will improve. 4. Acceleration in growth of retail market will benefit MSME since nearly 35% of goods are already being procured from this sector. A lot of smaller brands have got a tremendous boost through launch of private labels by modern retail. 5. There is the potential of local procurement by global retail chains from India. 6. Modern retailers also welcome the move since they can have strategic partnerships and get much needed capital to expand. The major players are, however, clear that they will not give majority stake to any partner. 7. Entry of foreign players will result in creation of four million new direct jobs and up to six million indirect jobs in areas such as logistics, contract labour for distribution, repackaging, housekeeping and store security. 8. The consumer would get consistent quality and there would be a lower risk of adulteration and counterfeit goods.
large family. Weekend shopping and storing in freezers only moves the wastage from the supply chain to the consumer. 6. Higher investments are required in agriculture to increase their bargaining power before FDI is
allowed in retail. 7. Big retailers use cheap prices only for a few items to lure customers into their stores and charge higher prices for other items to maintain margins. An air-conditioned big box store with provisions for parking and high overheads will pass these on to the consumers. 8. A lot of small retailers will have to close down in the towns where FDI would be allowed in retail. There could be a repetition of Thailand in India. 9. FDI in retail will raise the demand for real estate in retail thereby increasing the rentals and wrong utilisation of agricultural land to put up swanky malls. 10. Foreign players will flood the Indian market with cheap foreign goods impacting local industry. 11. Giant shopping centres will add to our existing urban snarls.
The Opponent’s View 1. FDI in retail is a non-critical area of intervention. There is no lack of access especially in the urban markets. The gloss of a shiny international brand name need not be the differential.
Implementation Problems for Foreign Players 1. Investment of USD 50 million in front end will mean opening up of approximately 1 million square feet of retail space. This would mean around 200 stores of 5,000 square feet or 20 stores of 50,000 square feet. 2. Sourcing of minimum 30% of items from MSME especially for non-food sector will be very difficult since customers prefer established brands. 3. Around 50 licenses are required for opening
2. The role of middlemen in perishables can be altered by policy changes and does not require foreign retail to come in. 3. Foreign retailers will give better prices to farmers in the short term but will squeeze them with growing control on the supply chain. 4. Modern retail is only supporting this move since they are really looking for bailouts and profitable exits from this sector. 5. Big formats are not suitable to the Indian psyche which looks to buy daily for a reasonably
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