India Retail News

Political upmanship has yet again taken India a step back when we should be taking two steps forward. The Retail FDI issue seems to be evoking strong reactions from everyone. Particularly passionate are those opposed to it. Who are these self-styled protectors of the kiranas? Some say the traders form a strong votebank. So this is votebank politics, is it? Oh, the opposition has heard about protests against Wal-mart abroad, the big evil company that harasses suppliers and employees. Have they visited any of the modern retail stores abroad? Of course, they have. And enjoyed it! Better quality, lower prices, better service, they have seen it all. Unfortunately, they would like to keep those benefits to themselves; for those who can afford to travel to Bangkok for shopping, or to the US and Europe for their vacations. Let the common man in India buy from the street hawkers. After all, she gets what she needs there and it keeps the fruit-sellers and vegetable-wallahs employed. Who cares if their wares are being displayed on top of rat-infested gutters, or if their illegal encroachments leave no space for people to walk on the footpath! Who cares if kiranas don't really pay taxes or sell expired products or grains with worms in them. We are Indians, we are like this only!

We have our own modern retail chains now, you might say. Let the consumers who care about quality and hygiene go to Food Bazaar and Reliance Fresh. Why do we need Wal-mart and Tesco? How many of these modern formats do we have, for a country of a billion plus people? What is missing is both know-how and scale. Retail is all about scale. That is what brings in the efficiencies. Retail processes and technologies enhance these efficiencies to bring benefits to all stakeholders. Margins in food and grocery hover in low single digit percentages. The only way to make a profitable business out of modern retail is with scale and efficient processes. And global retailers understand this. They have the money and the understanding of what it takes.

The government had finally done something good, by thinking for the long-term. And that decision had to be reversed. We are not guaranteed 8% growth for the indefinite future (in fact the rate has already dropped). Let's welcome the money while we have the upper hand. Modernising retail with scale, that the big global retailers can do far more quickly than anyone else, will have a positive impact on not just the consumer, but also our farmers, manufacturers and several allied stakeholders (The Knowledge and Opinion sections of IndiaRetailNews.com have a whole bunch of articles on how this will happen). Whether we like it or not, we don't have the necessary know-how and technology required to make retail efficient in the country today. Our Indian modern retailers are learning, but the process is slow and investments meek. Foreign retailers will bring processes and innovation (Companies like Tesco are rated among the top innovating companies in the world) and we will learn from them and possibly do a better job than them in a few years (6 of the top 7 Chinese retailers are Chinese-run).

We have wasted an excellent opportunity to signal to the world that we are open for business. Yes, we will do it on our own terms, but we want your money, your technology, your know-how and yes, you will make money by investing in our country. We will be clear about our rules and provide a stable environment to do business. That is what we should have conveyed. What we have instead signalled to the world is that we say one thing one day and take it back the next. So, don't really trust our word. Come if you wish. In the mean time, go to China and even Malaysia and Indonesia. Let them take your money and improve their economies and standards of living.

We will be happy thinking that oh we are so different from everyone else. This is India, the vibrant democracy, where everyone has an opinion. Never mind, that we pay through our nose for inferior quality food and let 30% of our produce rot away and let our farmers commit suicide.

Oh, our kiranas will lose their business and jobs. Have you seen any kirana close because of the modern retail in our cities today? They are savvy. We are a long way from their business getting affected by modern retail. Build in the protections if you must. Make foreign retailers supply to kiranas from their cash and carries. But what about the billion plus consumers? And don't tell me modern retail is only for the rich. That is what it is today. But I have seen lower income consumers throng Carrefour and Tesco in developing countries like Colombia and Thailand. There's no reason to believe it will not happen in India. Modern retail is for everyone and the benefits are for our country. Unfortunately, we will not see them any time soon because political parties have scores to settle and myopic agendas to cater to.