandcoffeeandtheseaccountfor90%ofIndianbeveragemarket,withplentyofcompeting
domesticbrandsandevenEuropeanbrandslikeNestl.ThenextmostimportantmarketinIndiais
bottledwater,whichoutsellsthecombinedsoftdrinksalesofthePepsiandCocaCola.Organised
retailtoowillhavenumerousbrandsandstrongcompetition.
Comparingthe21stcenturytothe18thcenturyisinappropriate.Conditionstodayaredifferent.India
wasn'tademocracythen.Globalawarenessandnewsmediahavealsochanged.Forexample,China
hasover57millionsquarefeetofretailspaceownedbyforeigners,employingmillionsofChinese
citizens.Yet,Chinahasn'tbecomeavassalofimperialists,enjoyingrespectfromallglobalpowers.
OtherAsiancountrieslikeMalaysia,Taiwan,ThailandandIndonesiaseeforeignretailersascatalysts
ofnewtechnologyandpricereductionandtheyhavebenefitedbywelcomingFDIinretail.Indiatoo
willbenefitbyintegratingwiththeworld,ratherthanisolatingitself.[64]
With51%FDIlimitinmultibrandretailers,nearlyhalfofanyprofitswillremaininIndia.Any
profitswillbesubjecttotaxes,andsuchtaxeswillreduceIndiangovernmentbudgetdeficit.Many
yearsago,ChinaadoptedtheretailreformpolicyIndiahasannouncedallowingFDIinitsretail
sector.FDIfinancedretailersinChinatookbetween5to10yearstopostprofits,inlargepart
becauseofhugeinvestmentsinitiallymade.LikeChina,itisunlikelyforeignretailerswillearnany
profitsinIndiaforthefirst5to10years.[35]Ultimately,retailcompaniesmustearnprofitsby
creatingvalue.
StateshavearighttosaynotoretailFDIwithintheirjurisdiction.[46]Stateshavetherighttoadd
restrictionstotheretailpolicyannouncedbeforetheyimplementthem.Thus,theycanplacelimitson
number,marketshare,style,diversity,homogeneityandotherfactorstosuittheircultural
preferences.Finally,infuture,statescanalwaysintroduceregulationsandIndiacanchangethelaw
toensurethebenefitsofretailreformsreachthepoorestandweakestsegmentsofIndiansociety,free
andfairretailcompetitiondoesindeedleadtosharplylowerinflationthancurrentlevels,small
farmersgetbetterprices,jobscreatedbyorganisedretailpaywell,andhealthierfoodbecomes
availabletomorehouseholds.
Inbuiltinefficienciesandwastageindistributionandstorageaccountforwhy,accordingtosome
estimates,asmuchas40%offoodproductiondoesn'treachconsumers.Fiftymillionchildrenin
Indiaaremalnourished.[56]Foodoftenrotsinfarms,intransit,orinantiquatedstaterunwarehouses.
Costconsciousorganisedretailcompanieswillavoidwasteandloss,makingfoodavailabletothe
weakestandpoorestsegmentofIndiansociety,whileincreasingtheincomeofsmallfarmers.
Walmart,forexample,sinceitsarrivalinIndianwholesaleretailmarket,hassuccessfullyintroduced
the"DirectFarmProject"atHaiderNagarnearMalerkotlainPunjab,where110farmershavebeen
connectedwithBhartiWalmartforsourcingfreshvegetablesdirectly,therebyreducingwasteand
bringingfresherproducetoIndianconsumers.[61]
Indiansmallshopsemployworkerswithoutpropercontracts,makingthemworklonghours.Many
unorganisedsmallshopsdependonchildlabour.Awellregulatedretailsectorwillhelpcurtailsome
oftheseabuses.[56]
Organisedretailhasenabledawiderangeofcompaniestostartandflourishinothercountries.For
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example,intheUnitedStates,retailerWholeFoodshasrapidlygrowntoannualrevenuesof$9
billionbyworkingcloselywithfarmers,delightingcustomersandcaringaboutthecommunitiesit
hasstoresin.[65]
Theclaimsthatthereisnoconsensusiswithoutmerit.About10yearsago,whenoppositionformed
thecentralgovernment,theyhadproposedretailreformsandsuggestedIndiaconsiderFDIinretail.
