French supermarket giant Carrefour announced earlier this month it is giving up on one of the world’s biggest consumer markets by closing its operations in India. Carrefour wants to concentrate on reviving flagging sales at home, but the move was also a reaction to India’s strict policy on foreign firms entering its retail sector.
Although it opened up its multi-brand retail sector to overseas companies in 2012, India has set strict pre-conditions, including that goods be locally sourced and that multinationals invest in infrastructure. They are also only allowed to control a maximum of a 51 percent stake in any operation they launch in the country.
Attempts in the past two years to introduce a more open “foreign direct investment” (FDI) policy have met with stern resistance from the country’s local traders.
‘They will exploit the market, they will exploit the consumers’
Praveen Khandelwal is a small trader from New Delhi and head of one of the country’s most powerful trade unions, the Confederation of All India Traders.
His has emerged as one of the loudest voices of protest against global retail giants. For Khandelwal, Carrefour’s exit from India is a major victory.
“We are on a mission to make sure that the bread of India remains in the hands of the Indian traders only,” he told FRANCE 24.
"We cannot allow any global retailer to have control of our supply chain. They will exploit the market, they will exploit the consumers and ultimately, they will end up controlling and monopolising the entire trade.”
India’s retail sector is dominated by small, family-owned businesses. This is where most people go to shop, and there are over 14 million such stores in the country.
Khandelwal’s extensive lobbying has won him the support of millions of small business owners.
“When you bring in this FDI, the big firms will come and our business will be affected very badly,” says one trader. Losing his business will also mean losing his home, he says. “So we will live nowhere at this juncture of life, where will we go?”
Helping India modernise?
However, others argue that giving greater freedom for global retailers to operate in the country will help India modernise its poor supply chain by creating crucial infrastructure.
At Azadpur, a vast wholesale market in New Delhi, the lack of such infrastructure is clear to see.
Krishna Gopal, who has worked at the market for 30 years, says the government has done little to help.
“There’s no cold-storage facility here. Farmers come all over but there is nowhere for them to stay. There is no water provided, which is a big problem. There are no toilets,” he says.
“It is the largest market in Asia but it is unbelievably dirty. It should be able to compete with markets in Europe. It should be clean like those markets, but it is not.”
Perhaps the answer lies with India’s own large retailers, such as Big Bazaar, which operates hypermarkets in more than 90 Indian cities. With the government failing to bring in a cohesive policy for multinational retailers, such companies are stepping in to meet the demand from India’s growing middle classes.
Yet large parts of the country remain entirely untapped and while some companies, like Carrefour, have grown tired of waiting for the government to make up its mind on global retailers, others, like US giant Walmart, continue to watch and wait.