FDI in retail won't harm interests of small companies

NEW DELHI: Global retail consultants today came together to dispel government’s fear about opening up the retail sector to foreign direct investment. US consultant A T Kearney says FDI in retail will not harm the interest of small retailers as large organised players will not corner more than 10% of the retail space, leaving a lot space for small players.

Speaking at the India Economic Summit 2004 organised by the CII, Joshua Chernoff, vice president, AT Kearney USA, said that a global study by the consultant firm has shown India moving up the ranking ladder rapidly.

“If opened to FDI, it will be an extremely attractive market. Our study shows that the concerns of the small retail shops were unfounded. In the most optimistic scenario, they will not occupy more than 10% of retail space.’’

Chernoff said an industry status for the retail sector would help create many job opportunities. Giving the example of Wal-Mart, he said the retailing giant employs 1.5 million people worldwide. It makes sense for global players to look at India closely.

Another consultant, Jacques-Etienne de T’Serclaes, partner, global leader, retail and consumer markets, PriceWaterhouseCoopers in France said a study done by his firm has strongly recommended India as a destination for FDI.

Opening of the retail sector will help grow allied industries such as construction, logistics, supply chains. Retailing is particularly important for technology transfer which would move people up the job ladder.

Sanjiv Goenka, vice-chairman of RPG Enterprises said India’s young population, growing consumer finance, increase in credit card spending and the changing pattern of rural consumption can keep up the momentum in retailing.

Organised retail has grown from 1.25% of the total market four years ago to 2% now. The sector however is still dominated by kirana stores and street vendors.