Archive for the ‘Retail India’ Category

A question of jobs, not ownership

June 21, 2007

The following two articles analyse the effect of Foreign Direct Investment (FDI) in Indian retail. The analysis can be extended to domesic behemoths like Reliance Fresh. Reliance plans to invest 25000 crores in the next 4 years in their retail division and plans to begin retail stores in 784 cities across India. There have been violent protests by displaced vendors and laborers in Ranchi.

A question of jobs, not ownership

By Kamal Sharma and Jeevan Prakash Mohanty (Published in Business Line, September 29, 2005.)

After farming, retailing is India’s major occupation. It employs 40 million people. A sizeable majority of owner/employees are in the business because of lack of other opportunities. The decade of liberalisation has so far been one of jobless growth. It is no wonder that retail has become the refuge of these millions. Lopsided economic development is transforming India from an agrarian economy directly to a service oriented post-industrial society.

In the Indian perspective, any policy that creates jobs is good policy. Any industry, Indian- or foreign-owned, that generates employment is welcome. The question over foreign direct investment (FDI) in retail is not as much about ownership as about jobs.

The Indian retail industry is highly fragmented. According to AC Nielsen and KSA Technopak, India has the highest shop density in the world. In 2001, it was estimated that there were 11 outlets for every 1000 people.

Since the agriculture sector is over-crowded and the manufacturing sector stagnant, millions of young Indians are virtually forced into the service sector. The presence of more than one retailer for every hundred persons is indicative of how many people are being forced into this form of self-employment, despite limitations of capital and space.

Trade/retailing is the single largest component of the services sector in terms of contribution to the gross domestic product. It accounts for 14 percent of the service sector, i.e., twice that of the next largest economic activity in the sector — banking and insurance. The total number of retail outlets (both food and non-food) was 8.5 million in 1996 and 12 million in 2003, a 41 per cent rise.

The CSO’s employment numbers give a comprehensive picture of the importance of this form of livelihood in India. Organised retail trade employs roughly 0.5 million people and unorganised 39.5 million. The fact that about 4 per cent of the population is employed in the unorganised retail trade speaks volumes about how vital this business is to the socio- economic equilibrium in India.

A Small Shop usually refered to as “Kirana” Stores

In 2004, Wal-Mart had a turnover of $256 billion and it recorded a net profit of $9 billion. Its 4,806 stores employs 1.4 million persons. The average size of a Wal-Mart outlet is 85,000 square feet and the average turnover about $53 million. The turnover per employee is $1,82,000.

By contrast, the Indian retailer had a turnover of Rs 1,86,075 ($4,100 approximately) and only 4 per cent of the 12 million retail outlets occupied space larger than 500 square feet. The total turnover of the unorganised retail sector, which employs 39.5 million persons, was Rs 735,000 crore.

India has 35 towns each with a population of over one million. If Wal-Mart were to open, on an average, one store in each of these 35 cities and if each achieved the average Wal-Mart performance per store, the turnover would amount to over Rs 8,033 crore and number of employees to only 10,195.

Extrapolated to the rest of the country, it would mean displacing around 4,32,000 persons. In other words, every new Wal-Mart employee will render 40 retailers surplus. If FDI retailers with deep pockets were to take over 20 per cent of the retail trade, this would mean a turnover of Rs 1,47,000 crore. This represents an employment of about 43,000 persons, displacing nearly eight million persons in the unorganised retail sector.

The future is bleak for traders such as these

The most important argument against modern retailing and supply chain integration is that it displaces labour in a labour-surplus society. Till such time that we are in a position to create jobs on a large scale in manufacturing and construction, it would make eminent sense to keep on hold any policy that results in the elimination of jobs in the unorganised retail sector.

The primary task of the government is still providing livelihoods and not create so-called efficiencies of scale by creating redundancies. If we assume 40 million adults in the retail sector, it would translate into around 160 million dependents. Opening the retailing to FDI means dislocating millions from their occupation and pushing vast number of families under the poverty line. The Western concept of efficiency is maximising output while minimising the number of workers involved. This will only increase social tensions in a developing country like India, where tens of millions are still seeking gainful employment. Companies such as Wal-Mart boast about how they give the consumer better value. Not surprisingly, Wal-Mart procured $20 billion worth of goods from China and just $1 billion worth of goods from India. This is simply because China is a better producer of manufactured goods and not because Wal-Mart has stores there.

