By NNN-PTI
New York : Far from opening its vast retail market to foreign investors, India is looking at how to prevent large domestic players from displacing mom and pop stores a sensitive issue in a market dominated by unorganised retailers.
“It is not (about allowing) FDI, the issue is that of large versus small retailers,” Commerce and Industry Minister Kamal Nath said at the first ‘Pravasi Bharatiya Divas New York 2007’, Sunday evening while replying to a question on when India would open up its over 330-billion dollar retail market to foreign investments.
His comments ring the alarm bells for Indian corporate retail players, who are already being shackled across states.
Last month, the Uttar Pradesh government ordered the closure of corporate-run food retail stores citing law and order problems, while Kerala has not permitted opening of western-style food retail stores in the state.
Asked if this meant large retailers would have to be prepared to close shop anytime the government feels like, Nath said: “That is not under my ministry. Ask the Consumer Affairs Ministry.”
While this is so, India oddly ranked World No.1 in the AT Kearney Global Retail Index 2006. Organised retailers account for roughly 3 per cent of the retail market, with the rest made up of mom and pop outlets and neighbourhood ‘kirana’ (grocery) stores.
He said the government wants to promote only incremental growth in the retail sector, but did not elaborate how it would find out the number of small retailers that have been displaced by big corporates.
Meanwhile, in NEW DELHI, NRI industrialist Lord Swraj Paul said Monday that Indian retailers are capable of working in a competitive environment and global retail giants coming to the country will only spur them to do better.
“Indians are capable of working very well in a competitive market. There is Wal-Mart in the US, there is Wal-Mart in the UK. There is Tesco too in these countries. Indians have set up retail shops there and have beaten them,” Lord Paul said.
Stressing that the government should concentrate on health, law and education and leave the business alone to fend for itself, Lord Paul welcomed competition for the Indian business community.
“We can compete with the best. The reason why IT industry has progressed so well is because they did not need the government nor did they know how to control them. So, I have no problem with Wal-Marts or Tesco or anybody. Let’s believe in ourselves.” Quelling apprehensions about the possible danger to traditional, small time domestic retailers due to the entry of MNCs, Lord Paul said.