Against FDI Retailing is the interface between the producer and the individual consumer buying for personal

consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producers goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. Unorganized retailing is by far the prevalent form of trade in India constituting 95% of total trade, while organised trade accounts only for the remaining 5%. Though organised trade makes up over 70-80% of total trade in developedeconomies, Indias figure is low even in comparison with other Asiandeveloping economies like China, Thailand, South Korea and Philippines,all of whom have figures hovering around the 20-25% mark. India still predominantly houses the traditional formats of retailing, that is, the local kirana shop, paan/beedi shop, hardware stores,weekly haats, convenience stores, and bazaars, which together form the bulk.

Main Points against FDI FDI will cause huge labour displacement. Organized trade employs roughly 5 lakh people , whereas the unorganized retail trade employs nearly 3.95 crores5! It is labour displacing to the extent that it can only expand by destroying the traditional retail sector. Till such time we are in a position to create jobs on a large scale in manufacturing, it would make eminent sense that any policy that results in the elimination of jobs in the unorganised retail sector should be kept on hold

FDI in retail is a non-critical area of intervention. Nobody in urban India is suffering for lack of access to food or grocery items. If at all it is the public distribution system that is diseased with corruption and needs to be replaced or removed. Access to food is an issue in the remote and rural impoverished areas of the country, where as the fine print tells you, FDI in retail will not be implemented. Middlemen are key to distribution. The myth about farm-to-store supply chain should end with the simple fact that middlemen will not be removed from the operation but that existing middle men will be replaced by bigger, more organized, more prosperous middlemen. The process requires a minimum of three transactions. From the farmer to the transporter, to the distributor and to the end supplier. The retailer will have his own middle men in the system, and that is all the difference there will be. Farmers will not get better prices. The idea that the farmer will get a better price for his produce if FDI in Retail is allowed is a baseless suggestion. The open market does not work on altruism and social service. It negotiates the best for itself so it can corner the most for itselfTo suggest that foreign retailers would be so teary eyed at the plight of farmers that they would offer a premium on produce which is available at less is plain childish. Fact is that the markets, if allowed to function without controls, will take their own route to price discovery. And remember, the more clout a buyer has, the lesser the seller gets per capit. The truth is that more than 70% of revenues of large format stores come from non-food items where the farmer does not even figures Big Retail cannot co-exist with small retail. That big retail can coexist with kirana is a flat impossibility. It cant because big retail alters the playing field permanently. The instruments of small retail are redundant in the schema of big retail. The grammar of big format selling influences the buying habits of people. The kirana sells on the basis of daily consumables of a middle class. The big-format pushes for bulk sales, weekly big purchases where you buy four when you need one simply because it is priced in an attractive deal for the day. The kirana and the small retailer cannot bundle promo packs because it cant deal directly with producers. Big retail is habit altering. It is not an alternate, not an expansion of choice but a modification of the manner of consumption and sale.

Better Price to Consumers. It is true that it is in the consumers best interest to obtain his goods and services at the lowest possible price. But this is a privilege for the individual consumer and it cannot, in any circumstance, override the responsibility of any society to provide economic security for its population. Clearly collective well-being must take precedence over individual benefits. MoreOver Consumers will get lower prices is another figment of the lobbyists fertile imagination. Prices never come down. Big bazaar or Walmart, prices never come down. The argument is a facetious assault on the principle of growth and inflation. Big retail can at best sell you cheaper potatoes or five such items carefully selected on seasonal variations or bulk deals with producers cheap for only a week and no more. For everything else you buy from them, you will pay more. That is how big retail works. A large format retailer, if it is not within an existing mall and aims to be the size of Walmart stores will have to put up its own air-conditioning plant, parking, galleys, staff, vans, transport, machinery and processes that simply cannot offset any purchasing bulk deals to support the idea of cheaper prices. Big Retail kills small jobs. More jobs will be created when big retail comes in is a fallacy and a purposeful falsehood. For an economy where 80% of the population engaged in trade and local retailing is self employed, how do the numbers stack up if you dislodge even 20% of that population. Does any math support the theory that any number of big retailers in a city likeDelhi will be able to support 5 lakh people who will progressively be thrown out of business due to their advent? For a government that is unable to provide employment in big cities with reasonable opportunities, the impact in smaller ones will be unmanageable. Policys of Big Retailers : The supermarket will typically sell everything, from vegetables to the latest electronic gadgets, at extremely low prices that will most likely undercut those in nearby local stores selling similar goods. Wal-Mart would be more likely to source its raw materials from abroad, and procure goods like vegetables and fruits directly from farmers at preordained quantities and specifications. This means a foreign company will buy big from India and abroad and be able to sell low severely undercutting the small retailers. Once a monopoly situation is created this will then turn into buying low and selling high. Retail is Opportunity for Self Employment :Our work force is 422 millions large and the organized sector only employs 27 million4. Therefore, it is clear that the selfemployed retail sector is a safety valve that allows people the opportunity to fend for themselves when the government fails to create jobs Expansion for High End Retailers : It must also be borne in mind that mass retailers like Wal-Mart do not cater to the high end consumers like branded retailers like Marks & Spencer or even fast food retailers like McDonalds or Dominos do. Wal-Mart mostly retails what the bazaar with its numerous shops already provides. Every Wal-Mart must be seen as an entire bazaar or market. So while it can be argued that a high-end store might even expand the market by creating a new demand, the likes of a Wal-Mart will only prey on the existing market.

