A key party in the ruling United Progressive Alliance (UPA) is asking the government to introduce rules and frame a national policy to curb the rapid proliferation of modern retailers in the country. Members of the Communist Party of India (Marxist) want the government to come up with norms such as corelating the number of large-sized stores in proportion to the population of the area where they operate, obtaining licenses from local municipal authorities for outlets in excess of a certain size.
It’s also asking that a body comprising of municipal officials, street vendors and small shopkeepers be empowered to grant licenses to the large retailers. The party also suggested measures to regulate contract farming, as retailers are also muscling into this space.
“These developments in the retail sector are having an adverse impact on the livelihoods of a large section of people who are engaged in unorganized retail across the country,” the CPI(M) said in a statement. It reiterated its stance that it opposes the entry of foreign retailers into India.
The CPI(M) noted unorganized sector accounts for 97% of India’s retail business and employs more than four crore people. Retail projects in the CPM ruled West Bengal have also been stymied by opposition from its allies such as the Forward Bloc that continue to put new hurdles in front of large retailers who are trying to procure directly from farmers.
Concern about the fallout of modern retailing also comes from the ruling Congress party. Sonia Gandhi, the chairperson of the UPA, highlighted the concerns of the small retailers in a letter earlier this year to Prime Minister Manmohan Singh. The government has since enlisted a New Delhi think-tank to conduct a study on the impact of modern retailers on the mom-and-pop stores and the farming community.
Meanwhile, small retailers and street vendors have protested and in some cases, even ransacked outlets operated by modern retailers including Reliance Industries Ltd’s Reliance Fresh. That in part has been provoked by an unprecedented rush in the last two years mostly by Indian corporate houses who have said they want to invest billions of dollars to roll out thousands of stores selling everything from fruits to furniture.
“I think retailers should sell on the platform of service quality rather than undercut small retailers. These apprehensions have arisen because of the fear of predatory pricing,’’ said Sumantra Banerjee, president and CEO of RPG Retail. “This licensing system will have to find a balance between helping customers and small retailers. If stores are too far away, customers will be hit and if they are too close, small retailers will be hit.’’