Retailreformsdiscussionsarenotnew.Morerecently,retailreformsannouncedevolvedaftera
processofintenseconsultationsandconsensusbuildinginitiative.In2010,theIndiangovernment
circulatedadiscussionpaperonFDIretailreforms.[20]On6July2011,anotherversionofthe
discussionpaperwascirculatedbythecentralgovernmentofIndia.[66]Commentsfromawidecross
sectionofIndiansocietyincludingfarmers'associations,industrybodies,consumerforums,
academics,traders'associations,investors,economistswereanalysedindepthbeforethematterwas
discussedbytheCommitteeofSecretaries.ByearlyAugust2011,theconsensusfromvarious
segmentsofIndiansocietywasoverwhelminginfavourofretailreforms.[67]Thereformoutlinewas
presentedinIndia'sRajyaSabhainAugust2011.Theannouncedreformsaretheresultofthis
consensusprocess.Thecurrentoppositionisnothelpingtheconsensusprocess,sinceconsensusis
notbuiltbythreatsanddisruption.Thosewhoopposecurrentretailreformsshouldhelpbuild
consensuswithideasandproposals.TheoppositionpartiescurrentlydisruptingtheIndianparliament
onretailreformshavenotofferedevenoneideaorasingleproposalonhowIndiacaneliminatefood
spoilage,reduceinflation,improvefoodsecurity,feedthepoor,improvetheincomesofsmall
farmers.
AstudybyGlobalInsightsresearchfoundthatmodernretailerssuchasWalmartcreatejobsdirectly,
indirectlyandbyinducedeffects.InDallasFortWorthareaoftheUnitedStates,withapopulationof
about2millionpeople,GlobalInsightsfoundthatWalmartalonehadhelpedcreateabout6,300new
netjobswithanaveragesalaryofover$21,000each.[68]ForIndia'surbanpopulationofover400
million,anaveragesalaryoflessthan$2,100peryear,thisscalestoover12millionnewjobs.Other
multibrandretailers,suchasMitsukoshiofJapan,employamuchhighernumberofsalessupport
employeeperstore,thanWalmart,tosuitlocalconsumerculture.TheGlobalInsightsstudyalso
foundthatthemodernretailsuchasWalmartwereakeycontributorincreatingnewnetjobsand
maintaininglowconsumerpriceinflationratesfrom1985to2005.

Oppositiontoretailreforms
Withinaweekofretailreformannouncement,Indiangovernmenthasfacedapoliticalbacklashagainstits
decisiontoallowcompetitionand51%ownershipofmultibrandorganisedretailinIndia.
DespitethefactthatSalmanKhurshid,Indiaslawminister,claimingthatmanyoppositionparties,
includingtheBharatiyaJanataParty,hadprivatelyencouragedthegovernmenttopushthroughtheretail
reform,theintensecriticismnowtargetsCongressledcoalitiongovernment,anditsdecisiontopush
throughoneofthebiggesteconomicreformsinyearsforIndia.Oppositionpartiesclaimsupermarket
chainsareilladvised,unilateralandunwelcome.[69]
Theoppositionclaimstheentryoforganisedretailerswouldleadtotheirdominancethatwoulddecimate
localretailersandforcemillionsofpeopleoutofwork.
MamataBanerjee,thechiefministerofWestBengalandtheleaderoftheTrinamoolCongress,announced
heroppositiontoretailreform,claiming"Somepeoplemightsupportit,butIdonotsupportit.Yousee
AmericaisAmericaandIndiaisIndia.Onehastoseewhatonescapacityis".[70]

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OtherstateswhoseChiefMinistershaveeitherpersonallyannouncedoppositionorannouncedreluctanceto
implementtheretailreforms:TamilNadu,UttarPradesh,BiharandMadhyaPradesh.
ChiefMinistersofmanystateshavenotmadeapersonalstatementinoppositionorsupportofIndia
needingretailreforms.Gujarat,Kerala,KarnatakaandRajasthanareexamplesofthesestates.Bothsides
havemadeconflictingclaimsaboutthepositionofchiefministersfromthesestates.
