India's Retail Explosion: Boon or Bane?

The upmarket retail sector seems set for a virtual explosion with the entry of a whole host of domestic players while foreign companies are waiting and watching eagerly on the sidelines. With India being one of the biggest emerging markets, it is no wonder that retail giants like Wal-Mart and Carrefour are eager to make an entry. For the time being, however, domestic giants like Reliance, Pantaloon, ITC, RPG, Rahejas and the Bharti group have jumped into the fray. These big retail chains seem to be visible at virtually every street corner lately but the question is, what happens to the neighborhood grocer?

The fact is that big retail chains have a lot to offer both the farmer and the consumer. On the other hand, the vibrant Indian trading community is going to be hard hit. Farmers are keen for big retailers to come in as they help in both marketing and processing of output without their having to go to middlemen in the mandis. Consumers similarly are reaping a bonanza as prices at these shops are at rock bottom rates since big retailers can afford to buy directly from the farmers.

No wonder that there have been reports of farmers protesting in Jharkhand against efforts to stop big retailers from buying tomatoes directly from them. In contrast, there were reports from another city of small retailers protesting in front of a Reliance Fresh showroom saying it was ruining their business.

Politicians, of course, are entering the fray to oppose the entry of large retail chains, but clearly economic forces are now going to play a larger role.

In this context, some of the data on the retail sector in India makes for interesting reading. For instance the CII-AT Kearney retail study shows that retailing is the largest contributing sector to the country's GDP. Besides, the retail sector contributes about 10 percent to the GDP compared to 8 percent in China, 6 percent in Brazil and a matching 10 percent in the US.

India is estimated to have around 15 million retail outlets, making it the country with the highest retail outlet density in the world. It also tops AT Kearney's list of emerging markets for global retailers. Currently the value of the retail market is estimated at around $270 billion with a growth rate of 5.7 percent per annum according to the India Retail Report 2007.

In addition, 96 percent of the total retail trade in the country is in the unorganized sector. The size of the organized retail market in 2006 was estimated at Rs.485 billion, making up 4.7 percent of the retail market. As for job potential, the retail industry is the second largest employer after agriculture, employing about 6-7 percent of the total work force.

Data clearly shows that the retail sector is not only extremely large but provides a huge amount of jobs in this country. The entry of the organized large retail chains may not have an immediate impact on the trading community. But in the long run, it is clear that small traders and retailers will be affected and the government cannot ignore the issue.

While one would ideally like to take the side of the consumers and the farmers on the issue, it is evident that the muscling in of the big retailers may lead to large-scale closures of small trading outlets. And this in turn could affect many families relying on jobs in this sector.

At the same time, the investments made by large food retailers in farm production could lead to tremendous savings as huge amounts of fruit and vegetables that cannot be processed are simply thrown away in India. In areas like Uttarakhand, for instance, farmers are welcoming the entry of retail chains that are putting money into proper processing and packaging facilities.

The government, on its part, insists that small retailers may face competition from the big fish but have definite advantages over them owing to low overheads, local market knowledge and their engaging in services like home delivery and sales on credit.

It also points to the fact that wastage estimated in the Indian food chain is around 40 percent, valued at over Rs.500 billion ($10 billion) annually. A study by the Indian Council for Research on International Economic Relations (ICRIER) has also shown that only about 2 percent of fruits and vegetables are processed in this country. In this backdrop, it is felt that there is no option but to allow big retail chains to make huge investments needed to create an efficient and modern agro processing industry.

Despite these arguments, it is clear the small trading community will have to be given some form of protection in the coming years. Otherwise, not only will the small retailer gradually disappear from the city scene, but even worse, employment for thousands of people could be affected in the long run.

FACTS OF INDIA

• India never invaded any country in her last 100000 years of history.
• When many cultures were only nomadic forest dwellers over 5000 years ago, Indians established Harappan culture in Sindhu Valley (Indus Valley Civilization).
• The name 'India' is derived from the River Indus, the valleys around which were the home of the early settlers. The Aryan worshippers referred to the river Indus as the Sindhu.
  
• The Persian invaders converted it into Hindu. The name `Hindustan' combines Sindhu and Hindu and thus refers to the land of the Hindus.
  
• Chess was invented in India.
  
• Algebra, Trigonometry and Calculus are studies, which originated in India.
  
• The 'Place Value System' and the 'Decimal System' were developed in India in 100 B.C.
  
• The World's First Granite Temple is the Brihadeswara Temple at Tanjavur, Tamil Nadu. The shikhara of the temple is made from a single 80-tonne piece of granite. This magnificient temple was built in just five years, (between 1004 AD and 1009 AD) during the reign of Rajaraja Chola.
  