Indian Supply Chain is Already Fit :A modern and nationwide supply chain has been created, indigenously, for milk and milk products which account for 8.11% of household expenditure. Similarly we have an effective supply chain for food items such as cereals, pulses, and sugar and edible oils, which together account for 24.16% of household expenditure. All other non-food goods purchased by our households such as tobacco products and alcohol, processed foods and snacks, toiletries, detergents, garments etc which together account for 52.57% of all urban household expenditure are made available for consumption by modern and efficient supply chains Global Sourcing : Opening of a giant pipeline of cheaply sourced goods from China,Thailand, ASEAN, etc., leading to manufacturing job losses on amassive scale in India. Monopsonistic buyer Using the tremendous clout of a monopsonistic buyer to drive down procurement prices over time in manufactured and agricultural products.

Inviting Trouble for the Farmers : The contract farming imposed on farmers by MNCs require strict adherence to quality and schedule. How will our small tomato or onion farmers cope with the vagaries of the weather, and the infrastructural constraints to fulfill their legal contracts? A FAO paper based on the proceedings of a FAO/AFMA/FAMA workshop states, Farmers experience many problems in supplying supermarkets in Asia and in some cases this has already been reflected in fairly rapid declines in the numbers involved. Experience in Southeast Asia: The impact on the traditional retail trade in Malaysia was so sudden and so adverse that that the Government had to step in with restrictions (non-tariff barriers). With the aim of fair and orderly development of the industry the government introduced a committee on Wholesale and retail trade and its approval is mandatory for foreign investors. Only one hypermarket is permitted per 350,000 people and no new hypermarket is permitted within 35 km of existing town centers or housing estates26. In Thailand the financial crisis of 1995-97 enabled the cash rich foreign chains to buy out the local chains after which new zoning regulations were announced. Now, large retail stores have to be located at least 15 km from the commercial centers of provincial towns27. Foreign Exchange Neutrality: The total value of imports to be retailed and the total value of exports to be retailed should match (not taking capital inflows) every year. We cannot approve of a situation where there are vast imports from the network of thousands of manufacturing sweatshops in China for five years while the Indian suppliers are being developed for later supplies and set off. If FDI in Retail is to be permitted, it should be made foreign exchange neutral for each year, at least for the first ten years. Models to emulate It will be better to follow the Chinese model of caution and hurrying slowly. China just allowed FDI in retail in 1992 and the cap was at 26%. After 10 years the cap was raised to 49% when local chains had sufficiently entrenched themselves. 100% FDI in retail was permitted only in 2004, after the infant retailing industry had acquired some muscle28. Even in as liberal an economy as Japan, large-scale retail location law of 2000 stringently regulates factors such as garbage removal, parking, noise and traffic. Recently Carrefour decided to exit Japan by selling off its eight struggling outlets after four years to the Japanese Aeon Co as the extremely cumbersome Japanese regulations blatantly favor its own homegrown retail firms29. Malaysias Bumiputra clause insists that 30% of equity is held by indigenous Malayans30. Philippines insist that 30% of inventory by value be grown within the country31.