Retailing in India

[11] An analyst from Fitch Group stated that the 30 percent requirement was likely to significantly delay if not prevent most single brand majors from Europe, USA and Japan from opening stores and creating associated jobs in India.

[14] On 20 September 2012, the Government of India formally notified the FDI reforms for single and multi brand retail, thereby making it effective under Indian law.

[19] Organised retailing actively started with the entry of Shoppers Stop, Westside, Pantaloons, Pyramid - Crossroad, all being department store formats in the mid to late 1990s and was absent in most rural and small towns of India till 2010.

Between 2000 and 2010, consumers in select Indian cities have gradually begun to experience the quality, choice, convenience and benefits of organised retail industry.

Some claim one of the primary restraint inhibiting better participation was that India required single brand retailers to limit their ownership in Indian outlets to 51%.

For example, in an invited address to the Indian parliament in December 2010, Jagdish Bhagwati, Professor of Economics and Law at the Columbia University analysed the relationship between growth and poverty reduction, then urged the Indian parliament to extend economic reforms by freeing up of the retail sector, further liberalisation of trade in all sectors, and introducing labour market reforms.

[44] While India presents a large market opportunity given the number and increasing purchasing power of consumers, there are significant challenges as well given that over 90% of trade is conducted through independent local stores.

Challenges include: Geographically dispersed population, small ticket sizes, complex distribution network, little use of IT systems, limitations of mass media and existence of counterfeit goods.

Suspension of retail reforms on 7 December 2011 would be, the reports claimed, an embarrassing defeat for the Indian government, suggesting it is weak and ineffective in implementing its ideas.

[54] Anand Sharma, India's Commerce and Industry Minister, after a meeting of all political parties on 7 December 2011 said, "The decision to allow foreign direct investment in retail is suspended till consensus is reached with all stakeholders.

In Chennai, Tamil Nadu CMDA authorities placed a seal on the massive warehouse spreading across 7 acres that had reportedly been built for one of the world's leading multinational retail giants, Wal-mart.

Despite the fact that Salman Khurshid, India's law minister, claiming that many opposition parties, including the Bharatiya Janata Party, had privately encouraged the government to push through the retail reform, the intense criticism now targets Congress-led coalition government, and its decision to push through one of the biggest economic reforms in years for India.

[79] The Hindu, another widely circulated newspaper in India, claimed the opposition's call for a nationwide shutdown on 1 December 2011, in protest of retail reform received a mixed response.

Over 75 per cent of the traders claimed their marketing resources will continue to be needed to push sales through multiple channels, but they may have to accept lower margins for greater volumes.

Fourthly, it is important to ensure that no single retailer monopolizes the procurement operations in an area, district or state in order to protect the local suppliers.

For example, the article claims:[85] Many business groups in India are welcoming the transformation of a long-protected sector that has left Indian shoppers bereft of the scale and variety of their counterparts in more developed markets.

[74] B. Muthuraman, the president of the Confederation of Indian Industry, claimed the retail reform would open enormous opportunities and lead to much-needed investment in cold chain, warehousing and contract farming.

Organised retailers will reduce waste by improving logistics, creating cold storage to prevent food spoilage, improve hygiene and product safety, reduce counterfeit trade and tax evasion on expensive item purchases, and create dependable supply chains for secure supply of food staples, fruits and vegetables.

[76] Organised retail will offer the small Indian farmer more competing venues to sell his or her products, and increase income from less spoilage and waste.

Walmart, since its arrival in India's wholesale retail market, already sources and exports about $1 billion worth of Indian goods for its global customers.

Not only do these losses reduce food security in India, the study claims that poor farmers and others lose income because of the waste and inefficient retail.

Over US$50 billion of additional income can become available to Indian farmers by preventing post-harvest farm losses, improving transport, proper storage and retail.

Organised retail is also expected to initiate infrastructure development creating millions of rural and urban jobs for India's growing population.

These supporters claim that unorganised small shopkeepers will continue to exist alongside large organised supermarkets, because for many Indians they will remain the most accessible and most convenient place to shop.

Andhra Pradesh, Assam, Delhi,[94] Haryana, Kashmir, Maharashtra, Manipur, Uttarakhand, Daman & Diu and Dadra and Nagar Haveli, will allow foreign retailers.

The decision will boost agriculture and allied sectors, manufacturing, logistics, integrated cold chains, refrigerated transportation and food processing facilities in a big way."

Criticising the BJP-organised opposition, Gogoi claimed that these parties who had just a few years ago dubbed opening up retail as good for India, are now singing a different tune.

They expect a flurry of joint ventures with global majors for expansion capital and opportunity to gain expertise in supply chain management.

Competition and investment in retail will provide more benefits to consumers through lower prices, wider availability and significant improvement in supply chain logistics.