If FDI gets better prices for producers, and better prices and quality for consumers, the loss of a literary romance is a small price to pay. Given the nature of our cities, the threat to the small kirana retailer is unrealistic and unlikely.
FDI in Retail
The government’s recent decision to open up India’s foreign direct investment (FSI) in retail markets, part of a package of economic measures to reboot the economy, generated the predictable howls of protest. For some odd reason, just one name was used again and again while slamming the government’s move. “Wal-Mart” is now in imminent danger of becoming its own grammar, at once a verb, an adjective, an adverb and a collective noun.
Wal-Mart has a limited presence in India, in Chandigarh (and Chandigarh isn’t a prototype for anything, being more a place for students of architecture than a space for people, and the closest one gets in India to the apparent idyll of suburban life). The government’s package of economic measures isn’t about assisting Wal-Mart in its relentless drive for world retail hegemony or favouring any other retailer in particular. The criticism is this: that allowing in the big gun retailers, we are sounding the death knell of the neighbourhood grocer, the small retailer, the kirana shop. Some, like Ian Jack, formerly editor of Granta, slide into a typically romantic description of Indian city life, one that’s stuck in the unrealistic time warp of early Satyajit Ray movies of half a century ago. This, for instance:
Certain habits in Indian life once gave an illusion of permanence. On hot afternoons 30 years ago, for example, you could lie on your bed under a slow-turning fan and hear noises from the street that had been the same for at least a century. The lonely wife in Satyajit Ray’s film Charulata heard them in the film’s celebrated opening sequence as she flitted about her Victorian mansion in 1870’s Calcutta like a trapped butterfly, and in 1982 you could hear them still: some rhythmic chanting, the hollow patter of a little drum. And if, like Charulata, you went to the window and looked down, there in the dusty lane you would see a gang of coolies shouting something like a work-song as they pushed a wooden-wheeled cart with a heavy load, or a street entertainer drumming up business with his tabla. The most common sounds, however, were the singsong calls of peddlers selling fish or vegetables, or milky sweets and ancient biscuits from a portable glass case. Some salesmen rode bicycles; that transport apart, these were scenes that looked as if they had existed for centuries and would never be expunged by modernity.
Their extinction is coming — not immediately and not everywhere, but probably inexorably in the middle-class districts of the big Indian cities, now India’s governing coalition has said it will open up the retail market to foreign supermarket chains.
Here’s news: we’ve moved on. We have non-Wal-Mart medium and big retailers already (Reliance Fresh and Big Bazaar as one columnist pointed out, among others) and they haven’t exactly succeeded. Godrej Nature’s Basket, for instance, is more a non-profit for expats than a substitute for the neighbourhood grocer.
There’s a fundamental flaw to the criticism. It ignores the structure and form of our cities, and assumes that by allowing in Western big retailers — specifically, American retailers — we are all somehow going to find ourselves living the American suburban dream, such as it is. That’s utter nonsense.
Big retailers have very special needs. They must have enormous areas of very expensive real estate. This kind of space only makes sense at a distance from city centres. In more densely populated areas, the rental overheads make large space impractical. Also, these places must be conveniently located — nobody from Mahim is going to travel to Malad for a few kilos of wheat or rice; or, for that matter, from Banashankari 6th stage to Koramangla, or Shaniwar Peth to Magarpatta — and they must have acres of parking space. In addition, Wal-Marting also demands a reversal of well-established life patterns, choices already made through several generations and hard to dislodge. For this model to work, households must have large storage areas because the Wal-Martists want us to buy in bulk; and every household must therefore also have large areas under refrigeration. In cities with slums, chawls, high densities, small living spaces, difficult commutes and insufficient access roads, the presumptions on which the criticism is based are simply untrue.
Most households provision for the month or longer, and in large cities, the supplies are ordered on the phone and are home delivered. This is more than a convenience. It is a necessity for middle class households, the very people at whom, presumably, the big-boy retailers are training their commercial guns. A few days into the month, households call their neighbourhood store for supplementary items, everything from a bottle of ketchup to cooking oil, grain, biscuits. It is home delivered by someone on a bicycle or on foot. It is hardly likely that CarreFour, Tesco or Sainsbury are going to want to send around a van, especially if their locations are many kilometres away.
It will not be the first time that someone has attempted to change our mindset. Big Cereal’s efforts at changing the breakfast habits of a billion people have been spectacularly ineffectual. Some years ago, a local company renowned for its pickles introduced pre-packaged chapattis in Pune (polis), on the thinking that the average Maharashtrian housewife would be spared the effort of making them fresh. Said Maharashtrian housewife was having none of it, and the (misad)venture soon folded.
India has its own indigenous version of multi-brand retail outlets. It’s Mumbai’s Crawford Market, and, till recently, Bangalore’s Russell Market and both are very much like Oriental bazaars except that they aren’t just the stuff of comic books and Hollywood films, but very much part of our daily lives. And there are others, too, the vegetable vendors on nearby streets who provision those who come to them on foot, not in SUVs with oceans of boot space. Ousting small retailers also means ousting the average small middle class household. That is unlikely.
Writers have pointed to the potential benefits to suppliers and to consumers. The arguments against are few and none are very compelling. A March 2012 study by UNI Global Union limits itself to studying the impact of Wal-Mart in India as if Wal-Mart is some paradigm for all players or even that it is the only one likely to come in to the space now being made available. A 6 July 2010 discussion paper from the Department of Industrial Policy and Promotion on the other hand addresses several issues, and frames important questions including steps to be taken to protect small retailers and the establishment of a system of protective controls. The secondary assumption, therefore, that the FDI liberalisation means no control is equally untrue. The UNI Global Union study does not address itself to the issue of where and how these big retailers will be able to set themselves up, or whether there is even physical space in our cities for them. They point to the experience in other countries, notably Thailand, to show that FDI wiped out the small retailer, but without reference either to the peculiar conditions that played out there or the September 2008 paper by the Indian Council for Research on International Economic Relations (ICRIER), which indicates the low likelihood of any significant impact on small retailers and intermediaries.
To be sure, there must be controls to protect small farmers to ensure they get the best prices and aren’t wiped out. If FDI finally translates into better quality and better prices for producers and consumers, then that is no bad thing. The loss of literary romance seems a very small price to pay.
The government's [recent decision] to open up India's foreign direct investment (FSI) in retail markets, part of a package of economic measures to reboot the economy, generated the predictable howls of protest. For some odd reason, just one name was used again and again while slamming the government's move. "Wal-Mart" is now in imminent danger of becoming its own grammar, at once a verb, an adjective, an adverb and a collective noun.
: http://timesofindia.indiatimes.com/india/Govt-shrugs-off-protests-notifies-FDI-plans-more/articleshow/16482155.cms "Govt shrugs off protests, notifies FDI, plans more, Times of India, 21 September 2012"