With friends such as these, do the owners of small neighbourhood stores across India really need enemies?
A parliamentary standing committee said on Monday that foreign direct investment in retailing should be banned. It also asked the government to keep local companies out of the business of selling groceries, fruits and vegetables. And for good measure, the committee members also asked for a ban on cash and carry chains that sell to wholesale traders.
And all this to protect small store owners. There are two problems here. First, the entire assumption behind such recommendations is terribly patronizing. It underestimates the ability of small shop owners to innovate and compete.
Second, the parliamentarians should realize that the small guys would get a boost if they have access to cash and carry stores, which will allow them to piggyback on modern supply chains that cannot be built on a small scale. It all just does not add up.
Good intentions and good economics are two different things. The government would do well to accept this report and then junk it.