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THE VICE-CHAIRMAN (PROF. P.J. KURIAN): Conclude please.
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SHRI P.G. NARAYANAN (TAMIL NADU): Sir, at the outset, I oppose the foreign direct investments in the retail establishments. The Foreign Investment Promotion Board made an attempt to remove the fiats of local players and went on to say that they made this stronger by adopting modern technology and management practices, when faced with foreign competition. Thus, this observation is ridiculous because our local entrepreneurs would be handicapped economically to adopt modern technology. This aspect has to be considered seriously by the Government, before allowing the FDI in the retail sector. The retail trade is one of the oldest businesses in the country, which has been established all over the country. (Contd. by 3b -- VP)
SHRI P.G. NARAYANAN (CONTD.): Retail trade has established a network of shops; supply chains extending to the length and breadth of our country. Sir, these shops, which sell products ranging from pencils to pocket computers, have established rapport with the local community also. Ninety-five per cent of the people are used to buying their daily necessities and provisions from these shops. Prices in the retail shops have also been, by and large, reasonable because of the inherent competition among the shops. The market forces work effectively and the consumers get a good deal from the shops. In the Southern States, especially, in Tamil Nadu, even governmental agencies run shops. They set the prices which, by and large, the entire retail market follows. Sir, several lakhs of people have found gainful employment from the retail shops. Employment is provided in the neighbourhood also and people are not displaced from their houses.
Sir, the Government on the dictates of the World Bank and Foreign Institutional Investors is now hell bent on demolishing the highly successful system in our country. They have now decided to open up the retail trade to global super bazaars. Once they come into our country, they will initiate the price war first and, then, kill all these small-time shops dotting the country. I do not know why parties like the CPM should support this diabolic move of the UPA Government. If they are really Communists, they should come out openly against FDI in retail trade. If their ideology to support the poor is true and unadulterated, they should not support this diabolic move of the Government which deprives the poor. I also demand that the UPA Government which came to power on the sole plank of supporting the aam admi should not now betray them. Betrayers should be taught fitting lessons from the aam admi.
Finally, I strongly emphasise that any policy on opening retail sector for FDI has to have adequate safeguards to ensure the livelihood and employment of the large section of small traders and shopkeepers.
SHRI ARJUN KUMAR SENGUPTA (WEST BENGAL): Mr. Vice-Chairman, Sir, I rise with a little bit of hesitation because I want to really support this move towards FDI in retail trade. I wish the Commerce Minister had allowed me to support him. But I find it a bit difficult because I do not quite know what his policy is. I know the policy of the Prime Minister. He has, definitely, supported FDI. I have looked for the Commerce Ministry's policies on FDI in retail trade. I have seen the latest initiatives on the FDI in the single brand which is at par with the earlier Government's FDI in wholesale trade. I still do not have a very clear idea whether this Government is committed to supporting FDI in retail trade. (Continued by PK/3C)
SHRI ARJUN KUMAR SENGUPTA (CONTD.): But I start from the resumption because there are very good reasons to support that, but this has to be carefully examined.
The first argument against FDI is very easy to dismiss. I am afraid, Mr. Joshi made points about culture. The FDI will bring in products which are not really the products of acceptance in our culture. Unfortunately, my friend, Shri Sitaram Yechury also, in the last part of his statement seemed to have supported that point saying something in a musical way that this is a kind of culture he does not support. I do not want to get into this, because that argument has been talked about. Any contact with foreigners, I hope, today, after so many years of economic policy and opening up, we have to spend much time on this. If the people in this country like to have coca-cola; if they like to have foreign brand things, jeans, or, whatever it is, they should have it. It is not because somebody else wants that, it should not be there. So, that is a question which is not necessary to debate.
But the other question which Mr. Yechury mentioned, and which I think, Mr. Joshi also hinted, is that it will affect the output. He mentioned about contribution to GDP, and said that contribution will fall. I am afraid, this is not correct, because if FDI comes to retail trade, it will expand the organised trade in our country. And organised trade would reduce transaction cost, inventory cost, intermediation cost, and establish supply chains all over the world. This reduces the unit cost of production and also sales, as a result of which output would expand. As the output expands, the system will become much more viable. Even if this country were not growing -- it is now growing at eight per cent growth rate -- I do not think FDI entrants will reduce the output of the retail trade sector. It will, actually, expand the volume of the retail trade.
