A day's lost business 'worth it to save my future'
MUMBAI // Bimal Bhuta, who runs a food store in Mumbai, shuttered his shop yesterday in protest against the policy reform that will help to open up India's retail market to supermarket chains such as Wal-Mart and Tesco.
Losing a day's worth of trade was worthwhile, he said, to try to prevent a move that could put his shop, which has been in the family for 65 years, completely out of business.
"What will happen to the middle class?" asked Mr Bhuta, 35. "What happens to the spirit of entrepreneurship? There will be unfair competition in retail. There's no value addition for retail [from foreign direct investment]. There's a set distribution network here."
His fears are prevalent among owners of small, family-run stores across India following the Indian government's announcement on Friday that it would open up the sector to allow up to 51 per cent foreign direct investment in multi-brand retail.
This is expected to attract global giants such as Wal-Mart to set up shop and expand in India.
Members of the main opposition party, Bharatiya Janata Party (BJP), yesterday gathered at Azad Maidan, a cricket ground and popular site for political rallies in Mumba. They called for the resignation of the prime minister Manmohan Singh over a coal-mining scandal, as well as demanding that the policy reform on foreign investment in retail be scrapped.
"We don't want foreign direct investment in retail," said Vinod Tawde, the BJP leader of the opposition in the state legislative council. "It will bring unemployment. We want investment for much bigger issues, such as power."
This is the second time the government has announced plans to open up the multi-brand retail sector to foreign investment. It put the reform on hold at the end of last year because of widespread resistance, just weeks after revealing the plan.
Analysts have said that while jobs would be lost as small local shops lose business or close, a greater number of jobs would be created as foreign supermarkets enter the country. This is part of the process of the modernisation of an economy that many other countries have already been through, they said.
"In any process, there will some beneficiaries and some losers," said Vidya Mahambare, the principal economist at Crisil, an Indian ratings and research firm. "How you take care of the people who are losing their jobs or their business - whether you retrain them - that is what is critical."
There is also some fine print in the reform that will limit the expansion of supermarket chain. Individual states will decide whether to open up to foreign direct investment and chains will only be allowed to enter cities with a population of more than one million.
Published: September 21, 2012 04:00 AM