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Concerns about the future of the existing
retailers in the country, especially those in the
unorganized sector are largely unwarranted. The small-time
retailers will still have their business as their target
market is completely different from the targeted consumers
(probable) of global retail giants like Wal-Mart (if it
enters India).
The small-time retailers act as next door stores that help
in purchasing items of daily usage. However, this is not the
case with large organized retailers and, therefore, the
local Kirana stores will anyway have their business. A case
in point is, China, which has allowed 49% FDI straight away
in the retail sector and improved its stand in international
trade.
As regards the future of unorganized retailing in China, according to a
study, allowing FDI did not displace the conventional local retailers but on
the contrary, these traditional outlets in China have increased
significantly from around 19 lakhs in 1996 to almost 26 lakhs in 2001. |
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The government should, therefore, go ahead and allow FDI in the retail
sector. In fact, it should take a cue from China in this regard. Planning to
withhold the decision until the December WTO meeting in Hong Kong, so that
the government can use this as a bargaining tool for service sector
negotiations, is a good move. Whatever the outcome, the government should
allow FDI in retailing, if not today at least tomorrow. |