Fdi in Indian Retail Sector Analysis of Competition in Agri-Food Sector

Sample this: A ten-year-old (Let us call him Raju!) was asked by his mother to get half a kg sugar and a packet of milk from the nearby grocery shop. Raju goes to the shop and for some reason, that day the prices of the regular milk packet have gone up by a few rupees. Raju was given the exact amount for the things that were to be bought. The grocery shop owner (let’s name him Mr. Lal) is quite known to Raju’s family. He tells the little boy to pay the remaining amount later, and hence Raju gets what his mother had asked for and gets back home. If you imagine a similar situation where Raju is sent to a nearby Super Shoppe (say, a Reliance fresh), I don’t think I need to narrate you what is likely to happen at the end of the story!

Change

comes

with

its

set

of

inevitable

consequences. Speaking of which all the hullabaloo that has come with the central government’s decision to allow Foreign Direct Investment in retail, whether or not the kirana shops will be shut down because of the entry of international bigwigs like Walmart, has got several arguments to it. With liberalised trade policies being openly

practised in our country, FDI will undoubtedly have an effect on the established unorganized retail sector. To elucidate, if we consider the conditions on the basis of which FDI will be allowed to launch their firms, one can actually see that there is no such threat that the kirana shops will face. Foreign retailers will be allowed to set up only in cities with a population of more than 1 million and only in states that want them. The retailers must make a

minimum investment of $100 million and must source at least 30 percent of the goods from local, small industries. One should not forget that the small scale retail shops (mom-and-pop store as they are popularly called) that are spread across in almost every nook and cranny of every available neighbourhood, allow their consumers to be a part of their business, in a way that there is a...

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