Big retail now comes under PMO lens

NEW DELHI: In a new twist to the controversy over retail FDI affecting mom & pop stores, the Prime Minister’s Office (PMO) has called for a study to assess the impact of large retailers—both domestic players and multinational giants like Wal-Mart—on small retailers. A number of Indian companies, including Reliance Retail, Bharti, Aditya Birla Group, Tata Group, Future Group and Subhiksha, have announced plans or are already in the process of rolling out a nation-wide retail network.

The study should be completed quickly so that inputs are available for “policy-making in the near future”, says a communication from the PMO to the Department of Industrial Policy & Promotion (DIPP). The PMO has also commented that DIPP’s view that the proposed Wal-Mart tie-up with Bharti is within the existing policy framework does not address Congress president Sonia Gandhi’s concern over the possibility of small retailers getting trampled by giant retail formats. The debate thus seems to be veering towards ‘big retail Vs small retail’ rather than being restricted to FDI in retail.

Speaking to reporters after his interaction with Wal-Mart vice-chairman Michael Duke on Friday, commerce minister Kamal Nath said there is no policy review on the anvil. “We have to see if the existing retail sector can deal with the demand from the 25-million-strong middle class. Whatever is in conformity with the existing FDI policy will be allowed. The impact on small stores has always been our concern,” he said.

“I don’t think I am affected as Wal-Mart is in the back end. We will proceed with our plans unless the government specifically asks us to stop,” said Bharti Group chairman Sunil Mittal who accompanied Mr Duke. The communication from the PMO was sent on February 12 and is signed by Jawed Usmani, joint secretary in the PMO. It is in response to a letter from the DIPP, dated February 7, which says the Bharti Group’s proposed tie-up with Wal-Mart is allowed by existing policy.

The two partners have preferred to maintain a low profile following Sonia Gandhi’s letter to Prime Minister Manmohan Singh, seeking ‘examination’ of the impact of ‘transnational supermarkets’ on livelihood security of small retailers, especially vendors hawking items like fruit and vegetables.