Agrees Wal-Mart's Menzer: "We want to expand our operations in India. We are ready for it. But it can be done only after the Indian government comes out with its FDI policy in the retail sector." The market buzz is that most foreign retailers have already firmed up their plans for India. Wal-Mart may have even identified cities and likely locations for its future stores and visited Indian retail stores to get a sense of retailing practices in India. Menzer expressed his interest particularly in the food and groceries sector in India where his company could bring in high-end technology. "So much agricultural produce is wasted here for lack of adequate cold chain and proper distribution and logistic network," he said.
Such aggression has led to fears that the MNC retailers could wipe out the millions of 'mom-and-pop' shops. But Arvind Singhal, chairman of retail consultancy ksa Technopak disagrees: "There is no reason why FDI should have a negative impact. Worldwide, the retail sector is the largest employer. In India, organised retail has the potential to provide direct employment to 10 million people, and another 30 million can get indirect employment. Besides, even in the US, the share of organised retail is only 40 per cent while the remaining 60 per cent is accounted for by small shops." Adds a top manager of an Indian retail chain: "Retailing caters to local needs. So, unorganised retail will always co-exist with the big chains."
According to the Planning Commission, FDI in food retailing could lead to a more efficient supply chain management system and reduce the disparity between the price consumers pay and what the farmer actually receives.
As foreigners salivate over entering the Indian market and the government tries to finalise its FDI policy, organised Indian retailers have got into the act to capture market space. The idea is to gear up for fresh competition. Large groups like Pantaloon Retail through its Big Bazaar retail chain is on an expansion spree; others like Trent and Westside, owned by the Tatas, and Shoppers' Stop, have also upped their investments. Sources indicate that the Reliance group is also putting final touches to its blueprint for entering the retail sector and start Wal-Mart-kind discount stores across the country. It is likely to open 18 such stores with an investment of about Rs 30-40 crore each. Together, the four of them may spend Rs 700-800 crore over the next few years.
All indications are that the government will announce its decision in the next few weeks. Going by the mood of the officials and the push being given to retail FDI by Kamal Nath, it's likely to open a few doors for the entry of foreign retailers. So, put a hold on your purchases and wait for the next season.