Consider a chain such as Wal-Mart with a single point of procurement entering India. Since it already procures huge quantities from China, this make for a massive entry point of China’s largely state-owned consumer goods industry into the insatiable market made up of the new consuming elite. It is true that it is in the consumers’ best interest to obtain quality goods and services at the lowest possible price. However, this vocal assertion by the chattering class cannot override the responsibility of any government to provide economic security for its vulnerable population. Countries such as China, Malaysia and Thailand, which have opened their retail sector to FDI in the recent past, have been forced to enact new laws to check the horrific expansion of the new foreign malls and hypermarkets.

A reliance ‘deadly’ fresh outlet

In a recent Oxfam study, a decade ago coffee producers earned $10 billion from a global market worth $30 billion. Now they receive less than $6 billion in a global market over $60 billion. Large numbers of producers now interact with monopolistic marketing structures and these chains transfer a large and growing proportion of added value away from producers to companies in industrialised countries.

Neither scale nor efficiency has raised the incomes of the coffee producers. The lessons are clear, bulk procurement plays havoc with producer’s margins. Enabling legislation and positive regulation is required to expand our industrial sector whose contribution to employment generation and GDP is much lower than that of the services sector. The percentage contribution of industry to GDP growth in 1992-96 and in 1997- 03 was 30.9 per cent and 23.7 per cent respectively, while for China over roughly the same period it was 62.2 per cent and 58.5 per cent.

We need to address issues at home before we inviting problems from abroad. Vocal proponents of FDI need to ponder a bit more about India’s true circumstances.

Excerpt from a paper on the entry of big corporations in Indian Retail

The most important factor against FDI driven “modern retailing” is that it is labour displacing to the extent that it can only expand by destroying the traditional retail sector. Till such time we are in a position to create jobs on a large scale in manufacturing, it would make eminent sense that any policy that results in the elimination of jobs in the unorganised retail sector should be kept on hold.

A mnc’s supermarket store in Delhi

The primary task of government in India is still to provide livelihoods and not create so called efficiencies of scale by creating redundancies. As per present regulations, no FDI is permitted in retail trade in India. Allowing 49% or 26% FDI (which have been the proposed figures till date) will have immediate and dire consequences. Entry of foreign players now will most definitely disrupt the current balance of the economy, will render millions of small retailers jobless by closing the small slit of opportunity available to them.

Imagine if Wal-Mart, the world’s biggest retailer sets up operations in India at prime locations in the 35 large cities and towns that house more than 1 million people. The supermarket will typically sell everything, from vegetables to the latest electronic gadgets, at extremely low prices that will most likely undercut those in nearby local stores selling similar goods. Wal- Mart would be more likely to source its raw materials from abroad, and procure goods like vegetables and fruits directly from farmers at pre-ordained quantities and specifications. This means a foreign company will buy big from India and abroad and be able to sell low – severely undercutting the small retailers. Once a monopoly situation is created this will then turn into buying low and selling high.

Such re-orientation of sourcing of materials will completely disintegrate the already established supply chain. In time, the neighbouring traditional outlets are also likely to fold and perish, given the ‘predatory’ pricing power that a foreign player is able to exert. As Nick Robbins wrote in the context of the East India Company, “By controlling both ends of the chain, the company could buy cheap and sell dear”. The producers and traders at the lowest level of operations will never find place in this sector, which would now have demand mostly only for fluent English-speaking helpers. Having been uprooted from their traditional form of business, these persons are unlikely to be suitable for other areas of work either.

It is easy to visualise from the discussion above, how the entry of just one big retailer is capable of destroying a whole local economy and send it hurtling down a spiral. One must also not forget how countries like China, Malaysia and Thailand, who opened their retail sector to FDI in the recent past, have been forced to enact new laws to check the prolific expansion of the new foreign malls and hypermarkets.

Given their economies of scale and huge resources, a big domestic retailer or any new foreign player will be able to provide their merchandise at cheaper rates than a smaller retailer.

Source: indiafdiwatch.org

Link via Sanhati

Oust Reliance !

June 4, 2007

Comrade Arasubalraj took part in a massive rally against Reliance Fresh in Chennai,
on 1st of May he posts the following report on his blog.

Oust Reliance !

The meaning of May Day is rubbished in India primarily by the pseudo-communist parties CPI and CPI (M) and by the ruling class parties like Congress, BJP etc., Historically May Day came in to existence to commemorate the Haymarket Martyrs of 1886 who fought for the Eight-Hour work day. The remaining eight-hours other than work and sleep for which the workers fought is not for entertainment as interpreted today. It is for organising the working class to build their future. Hence May Day cannot be celebrated as yet another holiday to rest at home or to distribute sweets as a ceremony to apoliticise and castrate the working class.

