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US retail giant Wal-Mart's planned entry into India has been met with stiff opposition from small retailers, trade unions and those who believe that the advent of big foreign and domestic retailers will kill off the small grocery stores, estimated to number 12 million, that have hitherto dominated the Indian market. On August 9, protesters held a rally in the national capital, expected to be one of many.
On August 6, 2007, Wal-Mart signed a deal with the Indian company Bharti Enterprises for an equal joint venture for cash-and-carry, or wholesale, and back-end supply chain management. Protesters have called this a ‘backdoor entry' into India's lucrative retail sector.
Under India's more relaxed FDI rules, foreign single-brand retailers can now take up to 51% in a joint venture with a local firm, while multiple-brand firms are limited to wholesale and franchise or licence deals.
Modern retail has only a 3% share of India's fast expanding retail market making it very attractive to big domestic retailers such as Reliance Industries Ltd and foreign players battling static markets at home.
FDI in retail is an emotive issue in India and a political hot potato since it involves the livelihoods of thousands of small farmers and shop-owners.
“Millions of hawkers and small shop-owners will lose their jobs and their livelihood,” says K L Bajaj, General Secretary of the Centre for Indian Trade Unions (CITU).
Wal-Mart says it plans to significantly step up its sourcing of locally-made goods, and its investments in the supply chain will benefit farmers and small manufacturers. But the opposition believes that the small farmer and shop-owner will not be able to withstand the onslaught of organised retail and is not equipped to make the change to anything else.
August 10, 2007
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