Pros and cons of foreign equity in retailing

November 25th, 2011 - 5:10 pm ICT by IANS  

Following are the main issues raised by those in favour of foreign equity in multi-brand retailing and those opposed to it:

Those against:

- It will lead to closure of tens of thousands of mom-and-pop shops across the country and endanger livelihood of 40 million people

- It may bring down prices initially, but fuel inflation once multinational companies get a stronghold in the retail market

- Farmers may be given remunerative prices initially, but eventually they will be at the mercy of big retailers

– Small and medium enterprises will become victims of predatory pricing policies of multinational retailers

- It will disintegrate established supply chains by encouraging monopolies of global retailers

Those in favour:

- It will cut intermediaries between farmers and the retailers, thereby helping them get more money for their produce

- It will help in bringing down prices at retail level and calm inflation

- Big retail chains have to put 50 percent of total investment in supply chains which will reduce wastage, estimated at 40-50 percent in case of fruits and vegetables

- Retailers will have to source at least 30 percent of requirement from small and medium enterprises. This will give them a bigger market, better technology and branding

- It will bring much-needed foreign investment into the country, along with technology and global best-practices

- Mega stores will be allowed only in cities where population is above 1 million. So it will not displace people engaged in small stores but will actually create employment

– It will induce better competition in the market, thus benefiting both producers and consumers

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