• India is the largest democracy in the world, the 6th largest Country in the world, and one of the most ancient civilizations.
  
• The game of Snakes & Ladders was created by the 13th century poet saint Gyandev. It was originally called 'Mokshapat'. The ladders in the game represented virtues and the snakes indicated vices. The game was played with cowrie shells and dices. In time, the game underwent several modifications, but its meaning remained the same, i.e good deeds take people to heaven and evil to a cycle of re-births.
  
• The world's highest cricket ground is in Chail, Himachal Pradesh. Built in 1893 after levelling a hilltop, this cricket pitch is 2444 meters above sea level.
  
• India has the largest number of Post Offices in the world.
  
• The largest employer in the world is the Indian Railways, employing over a million people.
• The world's first university was established in Takshila in 700 BC. More than 10,500 students from all over the world studied more than 60 subjects. The University of Nalanda built in the 4th century was one of the greatest achievements of ancient India in the field of education.
  
• Ayurveda is the earliest school of medicine known to mankind. The Father of Medicine, Charaka, consolidated Ayurveda 2500 years ago.
  
• India was one of the richest countries till the time of British rule in the early 17th Century. Christopher Columbus, attracted by India's wealth, had come looking for a sea route to India when he discovered America by mistake.
  
• The Art of Navigation & Navigating was born in the river Sindh over 6000 years ago. The very word Navigation is derived from the Sanskrit word 'NAVGATIH'. The word navy is also derived from the Sanskrit word 'Nou'.
  
• Bhaskaracharya rightly calculated the time taken by the earth to orbit the Sun hundreds of years before the astronomer Smart. According to his calculation, the time taken by the Earth to orbit the Sun was 365.258756484 days.
  
• The value of "pi" was first calculated by the Indian Mathematician Budhayana, and he explained the concept of what is known as the Pythagorean Theorem. He discovered this in the 6th century, long before the European mathematicians.
  
• Algebra, Trigonometry and Calculus also orignated in India. Quadratic Equations were used by Sridharacharya in the 11th century. The largest numbers the Greeks and the Romans used were 106 whereas Hindus used numbers as big as 10*53 (i.e 10 to the power of 53) with specific names as early as 5000 B.C. during the Vedic period. Even today, the largest used number is Tera: 10*12(10 to the power of 12).
  
• Until 1896, India was the only source of diamonds in the world (Source : Gemological Institute of America).
  
• The Baily Bridge is the highest bridge in the world. It is located in the Ladakh valley between the Dras and Suru rivers in the Himalayan mountains. It was built by the Indian Army in August 1982.
  
• Sushruta is regarded as the Father of Surgery. Over 2600 years ago Sushrata & his team conducted complicated surgeries like cataract, artificial limbs, cesareans, fractures, urinary stones, plastic surgery and brain surgeries.
  
• Usage of anesthesia was well known in ancient Indian medicine. Detailed knowledge of anatomy, embryology, digestion, metabolism, physiology, etiology, genetics and immunity is also found in many ancient Indian texts.
  
• India exports software to 90 countries.
  
• The four religions born in India - Hinduism, Buddhism, Jainism, and Sikhism, are followed by 25% of the world's population.
  
• Jainism and Buddhism were founded in India in 600 B.C. and 500 B.C. respectively.
  
• Islam is India's and the world's second largest religion.
  
• There are 300,000 active mosques in India, more than in any other country, including the Muslim world.
  
• The oldest European church and synagogue in India are in the city of Cochin. They were built in 1503 and 1568 respectively.
  
• Jews and Christians have lived continuously in India since 200 B.C. and 52 A.D respectively
  
• The largest religious building in the world is Angkor Wat, a Hindu Temple in Cambodia built at the end of the 11th century.
  
• The Vishnu Temple in the city of Tirupathi built in the 10th century, is the world's largest religious pilgrimage destination. Larger than either Rome or Mecca, an average of 30,000 visitors donate $6 million (US) to the temple everyday.
  
• Sikhism originated in the Holy city of Amritsar in Punjab. Famous for housing the Golden Temple, the city was founded in 1577.
  
• Varanasi, also known as Benaras, was called "the Ancient City" when Lord Buddha visited it in 500 B.C., and is the oldest, continuously inhabited city in the world today.
  
• India provides safety for more than 300,000 refugees originally from Sri Lanka, Tibet, Bhutan, Afghanistan and Bangladesh, who escaped to flee religious and political persecution.
  
• His Holiness, the Dalai Lama, the exiled spiritual leader of Tibetan Buddhists, runs his government in exile from Dharamsala in northern India.
  
• Martial Arts were first created in India, and later spread to Asia by Buddhist missionaries.
  
• Yoga has its origins in India and has existed for over 5,000 years.