T N Ninan: No consumer raj

WEEKEND RUMINATIONS

We like to tell ourselves that India has become a much more open market than it used to be in the bad old days; import licences have all but disappeared, tariff levels have come down to reasonable levels, and domestic production and supply restrictions too have all but gone. However, on the evidence of going to various shops in different countries, I am not at all sure that the Indian consumer is getting as good a deal as he or she thinks""or deserves.

Take laptop computers, on which Jaswant Singh removed import duties early this year. One would expect that they would now cost the same as they do elsewhere; but you can pick up an up-to-date laptop with all the usual bells and whistles for the equivalent of Rs 40,000 in a department store in the US, while the same machine is hawked in India for Rs 75,000.

Or cars, about which Montek Singh Aluwalia made a point at the annual meeting of the Society of Indian Automobile Manufacturers. Why is it that the premium cars that cost Rs 15 lakh in India, give or take 10 per cent, are available elsewhere for barely half that price?

It might be argued that the problem here is high taxes, but the counter to that would be that while we do need to levy extra taxes on gas guzzlers and luxury products, there is little call for a 100 per cent price difference.

Or look at something as simple as electric fans: they cost 50 per cent more in India than in many other markets, probably because the Chinese have flooded the world market but not yet made that much headway into India. Indian peddlers of fans have started sourcing supplies from Chinese manufacturers, but the prices still do not match.

This is not to argue that everything in India costs too much; on the contrary, a great many things are now available at lower cost in India than in most other markets.

Some obvious examples are leather shoes and pharmaceuticals, not to mention textiles. Telephone services are available for a pittance too (though Indian service providers still do not offer free calls at nights and on week-ends, as they do elsewhere), and the prices of commodities like steel and cement are now benchmarked to global prices. However, if you look at the end-of-season discount options available in mainline stores overseas, Indian consumers simply do not get the price bargains that are routine in other markets for basic items like clothing, as well as on electronic products that might be getting replaced by later models.

In short, the Indian consumer's money does not go nearly as far as that of consumers in other countries.

Let's go beyond price. Most Indian stores still sell on the basis of "no return, no exchange". And Indian consumers accept this condition as normal, without demur. But in markets like the American one, you can return absolutely anything that you have bought within 14 days, at no cost to you as a consumer.

No questions are asked, no explanations have to be given""even when the item in question might be something as perishable as a rack of lamp. However, Indian marketers have started doing better on trading in old models for a price-off on a new model; whether it is TV sets or refrigerators, you now get pretty attractive trade-in offers. So the picture is not all bad, but it is certainly very uneven.

There is more than one reason for this patchy development of Indian consumer markets. At one level, import and tariff policies are not all that they are cracked up to be.

At another, Indian companies are simply not chasing consumers with the zeal and inventiveness and even near-desperation that you see in the most competitive markets.

At a third, many Indian companies still want to sell primarily on the basis of premium image, and there aren't enough price warriors around. Also, the frenetic pace of product development activity that spurs the discount sales is not really evident in the country.

Finally, India's retailing business is simply not in the same league as that in most markets. In short, there is some way to go before we can truly say that the Indian consumer has at long last got his or her place in the sun.