by Disha Sahoo
Just back from first frenzied shopping experience in the UK, a four year old ever-inquisitive daughter asked to her father, Why do we not have a Harrods in Delhi? Shopping there is so much fun! Simple question for a four-year-old, but not so simple for her father to explain. As per the current regulatory regime, retail trading (except under single-brand product retailing FDI up to 51%, under the Government route) is prohibited in India. Simply put, for a company to be able to get foreign funding, products sold by it to the general public should only be of a single-brand; this condition being in addition to a few other conditions to be adhered to. That explains why we do not have a Harrods in Delhi. India being a signatory to World Trade Organisations General Agreement on Trade in Services, which include wholesale and retailing services, had to open up the retail trade sector to foreign investment. The main question being raised is whether the traditional mom and pop stores will survive and co-exist or leave the field for major organized retail players? The answer to this is-
- Primary among these is the concern regarding the Mom and Pop stores being adversely affected by the entry of global retail giants. They would come with deep pockets, resulting in the loss of jobs for lakhs of people absorbed in the unorganised sector.
2. . Lowering of prices of products owing to better operational efficiencies of the organised players that would affect the profit margins of the unorganised players.
3. Instability surrounding the political arena with a number of scams of varying magnitudes doing the rounds has also led to a sense of uncertainty among foreign investors.