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India's traders mobilise as superstores wait in the wings
Sydney Morning Herald - November 26, 2011
Overlooking the chaos from the relative calm of the cash till of OM Krishna grocery in south Delhi was Sourav Prasad, the owner. "If the law change happens it will be very bad indeed," he said, wobbling his head to indicate his concern. "All this will disappear."
For as Prasad spoke, a debate was under way a few kilometres away that could make such scenes a memory for hundreds of millions of grocery shoppers. The Indian cabinet was discussing a law that would allow foreign supermarket brands to open stores in India.
The move has been mooted for some time. Supporters say the presence of global giants such as Walmart, Carrefour or Tesco would bring down soaring food prices, bring massive investment to patchy distribution networks and boost an economy that is now hitting a series of bumps in the road after years of breakneck growth.
Critics say it would mean lower prices paid to farmers, huge job losses and the end of traditional shopping.
But shoppers in Karol Bagh in north Delhi – exactly the sort of middle-income urban neighbourhood that would be targeted by foreign firms – were enthusiastic about the move.
"I am very happy with all international companies opening up in India," Anuradha, a housewife, said. "It will help consumers, as with an increase in competition they will get better goods at better rates."
The proposal is to allow foreign companies to hold 51 per cent stakes in supermarket chains in India. Foreign firms are already allowed to set up wholesale operations selling to the small retailers who run the tiny, crowded shops that most people use daily.
Late this week, Indian media reported that ministers had approved the move, though only with tough conditions for potential investors. However, it is deeply controversial. Decades of an ideological commitment to economic self-reliance and a deep-seated suspicion of western multinationals will combine with more pragmatic political calculations to make the passage of any change through parliament a stormy one.
The government, already hit by a series of corruption scandals and public anger over high prices, may decide the political price of the move is too high. Groups representing small traders, who account for more than 90 per cent of India's almost $500 billion retail sector, were mobilising earlier this week, anticipating the debate.
Rohan Lal, who runs a small family grocery in Delhi's Shalimar Bagh neighbourhood, said he would be hit hard: "My sales are already low because of the local mini-supermarkets that have been springing up."
The main opposition Bharatiya Janata party has said it will oppose the move, as has a key government ally, the Trinamool Congress. Even some MPs in the party of the Prime Minister, Manmohan Singh, are against the change.
Sonia Gandhi, the president of the Congress party and India's most powerful politician, has voiced concerns about the impact on the small shops so much a part of daily life in India.
But with slowing economic growth, inflation stubbornly high despite repeated rate rises, and concerns about a recent slide in the value of the rupee, Dr Singh may feel there is a need for radical reform to restore the momentum of what is being called a weak and drifting administration.
Some shopkeepers are unconcerned by the prospect of a Carrefour opening nearby. The owner of Lal Sons, a small grocery in north Delhi, said that the "average people" could not afford to buy from big shopping malls.
And some customers see drawbacks in western-style shopping. "I prefer to shop in our old markets where I can negotiate the price; in these big supermarkets you can't negotiate," said Sumita Majumdar, as she haggled for fruit and vegetables in Karol Bagh.
[With Kakoli Bhattacharya, Guardian News & Media.]
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