'Consumer is king' says SC; rejects plea against retail FDI

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SME Times News Bureau | 02 May, 2013
"Consumer is the king", the Supreme Court said Wednesday upholding the government's policy of allowing foreign direct investment (FDI) in multi-brand retail, holding that it did not suffer from any constitutional infirmity.

While the court underlined the consumer's supremacy, it described the middleman as an "enemy", "sucker", "curse" and "Shylock" of the retail market.

The apex court bench of Justice R.M. Lodha, Justice Madan B. Lokur and Justice Kurien Joseph said: "On matters affecting policy, this court does not interfere unless the policy is unconstitutional, contrary to statutory provisions, arbitrary, irrational, or in abuse of power."

"Consumer is the king. Middleman is the enemy of the retail market. Middleman is a sucker of the economy and if he is being eliminated then it directly benefits the consumer and the producer," Justice Lodha said.

Dismissing a petition challenging FDI in multi-brand retail, the court said the impugned policy did not suffer from any vires and there was no merit in the challenge.

The policy was challenged by advocate M.L. Sharma who contended that FDI in multi-brand retail was introduced by issuing two press notes, without amending the provisions and rules regulating the sector.

Noting that permitting FDI in multi-brand retail was aimed at eliminating the middleman from the retail market and to benefit the consumer and the producer, Justice Lodha said: "Middlemen are a curse to the economy and they work like Shylock."

As Sharma insisted that FDI in multi-brand retail would eliminate the traditional retail marketing chain in the country, Justice Lodha gave the example of the onion producers in Maharashtra's Nashik.

Justice Lodha said while the onion growers of Nashik didn't get even Re.1 per kg for their produce, the same was sold for Rs.25 per kg to the consumer.

Referring to the government's reply to the petition, the court said the experience of China, Brazil, Indonesia, Thailand and other countries showed that both the organised and unorganised sector in retail market could co-exist and grow.

"Why don't you expect that happening in India?" asked the court.

The government in its affidavit said the prime focus in allowing the FDI in multi-brand retail was to "benefit the consumer by enlarging the choice of purchase".

The government pointed to a World Bank report which said the average price that farmer received for a typical horticulture product was only 12-15 percent of the price the consumer paid at a retail outlet.

The court also pointed to the Indian Council for Research and International Economic Relations report which said "unorganised and organised retail not only co-exist, but also grow substantially in size, as a result of the growth of organised retail".