India should maintain ban on FDI in multi-brand retail: Report

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SME Times News Bureau | 23 Aug, 2012
A global report cited in the parliament on Wednesday suggests that India should maintain its ban on foreign direct investment (FDI) in multi-brand retail, adding that without adequate safeguards put in place, FDI in multi-brand retail will likely lead to widespread displacement and poor treatment of Indian workers in retail, logistics, agriculture and manufacturing.

"We believe that our experiences around the world should inform the formulation of those policies and would therefore suggest that India maintain its ban on FDI in multi-brand retail," the report, presented by a Switzerland-based UNI Global Union, said.

Minister of State for Commerce and Industry Jyotiraditya Scindia informed the Rajya Sabha in a written reply, that UNI Global Union has presented a paper on 'Wal-Mart's Global Track Record and the implication for FDI in multi-brand retail'.

"The paper dwells on the business practices of Wal-Mart in some countries and concludes that without adequate safeguards put in place, FDI in multi-brand retail will lead to widespread displacement and poor treatment of Indian workers in retail, logistics, agriculture and manufacturing," Scindia said.

The report discusses the potential effects of globalised modern retail, on four groups of stakeholders: modern retail workers, small retailers (kiranas and hawkers), supply chain intermediaries (e.g. wholesalers), and producers. This report examines the track record of Walmart, the largest retailer in the world, with global revenue of USD 421 billion USD in 2010.

The report estimated that that in US - Walmart workers earn an estimated 12.4 percent less than retail workers as a whole. And each Walmart worker takes the place of 1.4 retail workers.

However, the report also said that the conditions and experiences in each country vary, and acknowledges that India needs to craft its own policies. The reports also offers a number of recommendations to mitigate its impacts.

Bharti Wal-Mart is a 50:50 joint venture between Wal-Mart Stores Inc and Bharti Enterprises that has already established its presence in the Indian market through 17 wholesale 'cash-and-carry' stores under Best Price Modern Wholesale stores across the nation.

It is among several other global chains waiting for implementation of the government decision to permit 51 per cent foreign direct investment (FDI) in multi-brand retail.

Scindia also said that 11 states and union territories have conveyed their support to the Centre for opening the sector to foreign investment.

In an another reply, Scindia said that a writ petition has been filed by Vandana Shiva, an NGO activist, in the Delhi High Court alleging that Bharti Wal-Mart and Bharti Retail are directly and indirectly carrying out retail trading in multi-brand in violation of the FDI policy. "The matter is sub-judice," Scindia said.