FDI IN RETAIL

BY: ABHIJEETUPADHYAY

RETAIL TRADE : BACKBONE OF ECONOMY

Retail trade is worlds oldest business. Retail trade consists of sale of goods & services to consumers for their personal, family or household use. Based on turnover and volume, retail trade is worlds biggest economic activity.

In the year 2000, world turnover in retail trade is estimated around Rs. 3,10,20,000 crores.
In India by investing nominal Capital a person can start retail business. In India Retail shops are generally owned and run by family. The whole family gets self employed.

HISTORIC CONTRIBUTION BY TRADERS :

During Pre-independence days the traders have helped the leaders in all forms like man power and money. In all social activities & establishment of schools, colleges, hospitals mandir, masjid etc. traders have contributed. Round the year 24 hours a day, traders have made all the goods required by customer available to them During the days of acute shortages, the traders have some how managed to arrange goods for its customers. Relationship of Indian traders and more than mere business customers is much

Indian traders have always seen customer satisfaction above personal profit.

SUPPORT AND HELP TO GOVERNMENT

Traders are self employed and give employment to entire family

and others.

Traders give employment to that neglected section of society

who do not get employment any where.

Traders take care of entire family of his employees. All direct and indirect taxes levied by Central, State and local

govt. are deposited by trader in Govt. treasury without any charges or commission from Govt.
calamities, the traders have always come out openly to extend full help to Govt.

During famine, floods, earthquakes tsunami and other natural

CONTRIBUTION OF TRADERS IN ECONOMY

In comparison

traders.

to world, India has largest number of retail

In our country there are about 1,25,00,000 retail out lets.

Retail trade contributes about 10% - 11% of our countrys GDP. Total turnover of retail sector is about Rs. 8,75,000/- crores.

After

agriculture, Retail trade maximum number of persons.

people.

provides

employment

to

1.25 crore shops are providing employment to about 4 crore

In a study conducted by Reserve Bank of India, India Retail

Traders charge less margin.

WHAT WAS THE CRITERIA FOR FDI

Some time in 1991-92, the then Finance Minister and present Prime Minister Dr. Manmohan Singhji referred to certain criteria for allowing Foreign Direct Investment. These were : Establishment of basic industries requiring huge capital and advanced sophisticated technology. Infrastructure projects like electricity generation road building etc. Projects which would generate employment

1.

2.

3.

WILL THIS HAPPEN WITH FDI IN RETAIL TRADE

Throughout the world it is known fact that huge

investment is not required to open a retail shop. sophisticated technology is not required in retail trade. large chain of Retail stores. from day one.

Investment is required to build infrastructure for shop, Small Retail shops provide more employment then There is no gestation period. Hence business starts Instead of developing under developed areas these

stores capture prime commercial property in cities.

 In 60s Big foreign houses entered in retail trade in other parts of

WHAT DO FOREIGN / MULTINATIONAL COMPANIES DO

world.

This is against our culture of One family One shop. These big companies, in order to crush competitors sell goods

cheap. Later on effective prices of goods are increased.

These companies buy material from International market.

Hence local producers are put to loss

These

companies buy in bulk quantities directly manufacturers. The intermediaries loose business. companies have now entered Asian markets.

from

After conquering the markets of Europe and America, these After establishing their footings in Thailand, Indonesia, China,

Japan, Philippines, etc in Asia, these companies are now targeting India.

WHAT HAPPENED IN OTHER ASIAN COUNTRIES

Other countries are also unhappy.

started taking precautions.

Many countries have

Indonesia and Malaysia have established zones within which

these foreigners can do trade.

In Japan Big companies have to discuss with small traders.

There is Zoning system also. Hence these companies have to establish their shops outside city limits. amongst shopkeepers & people in the countries to which these store belong. allow opening of new shops to WALMART. France, Germany and America.

There is wide discontent

The city counselor of California & Chicago have refused to These shops are required to take permission in countries like

NOW ITS TURN OF INDIA

The tough stand taken till recently by Central Govt., Foreign Retail

Traders could not enter India. Retail Trade.

It is unfortunate that Central Cabinet has given approval to FDI in

Shift of Major retail trade to these big companies will render small

traders & their employees unemployed.

Many companies with the help of contract farming will sell goods

produced in farms directly from their chain of stores.

will start dictating.

After establishing control over purchases & sale these companies These companies will keep only graduates and above in their

employment. There will be no scope for employment to under graduate and others. impossible to reach owners.

In the event of non receipt of payment of supplies, it becomes

SELF EMPLOYMENT IN INDIA

India has huge force of unemployed persons.

Govt. has failed to generate need based

employment..

Majority of people in India are self employed. The Major area of self employment is Agriculture

and Retail Trade .

The farmers problems were not addressed timely.

They are committing suicide.

WHAT is the future of Indian Traders in India? WILL next generation pardon us?

WHAT SHOULD GOVT. DO

Govt. should identify the weakness of present retail

trade.

Govt. should specify the areas where customers are

not being served properly.

Govt. should specify what it expects from retail

trade that is not being met presently.

Govt. should publicise the sector / persons who

have demanded FDI in Retail Trade.

Govt. should come out with white paper on FDI in

Retail Trade specifying the picture after 25 years and 50 years.

THANK YOU