With this understanding, People’s and Literary Association (PALA) and its associate organisations namely New Democratic Labour Front (NDLF), Peasants Liberation Front (PLF) and Revolutionary Students Youth Front (RSYF) in Tamilnadu set specific political agenda for every May Day to organise the working class to make conscious of its duty. Hence, for the past two decades, May Day in Tamilnadu is marked with arousing protests, agitations and conferences by PALA. This year, as announced earlier, as part of the one month campaign against Reliance and MNC’s entering in Retail sector, PALA organised the protests encircling Reliance Fresh Shops. The one month campaign had 1,50,000 pamphlets, thousands of posters and wall writings and 25,000 booklets covering all over Tamilnadu but the primary focus was on Chennai as at present Reliance has started shops only in Chennai. The intensive campaign involved the doorstep propaganda in and around areas of Reliance shops.

The arousing march was flagged off by Comrade.Mukundan, President of NDLF and it started from the Koyambedu Market which is at the verge of extinction due to the Reliance entry in Chennai. The fervent slogans raised by the comrades of these organisations exposed the political parties, bureaucracy and Reliance while upholding the Naxalbari Revolutionaries as the only alternative to face the Recolonisation onslaught. The Revolutionary songs of PALA arts troupe roared in the air. Children and women carried the placards defying the scorching heat. The march reached the Reliance Fresh shop at Virugambakkam Market Road one in sense and two thousand in numbers.

The shop was closed expecting the protest and the police were all ready with barricades. Comrade Marudhaiyan, Secretary of PALA and Comrade Kaliappan, Joint-Secretary of PALA gave speeches explaining the movement. As the one-month campaign in various forms already reached the people of that area, they came in large numbers to watch the agitation bearing the three-hour traffic jam. The comrades got arrested 50 yards before the shop. When they all were carried in Police vans, Koyambedu trader’s union designators came to wish the comrades. Comrade.Marudhiyan thanked them and said, “The distance between us and the shop is just 50 yards. But the distance between the understandings of the people on the menace of MNC’s in retail sector and the reality is far more. Our motto at present of this struggle is to reduce that gap. If reliance to be put down, then Koyambedu should rise up!”

The false and confused ideas ruling the minds of people that deter them to foray were not formed by Ambani. These ideas were thrust in by the ruling class, media and political parties with the implementation of Recolonisation from the last decade. When the traders alone raise the slogan to oust the MNC’s, Reliance masquerades in ‘quality and cheaper prices’ and lures the people. But when the fight begins as a fight against Recolonisation then the slogan will become a people’s slogan and the definite moment will arrive.

The recent, spontaneous, laudable struggle of Ranchi vendors shows the desperation of the small vendor class. The land of Birsa Munda atlast showed the way to the country. These struggles should be organised and shouldn’t be allowed to be corrupted with decomposed political parties. People’s movements should be channelised as movements against Recolonisation as a whole and not to fade away as scattered and spontaneous.


photographs of the protest on May 01,2007 at Chennai:


















* Watch the Video in this post. Thanks to Karumpalakai.
* To read the tamil press clips of the protest read here.
* To read the tamil summary of the thought-provoking speech by Comrade Marudhaiyan, General Secretary, PALA in Public meeting on 27-04-07, read here.
*To hear the speech, click here


Fromarasubalraj.blogspot.com

Video of Massive rally against Reliance Fresh in Chennai

June 4, 2007

Comrade Arasubalraj took part in a massive rally against Reliance Fresh outlet
in Chennai,given below is the video of the protest.

Link on youtube

May12th attack on Reliance Fresh retail outlets

June 4, 2007

This attack took place in the second week of May posting it here for archives
and for its relevance.

Traders attack Reliance Fresh retail outlets

— PHOTO: PTI

ON THE RAMPAGE: Roadside fruit and vegetable vendors vandalising a Reliance Fresh retail outlet in Ranchi on Saturday. — PHOTO: PTI

Ranchi: Petty traders and vegetable vendors on Saturday vandalised three of the five Reliance Fresh food outlets here, feeling threatened by the modern retail chain.

Around 200 people barged into the stores, which sell grocery, fruits and vegetables and smashed glass panes and pulled down the shelves as the Reliance Fresh staff ran for cover.

A retail outlet at Lalupur Chowk was the first target, followed by one near Tagore hill and another near the Plaza cinema here.