AWallStreetJournalarticlereportsthatinUttarPradesh,UmaBharti,aseniorleaderoftheopposition
BharatiyaJanataParty(BJP),threatenedto"setfiretothefirstWalMartstorewheneveritopens"withher
colleagueSushmaSwarajbusytweetingupastormofmisinformationabouthowWalMartallegedly
ruinedtheU.S.economy.[71][72]
On1December2011,anIndiawide"bandh"(closeallbusinessinprotest)wascalledbypoliticalparties
opposingtheretailreform.Whilemanyorganisationsresponded,thereachoftheprotestwasmixed.[73]The
TimesofIndia,anationalnewspaperofIndia,claimedpeopleappeareddividedoverthebandhcalland
internalrivalryamongtradeassociationsledtoamixedresponse,leavingmanystoresopendaylongand
othersopeningforbusinessasusualinthesecondhalfoftheday.EvenPurtiGroup,anetworkofstores
ownedandoperatedbyNitinGadkariwereopenforbusiness,ignoringthecallforbandh.Gadkariisthe
presidentofBJP,thekeypartycurrentlyorganisingoppositiontoretailreform.[74]
TheHindu,anotherwidelycirculatednewspaperinIndia,claimedtheopposition'scallforanationwide
shutdownon1December2011,inprotestofretailreformreceivedamixedresponse.Somestateshad
strongsupport,whilemostdidnot.Eveninstateswhereoppositionpoliticalpartiesareinpower,many
ignoredthecallfortheshutdown.InGujarat,Bihar,Delhi,AndhraPradesh,Haryana,PunjabandAssam
thecallevokedapartialresponse.Whileanumberofwholesalemarketsobservedtheshutdown,the
newspaperclaimedamajorityofkiranastoresandneighborhoodsmallshopsforwhomapparentlythe
tradebandhhadbeencalledremainedopen,ignoringtheshutdowncall.Conflictingclaimsweremadeby
theorganisersofthenationwideshutdown.Contrarytoeyewitnessreports,oneTraderunion'ssecretary
generalclaimedtradersacrossthecountryparticipatedwholeheartedlyinthestrike.[75]
ThepoliticalpartiesopposingtheretailreformsphysicallydisruptedandforcedIndia'sparliamentto
adjournagainonFriday2December2011.TheIndiangovernmentrefusedtocavein,initsattemptto
convincethroughdialoguethatretailreformsarenecessarytoprotectthefarmersandconsumers.Indian
parliamenthasbeendysfunctionalfortheentireweekof28November2011overtheoppositiontoretail
reforms.[76]

Supportforretailreforms
InapanIndiansurveyconductedovertheweekendof3December2011,overwhelmingmajorityof
consumersandfarmersinandaroundtenmajorcitiesacrossthecountrysupporttheretailreforms.Over90
percentofconsumerssaidFDIinretailwillbringdownpricesandofferawiderchoiceofgoods.Nearly78
percentoffarmerssaidtheywillgetbetterpricesfortheirproducefrommultiformatstores.Over75per
centofthetradersclaimedtheirmarketingresourceswillcontinuetobeneededtopushsalesthrough
multiplechannels,buttheymayhavetoacceptlowermarginsforgreatervolumes.[77]

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AstudyinIndiaontitle'ForeignDirectInvestmentInIndianRetailSector:Drawinglessonsfromthe
internationalexperience',concludedthattheentryofFDIinmultibrandretailinIndiacanbegrowth
enhancingonlyifpropersafeguardsareinplaceandthemarketenvironmentisregulated.Firstly,the
resourcesshouldbededicatedforacomprehensivestudyofretailanditsrelatedindustries.Secondly,the
numberofbigretailoutletsinaparticularcityshouldbedecidedonthebasisofpopulationcriterionandthe
employmentleveloflocalyouthintheretailbusiness.Thirdly,theformatoftheseretailchainsshouldalso
beregulatedasisdoneinMalaysiancase.Theyshouldnotbeintheformofneighborhoodconvenience
storeandthereshouldbeminimumandmaximumlimitofthesizeofthesestores.Fourthly,itisimportant
toensurethatnosingleretailermonopolizestheprocurementoperationsinanarea,districtorstateinorder
