The retailers and traders are up in arms against the government’s decision to allow 51% FDI in multi-brand retail and 100% in single-brand retail. Mohan Gurnani, president of the Federation of Associations of Maharashtra (an apex body of over 750 trade, transport and small scale associations), explains his stand to Sanjay Jog. Edited excerpts:
Why is your federation still opposing the government’s decision when many hail it as a game-changer for the $590 billion retail market?
The government is misleading the nation by claiming that it will change the face of retail trade in the country. In fact, it will only destroy the very fabric of small retail trade.
It has been the modus operandi of companies like Walmart to indulge in predatory prices. They would first sell commodities at a loss, eliminate the competition and, once they get a hold, fleece the consumer. It is no secret that the consumers of United Kingdom and other countries, where these companies are active, pay almost 30 per cent more than Indian consumers. It is also a known fact that Indian retailer works on the lowest margin.
Are you not convinced with the government’s clarification that it will not lead to displacement and unemployment?
There is absolutely no doubt that the small traders will be wiped out by the opening of FDI. True, multinational companies will provide some employment. But what about the dis-employment that will be caused by the closure of small shops? This will affect not only small traders, but small-scale industries, labourers, hawkers and — ultimately — the consumer, who will be ultimately at the mercy of the MNCs. We are being misled by the government. We have the examples of the markets in America and Europe, where the opening of the multinationals will force the small roadside ‘Mom and Pop’ shops to close business. Many small traders have become paupers.
The government believes that the decision will help build infrastructure in rural India. Why then are you scared about it?
What infrastructure is the government talking about? All they will do is create more cold storages. Do you think Indians are not capable of making cold storages? Is it some rocket science that the Indians are unaware of?
The government says it will have the first right to procure agricultural products. The move will not impact small and marginal retailers. What is your viewpoint?
This is again a white lie. Multinationals and, especially, these companies have deep pockets. They will lure the farmers with money — and take their products at cheap rates by exhibiting their money power. Even now, the government has procurement as its first choice. Has it been successful to the satisfaction of farmers? If they were, so many farmers would have not been committing suicides.
Foreign companies investing more than 51 per cent in single-brand retail stores must source at least a third of their products from small domestic industries or village craftsmen. What is your objection?
Only a third of the procurement, isn’t it? What about the two-thirds? Will our small-scale industry not be affected if these companies source their material from outside the country? It is known that these companies have a centralised procurement system. This will ultimately result in loss of opportunity for our Small Scale Industries. Even the labourers will be at the receiving end.
What are the regulatory checks and monitoring system to see that companies source the given quantity from small domestic industries or village craftsmen?
Unfortunately, these companies know very well that Indian law and system can be twisted to suit their goal — and no checks will be enough to check their malpractice. Metro Gmbh was given a cash-and-carry licence and they were supposed to sell goods only in wholesale, but they continue to abuse the system and sell in retail by registering the clients on the basis of their municipal licences. So even a doctor having municipal licence can buy anything which is for his personal use that is retail. Hence these checks too would not work. Besides, they know that they can manipulate things by their sheer money power.
The government is firm on the implementation of this decision. What are your suggestions?
I think the trading community will have to seriously exercise their democratic right of voting and use it to serve its interest. That is the only weapon the business community is left with.