City Superintendent of Police Richard Lakra told PTI that the protesters pelted stones at the stores injuring a constable, when the police tried to stop them near the Tagore hill shop and also attacked and damaged passing vehicles.

Reliance Retail officials, however, declined to comment.

The police had to use `mild force’ to quell the mob, which was joined by people from the weekly haat at Tagore hill, Mr. Lakra said.

According to unofficial reports six people were injured in the police action.

After the violence, all the five Reliance Fresh shops downed shutters with the police standing guard.

Recently vegetable vendors and small retail shop-owners had demonstrated against the opening of Reliance Fresh outlets in Jharkhand, accusing the private sector of directly affecting their business.

In West Bengal, Forward Bloc leader and State Marketing Board Chairman Naren Chatterjee said the company could face similar action if it went ahead with plans to open stores in the State.

“If small traders are affected, the reaction may be violent,” he said.

PTI

hindu

Reliance seeks land and tax breaks to ruin vegetable vendors in Jharkhand

June 4, 2007

The recent attack on one of its outlets in Jharkhand does not seem to
have had any effect on the Reliance Hydra.

Reliance seeks land and tax breaks to ruin vegetable vendors in Jharkhand

Reliance seeks land, tax breaks to promote Jharkhand’s ‘haats’

India’s private sector behemoth Reliance Industries has sought land
and tax benefits to expand its retail business and promote the
rural ‘haat’ market of Jharkhand.

Ranchi, Jharkhand, India, 2007-05-27 16:45:01 (IndiaPRwire.com)

India’s private sector behemoth Reliance Industries has sought land
and tax benefits to expand its retail business and promote the
rural ‘haat’ market of Jharkhand.

‘Reliance in its letter to the Jharkhand government has sought land
and tax benefits to expand its business and promote the ‘rural haat’
market. The letter has been forwarded to the concerned departments,’
an official of the Chief Minister’s Office (CMO) told IANS.

‘The concerned departments will look into the demand of Reliance and
the interest of the state. The letter has been forwarded to the
agriculture, land and revenue, and finance departments through the
chief secretary,’ he said.

‘If the state government provides land and tax benefits to the
company, Reliance will develop the ‘haat’ market of the state and
open collection centres in different parts of the state,’ the letter
states, according to the official.

The company has already made its entry in the retail market here
with the launch of Reliance Fresh shops to sell mainly fruits and
vegetables.

It has opened six retail outlets. Vegetable vendors are, however, up
in arms against the outlets, as they have affected their business.

‘The Reliance proposal will be considered only after the different
departments give their comments. The state government will also
consider the interest of the people of the state and promotion of
state market,’ said the official.

– Indo Asian News Service

Chhattishgarh Yahoo group

Reliance Fresh: Deadly fresh

April 16, 2007

From http://arasubalraj.blogspot.com/

Reliance Fresh: Deadly fresh

Reliance, a corporate rogue which is built with deceit, forgery and all sorts of fraudulent acts at each and every step from its inception, has opened its chain of stores named ‘Reliance Fresh’ in Chennai. It has opened 14 stores covering major locations with expanding its tentacles every nook and corner of the city.

The wholesale grocery market at Koyambedu, a location at North Chennai which is delivering the groceries to Chennai and its surroundings has felt the instant tremors. Sales have fallen by 40% percent than before and the Number of small traders coming to Koyambedu for procurement has got reduced. Labourers dependent on the market have lost their income and jobs. As a whole, the lives of one lakh families dependent on Koyambedu Market are at stake.

Following Reliance, Tata and Birla also foray in to the Retail market with their chain of stores all over India. Moreover, American Wal-Mart, Metro from GermanyIndia. and Carrefour of France had announced their plans to open their retail outlets in the major cities of India.

India stands fourth in the Retail sales in the International level. The Indian reatil sector is estimated to be worth of 12 Lakh Crore per annum and the Chennai Market alone is of 20 Crore. It has been roughly estimated as more than 4 Crore people are engaged in Retail Sector. The MNC’s, TNC’s and the Vultures of Shining India are trying to swallow this entire market and to wipe out the ‘hurdles’ that come across their way.

Finance Minister P.Chidambram, the living example of all colonial traitors says that by allowing MNC’s and the comprador capitalists like Tata, Reliance etc., the farmers will be assured of fair rates and with the ‘elimination’ of Intermediaries consumers can also enjoy low costs. According to that ‘Intelligent’ definition, from the wholesale dealer who buys vegetables from farmers to the road-side grocery vendor, all are ‘Intermediaries’ and they are the ones who are getting ‘eliminated’ now. The crux of the issue is not only the loss of business of small retail traders with the MNC entry but it’s far above that. Markets, whoesale sales and retail form an axis of the economy while productive sectors like Agriculture, textile, industries form the other axis. By exerting their might on the former axis, MNC’s try to control the latter axis of economy.

