10th National Convention (Jalandhar-Punjab), 2, 3, 4 October, 2010

Ban entry of Multinational Companies in Retail

3.5 crore people in the country engaged in the retail, along with another 1.5 crore in subsidiary activities, are facing a big threat to their existence. These 5 crore people whose livelihood depends on, what is called unorganized retailing, are facing this threat due to change in policy proposed by the government by allowing opening up foreign investment in retail. The Government of India issued a Discussion Paper on July 6, 2010 expressing its intent to open up foreign investment in the multi-brand retailing.

It is well known that this would mean allowing all multinational companies like Wal-mart, Tesco, Carrefour, Marks and Spencers etc., to open their stores in India. In our country size of the general stores generally varies between 50 square feet and 200 square feet. Most retail traders do not even have their shops and are forced to carry out their business on pavements, on rehris, Khomcha etc. and in the process face lot of hassles, harassment and exploitation. But due to lack of any alternative employment avenues they somehow earn their bread from retail business.

Even the government support in terms of credit, marketing, warehousing is also inconspicuously absent. These people do not have option of any alternative source of employment. On the other hand stores of multinational companies are huge sized, one lakh square feet or even more. Under one roof they sell all kinds of items. Experience, worldwide shows that where ever multinational companies have opened their stores, almost all small shops, selling groceries and other households, in the 3 km radius have been compelled to close their business.

MNCs made their debut in retail business in 1960. In less than five decades, multinational companies have almost dominated the retail business, where ever they have gone, without exception. With that in these countries, most small retailers have been pushed out of the competition. Businesses of Wal-mart, Tesco, Carrefour and many other multinational companies engaged in retail business have crossed national incomes of many countries. After America and Europe many countries in Latin America and Southeast Asia and several other countries, governments opened their retail trade to foreign investment, under pressure from multinational companies, and most of the small and medium shopkeepers were shunted out of competition there. As these large multinational companies set up their big stores, people engaged in so called unorganized sector tend to lose their livelihood.

Since these multinational companies already dominated European and U.S. markets, targets. In this endeavor, they first approached Southeast Asian countries and now they are getting desperate to gain entry into India. Knowing very well that opening of retail sector for multinational corporations would be detrimental to the interests of 5 crore people engaged in this sector, directly and indirectly, the Government of India is desperate to take this decision, before US President Barack Obama arrives in India, for the reasons best known to them. Showing scant respect for the Report of the Parliamentary Committee of Commerce on this issue, the Government is bent upon handing over the retail sector to foreigners. Discussion Paper refers to the so called ‘findings’ of ICRIER, a research organization hired by the government. ICRIER claims that this research is ‘wide based’. By interviewing 2020 small retailers (indirectly),1318 consumers and 197 farmers, the research body reaches at a conclusion, which they claim to be for all India, that except for their slow growth, there will be only a small impact on small retailers. The study also claims that there are big gains for consumers and the farmers in store, once this sector is opened up for transnational corporations.

SJM strongly condemns the Discussion Paper issued by the Department of Industrial Promotion and Policy, Government of India and rejects the so called ‘findings’ of ICRIER as they are clearly motivated. These findings are far from realty. Opening up of stores by large Indian companies and multinationals first in guise of wholesale trade in the name and style of ‘cash and carry’ and then by back door under partnership with Indian companies (such as Bharti - Wal-Mart) have had made a wide impact on small shopkeepers. If we allow these multinationals to enter openly, undoubtedly small retailers will be ruined.

The country had already witnessed the devastating impact of entry of big Indian companies in the retail sector on the livelihood of small retailers. If the government allows the entry of multinational companies now, the small retail sector would be totally ruined.

Under these circumstances, expressed intention to open foreign investment in retail sector by the government is a reflection of its total insensitivity towards the common man. SJM has already launched a nationwide public awareness programme, under which Pad Yatras, Public Meetings and seminars are being organized all over India.

This National Assembly of SJM demands:
1. That government gives up its insensitivity to the common man and decides, not to open retail for MNCs.
2. That licenses issued to Indian companies for opening stores for retail trading and foreign companies for ‘wholesale trading’ and single brand retailing should be cancelled with immediate effects for misconduct and to safeguard the interests of the small retailers.
3. A separate ministry for the welfare of the small retailers be made.
4. Small retail trade be given loans on priority basis at 4% rate of interest, with the objective of upgrading services provided by the small scale sector.
5 While making plans for urban development, protection of small traders and rehri, patri-thela be given due importance.