toprotectthelocalsuppliers.Lastly,thepredatorypricingandtheanticompetitivepracticesofthese
internationalretailersshouldbeprohibitedinordertocreateaplayingfieldforlocalretailersSOURCE
(http://ijtemt.org/vol2issue5/Foreign_Direct_Investment.html).[78]
Farmergroups
VariousfarmerassociationsinIndiahaveannouncedtheirsupportfortheretailreforms.Forexample:
ShriramGadhveofAllIndiaVegetableGrowersAssociation(AIVGA)claimshisorganisation
supportsretailreform.Heclaimedthatcurrently,itisthemiddlemencommissionagentswhobenefit
atthecostoffarmers.Heurgedthattheretailreformmustfocusonruralareasandthatfarmers
receivebenefits.Gadhveclaimed,"Abettercoldstoragewouldhelpsincethiscouldhelppreventthe
existinglossof34%offruitsandvegetablesduetoinefficientsystemsinplace."AIVGAoperatesin
ninestatesincludingMaharashtra,AndhraPradesh,WestBengal,Bihar,Chhattisgarh,Punjaband
Haryanawith2,200farmeroutfitsasitsmembers.[79]
BharatKrishakSamaj,afarmerassociationwithmorethan75,000memberssaysitsupportsretail
reform.AjayVirJakhar,thechairmanofBharatKrishakSamaj,claimedamonopolyexistsbetween
theprivateguildsofmiddlemen,commissionagentsatthesabzimandis(India'swholesalemarkets
forvegetablesandfarmproduce)andthesmallshopkeepersintheunorganisedretailmarket.Given
theperishablenatureoffoodlikefruitandvegetables,withouttheoptionofsafeandreliablecold
storage,thefarmeriscompelledtosellhiscropatwhateverpricehecanget.Hecannotwaitfora
betterpriceandisthusexploitedbythecurrentmonopolyofmiddlemen.Jakharaskedthatthe
governmentmakeitmandatoryfororganisedretailerstobuy75%oftheirproducedirectlyfrom
farmers,bypassingthemiddlemenmonopolyandIndia'ssabzimandiauctionsystem.[79]
ConsortiumofIndianFarmersAssociations(CIFA)announceditssupportforretailreform.Chengal
Reddy,secretarygeneralofCIFAclaimedretailreformcoulddolotsforIndianfarmers.Reddy
commented,"Indiahas600millionfarmers,1,200millionconsumersand5milliontraders.Ifailto
understandwhypoliticalpartiesaretakinganantifarmerstandandworriedabouthalfamillion
brokersandsmallshopkeepers".CIFAmainlyoperatesinAndhraPradesh,KarnatakaandTamil
NadubuthasagrowingmembersfromrestofIndia,includingShetkariSanghatanainMaharashtra,
RajasthanKisanUnionandHimachalFarmerOrganisations.
PrakashThakur,thechairmanofthePeopleforEnvironmentHorticulture&LivelihoodofHimachal
Pradesh,announcinghissupportforretailreformsclaimedFDIisexpectedtorolloutproduce
storagecentersthatwillincreasemarketaccess,reducethenumberofmiddlemenandenhance
returnstofarmers.[80]Highlyperishablefruitslikecherry,apricot,peachesandplumshaveahuge
demandbutareunabletotapthemarketfullybecauseoflackofcoldstorageandtransport
infrastructure.Saleswillboostwiththeopeningupofretail.EventhoughIndiaisthesecondlargest
produceroffruitsandvegetablesintheworld,itsstorageinfrastructureisgrosslyinadequate,claimed
Thakur.
SharadJoshi,founderofShetkariSangathana(farmersassociation),hasannouncedhissupportfor
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retailreforms.[81]JoshiclaimsFDIwillhelpthefarmsectorimprovecriticalinfrastructureand
integratefarmerconsumerrelationship.Today,theexistingretailhasnotbeenabletosupplyfresh
vegetablestotheconsumersbecausetheyhavenotinvestedinthebackwardintegration.Whenthe
farmers'producereachestheendconsumerdirectly,thefarmerswillnaturallybebenefited.Joshi
feelsretailreformisjustafirststepofneededagriculturalreformsinIndia,andthatthegovernment
shouldpursueadditionalreforms.
