January 24th, 2013

The Minister meets Walmart CEO

Here is the official statement by Govt of India:

“Mr Doug McMillon, CEO Walmart International met Union Commerce Industry and Textiles Minster Shri Anand Sharma at Davos today and conveyed that Walmart is `excited about India’ and they are studying the conditions before making the final announcement.

Shri Sharma said that India’s Policy on FDI in Multi Brand retail has finality and they need not be unduly concerned about any policy reversal. Shri Sharma also asked them to send request for clarification, if any, in the written form to his Ministry. All necessary clarity will be provided, assured Shri Sharma.”

Anger Grows

Swedish furniture manufacturer IKEA is the latest retail store set to expand into India. The government wants to attract much-needed infrastructure – while many shop owners fear for their livelihood.

Praveen Khandelwal’s hardware store in Delhi employs some 15 people. But soon, the shop owner fears, they might all lose their jobs – and with it, their livelihood.”International companies will grab the entire retail trade,” Khandelwal told DW. He is afraid that there will be no room for small-scale retailers like him. “Foreign companies will rule India!”

For a long time, India had very restrictive rules on Foreign Direct Investment (FDI). But in the last couple of years, restrictions have been loosened. In June, 2012, the government made some changes to its policies, allowing foreign retailers to operate with less restrictions in the country.

This, according to Gareth Price, a Senior Research Fellow at the British think-tank Chatham House, was aimed at building up much-needed infrastructure in particular in the agricultural sector. “India’s supply chain management is very poor. A lot of food is wasted before it even reaches the shops,” Gareth told DW. India, he added, lacked the resources to improve its infrastructure – the reason the ruling Congress Party decided to open the country to foreign investment.

Several foreign companies, including Wal-Mart, were quick to set up shop following the liberalization.

Highly divisive policies

In November, the government went even further, allowing for full ownership of local subsidiaries by foreign companies. Previously, foreign ownership had been limited to 51 percent.

Furniture manufacturer IKEA is the latest international retailer set to expand into India. On Tuesday, January 22, an Indian Commerce Ministry official said that the Investment Board had approved the Swedish company’s 1.9-billion-dollar investment proposal. IKEA announced it planned to open 25 stores in India over the next 15 to 20 years. The Cabinet, however, has yet to approve the bill and some Members of Parliament have already voiced their opposition. The opposition BJP party said that it would reverse the decision after the next elections, Price from Chatham House said.

The issue of foreign investment is highly divisive. Many Indians, Price said, fear that hundreds of thousands of jobs might be lost in the retail sector, one of the biggest employers in India.

“They will spread”

Dharmendra Kumar is one of them. “We’re not so concerned about IKEA,” the social activist with India FDI Watch, told DW. “They only make furniture, they won’t have much impact.” But he is concerned that while so far only a minority of India’s states have passed the FDI laws, others may soon follow suit. “And once they get here, they will spread.”

It was only a matter of time, he added, before foreign companies would start to have an impact on supply chains, dictate prices and force small- and medium-sized producers out of business.

With a little help from abroad

Amita Arora Puri from the All India Artisans and Craftworkers Association takes a less bleak view: IKEA with its “unmatched funds and global expertise” could help local artisans and traders to improve their designs, product quality and production abilities,” Puri told DW.

“The domestic private sector is looking for intellectual property of how foreign firms are doing things,” Price agrees. He added that, given India’s red tape and often excessive bureaucracy, foreign companies might find it hard to operate in India, letting the domestic sector take over. “That would seem a perfectly plausible outcome in the retail sector.”

Or, in one Twitter users’ laconic words: “50 percent of Ikea’s sales in India will be to furniture manufacturers who want to steal their designs.”

But Price doesn’t think that many foreign companies will commit themselves to India just yet, given the political opposition to the liberalization move. After all, he told DW, the opening was “reversible.”

Shop owner Praveen Khandelwal, for one, isn’t planning to wait and see. He wants to take his fear to the streets. “We’re working on a campaign against the foreign retailers,” he told DW, referring to a group of shop owners and retailers. “Just wait.”

