| Officials
said the political push for protecting mom-'n'-pop stores
would not result in action preventing corporate companies
from tapping retail that has grown into a Rs 8,40,000-crore
business.
As opening up of retail to FDI turned into a political
issue recently, Congress president Sonia Gandhi urged
the government to study the impact of MNC supermarkets
on small vendors. The government feels the impact of
corporate retail on mom-'n'-pop stores would be same
as that of MNCs, but officials said there would be no
bar on domestic companies entering retail. This is despite
the prevailing election mood that is giving birth to
populist ideas and schemes.
Nearly 30 representations against corporates and FDI
in retail from industry associations and 20 references
from MPs, including Cabinet ministers, are under consideration
of the government. The commerce & industry minister
has commissioned a study by ICRIER on the impact of
retail on mom-'n'-pop stores but its outcome is unlikely
to result in a situation where the government would
have to rein in corporates, they added.
Taking into consideration the employment-generation
potential of organised retail and benefits to consumers,
the Centre is likely to stick to its stand of backing
organised retail. The officials said private final consumption
expenditure in the country was estimated at Rs 16,90,000
crore in 2003-04, and even a small price-benefit will
enhance purchasing power of consumers. Apart from creating
25 lakh more jobs by 2010, it is felt organised retail
would also produce better quality employment.
Organised retail accounts for nearly 10% of the retail
business and the major players in the segment include
Reliance Retail, RPG, Future Group (Pantaloon), Tata
Group, Reheja Group, Lifestyle India, Piramals, Subhiksha,
Vishal Group, Adani Group and Trinethra. Due to apprehensions
over livelihood security of hawkers selling items like
fruit and vegetables, there have been protests in various
states over organised retail.
Uttar Pradesh recently packed off Reliance Fresh outlets
while protests against the company's outlets broke out
in Delhi and Orissa. Tamil Nadu has also witnessed demands
from small traders to shut Reliance outlets. Kerala
has spoken about banning organised retail while the
Madhya Pradesh government is looking at ways to keep
the situation under control.
"State governments are empowered to take action
against retail players under the Shops & Establishment
Act. We do not plan to arm ourselves with such power
or act against organised retail," officials said.
While retail is estimated to account for 10% of the
country's GDP, modern retail is projected to grow rapidly.
Officials feel that huge investments — in the
range of $25 billion — would be required in the
retail sector over the medium term to meet the growing
purchasing power of the middle class.
Report : http://economictimes.indiatimes.com
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