Suryamurthy,inanarticleinTheTelegraph,claimsfarmergroupsacrossIndiadonotsupportstatusquo
andseekretailreforms,becausewiththecurrentretailsystemthefarmerisbeingexploited.Forexample,
thearticleclaims:[80]
Indianfarmersgetonlyonethirdofthepriceconsumerspayforfoodstaples,therestistakenas
commissionsandmarkupsbymiddlemenandshopkeepers
Forperishablehorticultureproduce,averagepricefarmersreceiveisbarely12to15%ofthefinal
priceconsumerpays
IndianpotatofarmersselltheircropforRs.2to3akilogram,whiletheIndianconsumerbuysthe
samepotatoforRs.12to20akilogram.[82]
Economistsandentrepreneurs
ManybusinessgroupsinIndiaarewelcomingthetransformationofalongprotectedsectorthathasleft
Indianshoppersbereftofthescaleandvarietyoftheircounterpartsinmoredevelopedmarkets.[69]
B.Muthuraman,thepresidentoftheConfederationofIndianIndustry,claimedtheretailreformwould
openenormousopportunitiesandleadtomuchneededinvestmentincoldchain,warehousingandcontract
farming.
Organisedretailerswillreducewastebyimprovinglogistics,creatingcoldstoragetopreventfoodspoilage,
improvehygieneandproductsafety,reducecounterfeittradeandtaxevasiononexpensiveitempurchases,
andcreatedependablesupplychainsforsecuresupplyoffoodstaples,fruitsandvegetables.Theywill
increasechoiceandreduceIndiasrampantinflationbyreducingwaste,spoilageandcuttingout
middlemen.Freshinvestmentinorganisedretail,thesupportersofretailreformclaimwillgenerate10
millionnewjobsby2014,aboutfivetosixmillionoftheminlogisticsalone.[71]
OrganisedretailwillofferthesmallIndianfarmermorecompetingvenuestosellhisorherproducts,and
increaseincomefromlessspoilageandwaste.AFoodandAgriculturalOrganisationreportclaimsthat
currently,inIndia,thesmallfarmerfacessignificantlossespostharvestatthefarmandbecauseofpoor
roads,inadequatestoragetechnologies,inefficientsupplychainsandfarmer'sinabilitytobringtheproduce
intoretailmarketsdominatedbysmallshopkeepers.TheseexpertsclaimIndia'spostharvestlossesto
exceed25%,onaverage,everyyearforeachfarmer.,[83][84]
Unlikethecurrentmonopolyofmiddlemenbuyer,retailreformsofferfarmersaccesstomorebuyersfrom
organisedretail.Morebuyerswillcompeteforfarmersproduceleadingtobettersupportforfarmersandto
betterbids.Withlessspoilageofstaplesandagriculturalproduce,globalretailcompaniescanfindand
provideadditionalmarketstoIndianfarmers.Walmart,sinceitsarrivalinIndia'swholesaleretailmarket,
alreadysourcesandexportsabout$1billionworthofIndiangoodsforitsglobalcustomers.

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NotonlydotheselossesreducefoodsecurityinIndia,thestudyclaimsthatpoorfarmersandotherslose
incomebecauseofthewasteandinefficientretail.OverUS$50billionofadditionalincomecanbecome
availabletoIndianfarmersbypreventingpostharvestfarmlosses,improvingtransport,properstorageand
retail.Organisedretailisalsoexpectedtoinitiateinfrastructuredevelopmentcreatingmillionsofruraland
urbanjobsforIndiasgrowingpopulation.Onestudyclaimsthatifthesepostharvestfoodstaplelosses
couldbeeliminatedwithbetterinfrastructureandretailnetworkinIndia,enoughfoodwouldbesaved
everyyeartofeed70to100millionpeopleovertheyear.[85]
Supportersofretailreform,TheEconomistclaims,sayitwillincreasecompetitionandqualitywhile
reducingpriceshelpingtoreduceIndia'srampantinflationthatisclosetothedoubledigits.These
supportersclaimthatunorganisedsmallshopkeeperswillcontinuetoexistalongsidelargeorganised
supermarkets,becauseformanyIndianstheywillremainthemostaccessibleandmostconvenientplaceto
shop.[86]
AmartyaSen,theIndianbornNobelPrizewinningeconomist,inaDecember2011interviewclaims
foreigndirectinvestmentinmultibrandretailcanbegoodthingorbadthing,dependingonthenatureof
theinvestment.Quiteoften,claimsProfessorSen,FDIisagoodthingforIndia.[87]
Allowedinsomestates,bannedinothers