If production, sales and retail will fall in to the hands of 10-20 MNC’s, then all prices will be under their dictate and nobody can defy them. Like the cement traders of today, they will dictate the prices of all essential commodities and will plunder the people. The arguments of Chidambaram is rubbish as Ambani is not coming to Chennai with 3000 Crores to ensure fair rates for the farmers or for ensuring cheap prices to consumers. Middle class fools too buy this argument by astonishing at the A/C showrooms and the attractive schemes of Reliance.

In the name of hygiene and consumer consciousness, a vicious propaganda is on set by the State that people shouldn’t buy products which are not sealed and not to buy goods without bill. What is the state of hygiene in MNC Products? isn’t the glossy covered Cadbury’s chocolate was found with worms and got banned in Maharashtra? The Killer Coke bottles were found with cockroaches, lizards, nails and even condoms. Was the Coke and Pepsi were banned even after it was proved that they had pesticide residuals that could cause cancer? What about the tightly sealed ‘Lays’ chips that hang around in all petty shops? Isn’t the chemical mixtures added in ‘Lays’ to avoid decomposition were clinically proved to cause cardiac arrest?

Is bill is the sole criteria for consumer safety? Ofcourse Reliance billed its consumers who used its mobile services to make calls to US and UK. But it forged those calls as local calls and deceived the Indian Government for about 3000 Crores. This fully deserved financial crime of Reliance was forgiven by its friend Dayanidhi Maran, the communications minister with a meager fine. A ‘Consumer’ from Chennai has filed a case on the fraudulent act of Reliance Mobiles. Last year it has announced a contest named ‘Film Dhamaka’ and this ‘Consumer’ sent 6000 SMS messages at the cost Rs.6/- per message to the Number 8888. After paying 36,000/- as bill, now he is fighting at the Court that Reliance has not actually conducted the contest and had not given any prize to anyone till date. Do we need any other example to show how cheap tricks can reliance play?

Retail trading in India is the last resort of people who are driven out of all other trades. State and Capitalist vultures want to ‘eliminate’ them even from that verge. Supreme Court showed its complicity by locking the shops of Delhi small traders. In Metros, Platform shops were bulldozed. As a final decisive blow, VAT was implemented to facilitate the entry of MNC’s all over India.

All the parliamentary firebrands are conspicuously maintaining their silence or had washed their hands with formal statements. Even the so-called Left parties are satisfied with their ritual statements. India is not a sovereign country. It has been sold to World Bank, WTO, US and MNC’s. Nationalism, Regionalism, and all those sorts of political trends of India are just jugglery of words and they are not even capable of throwing even a tomato away from the Reliance Shops.

Ambani is not the only one and Koyambedu is not a separate issue. MNC’s are entering in Retail sector only on the pretext of Privatisation and Liberalisation, and the traders of Koyambedu cannot defeat them individually. All compradors of India are backing Ambani. State Machinery, Police, Courts, Political parties and MNC’s are behind them. To defeat such a big enemy, all people affected due to Globalisation need to stand one and by fighting alone they will not be able to move even an inch.

Hunger strikes of traders will not give any results. Strikes and Ghereos are to be organised in the door steps of Reliance Shops. People should boycott Reliance shops and should realise that the so-called freshness assured is just a farce and each and every paisa spent at Reliance shops is nothing but a nail on the coffins of Lakhs and Lakhs of fellow people who served us all these days with all their hard work. We shouldn’t be like Nero’s guests who stood muted to the burning of slaves for the party lights.

Reliance is the first Serpent that had poured its venom in the retail sector. More and more massive serpents are on the pipeline. The only option left out is to slay the snake instead of shivering with fear and get bitten.


Sarfaroshi ki tamanna ab hamare dil me hain, Dekhna hain zor kitna bazuven khatil mein hain.
(The passion of Patriotism linger in our hearts,
Let’s see, how powerful the weapons of enemies are! )*


This post is an abridged version of the booklet released by People’s Art and Literary Association (PALA), New Democratic Labour Front (NDLF), Revolutionary Students Youth Front (RSYF) and Peasants Liberation Front (PLF) in Tamil. These organisations have planned for a protest encircling Reliance Fresh Shops in Chennai on coming May 1, 2007.

* One of the favorite songs of Bhagat singh and his comrades.