Parliament panel for retail regulator to ensure no job losses

A Parliamentary panel asked the government to create a regulatory body to address the problems, including possible joblessness, of medium and small scale entrepreneurs in the retail sector following its liberalisation. However, there are questions about how such a regulatory body would work because retail is one area where states can decide their own policy.

“We have recommended a regulatory authority to look into the problem (impact of FDI in multi-brand retail on MSMEs),” Tiruchi Siva, DMK leader and chairman of the standing committee, told reporters. If multi-brand retail chains are not regulated well, it will impact MSMEs, farmers and domestic markets. “Once mandis are eliminated, the big foreign retail giants will manipulate prices and our farmers will be forced to sell their products at low prices dictated by them (foreign retailers),” the panel said.

Even as the debate continues on whether opening the retail sector to foreign direct investment will help or harm small retailers, members of Parliament of the Congress, too, signed on the report of the Parliamentary Standing Committee on Industry,  made public on Tuesday. The report was unanimous and there were no dissent notes.

The United Progressive Alliance invested enormous political capital in opening up the retail sector to FDI and had to pay the price when ally Trinamool Congress walked out of the alliance due to differences on several policies including FDI in retail.

At that time, the appointment of a regulator for the sector was considered but it was dropped following opposition from the industry.

“We have recommended a regulatory authority to look into the problem (impact of FDI in multi-brand retail on MSMEs),” Tiruchi Siva, Dravida Munnettra Kazhagam leader and chairman of the standing committee, told reporters.

According to Siva, if multi-brand retail chains are not regulated well, it will impact MSMEs, farmers and domestic mandis.

“Once mandis are eliminated, the big foreign retail giants will manipulate prices and our farmers will be forced to sell their products at low prices dictated by them (foreign retailers),” the panel said in a report.

According to Siva, multi-brand chains should be regulated so that customers are not fleeced and farmers are not underpaid for their produce.

After the decision to liberalise the retail sector was taken, the Congress held a big rally in Delhi, where it said there would be no joblessness because of this decision. But now, the party’s MPs seem to have conceded that there could be some joblessness.

Taking serious note of the implementation of sourcing norms, the committee suggested the 30 per cent procurement requirement should be applicable item-wise. A proposal that Indian retail giants also be forced to procure 20 per cent from MSMEs was apparently not pursued. This proposal came from the Left parties.

While allowing 51 per cent FDI in multi-brand retailing, the government had made it mandatory for at least 30 per cent of the value of manufactured or processed products to be sourced from small industries.

The panel also suggested the MSME ministry should commission a survey to assess the benefit and losses of previous FDI policies on the sector to ascertain if they have created any back-end infrastructure, imparted skills to domestic manpower or upgraded managerial skills, as is being envisaged in the current FDI policy.

The Parliamentary committee’s report, members said, was deeply influenced by the data submitted by Praveen Khandelwal of the Confederation of All India Traders, a body that broadly works in tandem with the Bharatiya Janata Party) although it has no institutional affiliation to it.