Thegovernmentsofsomestates,particularlyCongressruledstateshavesaidtheywillallowforeign
supermarketstoopenintheirstate:
AndhraPradesh,Assam,Delhi,[88]Haryana,Kashmir,Maharashtra,Manipur,Uttarakhand,Daman&
DiuandDadraandNagarHaveli,willallowforeignretailers.[15]
Otherstates,particularlyBJPruledstateshavesaidtheywillnotallowforeignsupermarketstoopenin
theirstate,theseare:
WestBengal,[89]Gujarat,[89]Bihar,Karnataka,Kerala,MadhyaPradesh,Tripura,and
Orissa,[15]Rajasthan
SupportersofretailreformwhohavevoicedtheneedtopromoteorganisedretailincludeChiefMinistersof
severalstatesofIndia,severalbelongingtopoliticalpartiesthathavenoaffiliationwithCongressled
centralgovernmentofIndia.ThelistincludestheChiefMinistersofMaharashtra,AndhraPradesh,Tamil
NaduandGujarat.Inareportsubmittedearlierin2011,theseChiefMinistersurgedthePrimeMinisterto
prioritizereformstohelppromoteorganisedretail,shortentheretailpathfromfarmtoconsumer,allow
organisedretailtobuydirectfromfarmersatremunerativeproduceprices,andreducefarmtoretail
costs.[90]Similarly,theChiefMinisterofDelhihascomeoutinsupportoftheretailreform,[91]ashavethe
ChiefMinistersofthetwofarmingstatesofHaryanaandPunjabinnorthIndia.,[92][93]TheChiefMinisters
ofHaryanaandPunjabclaimthattheannouncedretailreformswillneverbenefitfarmersintheirstates.
TheChiefMinisterofthestateofMaharashtrathestatewiththebiggestGDPinIndiaandhometoits
financialcapitalMumbaihasalsowelcomedtheretailreform.,[94][95]

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TarunGogoi,theChiefMinisterofAssam,aneasternstateinIndia,announcinghissupporttotheretail
reform,claimed"thiswillgoalongwayinbringingaboutaseachangeinruraleconomy.Thedecisionwill
boostagricultureandalliedsectors,manufacturing,logistics,integratedcoldchains,refrigerated
transportationandfoodprocessingfacilitiesinabigway."CriticisingtheBJPorganisedopposition,Gogoi
claimedthatthesepartieswhohadjustafewyearsagodubbedopeningupretailasgoodforIndia,arenow
singingadifferenttune.[96]
2013stateElections

InDecember2013electionswereheldinthestateofDelhiandanewpartycametopower.[97]Thenew
ChiefMinisterofDelhiopposesforeigninvestmentinretailandhaswrittentothefederalgovernmentto
withdrawpermissiongivenbythepreviousChiefMinistertoallowforeignretailerstoopenshopsinthe
state.[88]ThefederalIndustryMinistryhasrespondedbysayingitdoesnotwantforeigninvestorstothink
ofIndiaasan"unpredictablebananarepublic"thereforetherulesaresuchthatonceastategovernment
allowsforeignretailersinthatstate,theycannotdisallowtheforeignshopsifanewpartycomestopower
inthatstate.[88]
Currentsupermarkets
ExistingIndianretailfirmssuchasSpencer's,FoodworldSupermarketsLtd,Nilgiri'sandShopRitesupport
retailreformandconsiderinternationalcompetitionasablessingindisguise.Theyexpectaflurryofjoint
ventureswithglobalmajorsforexpansioncapitalandopportunitytogainexpertiseinsupplychain
management.Spencer'sRetailwith200storesinIndia,andwithretailoffreshvegetablesandfruits
accountingfor55percentofitsbusinessclaimsretailreformtobeawinwinsituation,astheyalready
procurethefarmproductsdirectlyfromthegrowerstheinvolvementofmiddlemenortraders.Spencers
claimsthatthereisscopeforittoexpanditsfootprintintermsofstorelocationaswellasprocuringfarm
products.Foodworld,whichoperatesover60stores,planstorampupitspresencetomorethan200
locations.IthasalreadytiedupwithHongKongbasedDairyFarmInternational.Withtherelaxationin
internationalinvestmentsinIndianretail,IndiasFoodworldexpectsitsglobalrelationshipwillonlyget
stronger.Competitionandinvestmentinretailwillprovidemorebenefitstoconsumersthroughlower
prices,wideravailabilityandsignificantimprovementinsupplychainlogistics.[98]

Seealso
Indianroadnetwork
AgricultureinIndia
Indianexpressways
FishinginIndia

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