January 15th, 2013

A National Convention against FDI in Retail is being organized on 16^th January at NDMC ConventionCentre, Parliament Street, New Delhi. Senior leaders of various political parties are expected to join theconvention including the leader of the opposition Smt. Sushma Swaraj, NDA Convener Sh. SharadYadav, CPI Secretary Comrade A B Bardhan and the senior BJP leader Sh. Murli Manohar Joshi.

President and General Secretaries of small retailers’ federations from across the country will be participating inthe convention. Along with traders and hawkers leaders of Delhi leaders from Punjab, Haryana, Himachal Pradesh,Maharashtra, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Kerala, Rajasthan etc. are joining the convention.

December 7th, 2012

Discussion on Al Jazeera

December 6th, 2012

http://economictimes.indiatimes.com/news/economy/policy/retail-fdi-india-plans-to-amend-its-antiquated-labour-laws/articleshow/17513203.cms

NEW DELHI: The government plans to revolutionise the retail sector to make India a global shopping hub, with new labour laws to support 24-hour business, limiting reckless multiplication of malls to prevent urban chaos, and strong measures to ensure small shopkeepers also thrive in the transformation.

The consumer affairs ministry also wants to allow farmers to directly sell their produce to retailers, and adopt a uniform countrywide licensing regime to accelerate retail growth. The issue of modernising retail to ensure that benefits reach every section of society was debated in the cabinet when it approved FDI in multi-brand retail.

It gives enough space for small stores to operate, which can thrive on their doorstep services. The government should modernise APMC Act to create direct linkage of farmers with retailers,” he said.

However, Dharmendra Kumar, director, India FDI Watch, an NGO that has opposed the entry of foreign retailers, said the government should have sufficient regulatory framework to control the rampage of foreign retailers entering the Indian space. “There is no cap on the number of stores a big retailer can open in a city. Nor there is any specification on size of the store. In absence of such regulations, these supermarts can open in any location interfering with the operations of small stores,” he said.

The panel, however, is looking at putting some safeguards in place to help small stores. “It will work out a legal and regulatory mechanism to ensure that large retailers don’t displace small ones and even misuse their higher buying power to create a one-sided price war besides setting up in-built policy to relocate or reemploy people who are affected due to opening up of big malls in the vicinity of their shops,” another official of consumer affairs ministry said. The committee will also consider recommendations of the parliamentary standing committee on retail sector, and suggestions of the study on organised retail by the Indian Council for Research on International Economic Relations (ICRIER).

ICRIER had endorsed the entry of branded chains in retail sector, saying the sector is likely to grow at 13% till 2011-12 with organised retail growing at 45-50% in this period and unorganised retail at about 10%.

A recent study by ICRIER on facilitating trade has argued that pan-India supply chains cannot be established unless GST is implemented. Arpita Mukherjee, professor, ICRIER, said retailers face multiple regulations that vary across states and this creates hurdles for smooth functioning.

“For example, the central government can have a model Shops and Establishment Act that states can implement. This Act should have provisions for modern retail to operate such as possibilities to employ on a rotational basis and flexibilities in shop opening timings. If these reforms are implemented within two years, it will lead to investment in backend and help to reduce wastage,” she said.

November 14th, 2012

The winter session of Parliament would begin on 22^nd November and is likely to end on 20^th December. It is unlikely to have business as usual unless the issue of FDI in Retail is discussed in Parliament. CPM has already moved for an adjournment motion under rule 184 forcing for a vote (if the notice is allowed by the speaker) on the Govt. decision to allow FDI in Retail. Mamata Banerjee’s TMC which has already walked out of Govt. on the issue too is sure of moving a no trust motion. Govt. ally DMK is also against the centre decision. Feeling the heat, Prime Minister, heavily depending on outside support of BSP and SP is having lunch and dinner with their supremos.

In the meantime, stakeholders would keep the pressure on by street actions. Hawkers would hold a mass rally in Kolkata on 24^th November whereas small retailers would organize protest outside parliament on 26^th November.