The third point is whether it will affect employment. This is a very major question which we must deal with. As a matter of fact, retail sector in our country is mostly unorganised. About 98 per cent of the retail trade is unorganised which means that they are very small units which produce without much capital, without much market, and without much space. Actually, the total number of shops with 500 square feet or more than that is very few in our country. We have little shops. There is a 'Pop and Mom store'. That is not a very right phrase, but very poor people come there. As a matter of fact, Sir, the retail trade absorbs the unemployed. If you are not employed, if you cannot get a job, normally, you move to retail trade; so that, you can survive. That is how the retail trade has, actually expanded.
Now it is very difficult to say that if we expand organised trade, it will not affect unorganised trade employment. It is not true. There is no connect. Whatever connect there is would reduce the unorganised sector employment, the retail traders, because they will be outbid, they would lose their competition, they would not have the kind of a market reach and plenty of other reasons which you have talked about. There is now no doubt that if you have a kind of an expansion of the organised retail trade or FDI in a country like ours, they would, definitely, have an immediate adverse effect on employment. They would not be able to sell, and they would not be able to compete. This is true not of FDI, but any kind of opening up in the international trade, the first impact is that it will out-compete the existing units. The question is: should that be a good enough reason not to allow trade, expansion of trade, and in a similar argument not to allow expansion of FDI?.
(Contd. by 3d/PB)
SHRI ARJUN KUMAR SENGUPTA (CONTD.): I am afraid, this particular question has to be answered. I want to request my friend, Kamal Nathji, that he represents a Government which believes in free trade, which believes in liberalisation, but, at the same time, he has also to ensure that its effects on the poor people, on the unemployed people are minimised. You will find it at every point. The other day, Sir, you must have noticed the question about the FTA, the question of cardamom, etc., that came up. Again the problem is the same. You introduced free trade without taking care of the problems of the people who will be affected by that trade. I am afraid this question will come up again and again when you try to do that in agriculture. I do not believe that anybody in this Government or in the Congress Party will believe that there should be no increase in trade or lowering of trade barriers in agriculture. But the only point is that when you reduce that trade barrier, you must make sure that the effect of that on the poor, on the unorganised, on the unemployed has to be taken care of. It is a different debate. We have been talking about this question. I hope at some point of time, we shall have a very good general discussion on WTO. I don't want to get into that now.
But in the case of FDI, Sir, exactly, a similar approach has to be taken. Mr. Kamal Nath owes it to us, owes it to his Government, owes it to his programme, his Prime Minister, to come out with a policy which will allow FDI in retail trade but would not allow the effect of that on the poor, unorganised retail traders in our country. How can he actually protect them? It is not a very easy task, but the Government is not an easy thing to do. It has to be considered what are the main problems that these retail traders are facing. We have examined it in our little way and it is known quite all right that they lack trading opportunities, they lack marketing opportunities, they lack credit, they lack finance, they lack capital, they lack technologies, etc. All these things are there. Somehow, these will have to be provided. Market cannot provide that. I am afraid, Mr. Joshi is sitting here, and I found that he is a great champion of opening up of all this trade, but he is not the friend of Shri Kamal Nath's philosophy. That is a neo-liberal solution which will believe that you open the market, market prices will take care of that. That will invest in products which will actually compete in the market. It does not work, and does not work in unorganised sector, does not work with the vulnerable poor, the poor people. You have to take special measures to do that, to support them, to see that the unemployment does not expand. I fully agree with Mr. Sitaram Yechury on that point. He has to provide a policy which would make sure that unemployment is not going to expand and the retail traders, the poor retail traders are not being affected. Now, I might mention a very simple point here which Mr. Kamal Nath may take into account. He is now involved in the negotiations on WTO. Mr. Jaitley is here. He was also involved with this. I presume he does not share the views of Mr. Joshi, as he propounded here. He might have, but I am just making a presumption. But the question is that in the WTO, the negotiation on services is just starting, it is open, it is perfectly possible for India and under India's leadership other developing countries to point out that we shall allow, what you call, the commercial presence in our country. We shall allow accordingly FDI, provided they accept certain conditionalities. The only conditionality that you cannot impose according to WTO is that you cannot link it with domestic content or kind of TRIPS problems. But it does not prevent you from imposing export performance as a conditionality, not export related to actual product that you take, but export performance. (Contd. by 3e/HK)
SHRI ARJUN KUMAR SENGUPTA (CONTD.): It does not prevent you from imposing upon them certain kinds of capital expenditures, R&D expenditure, employment-related clauses. These conditions are actually allowed. And why I am saying that? Let me just talk about the export performance, the only way the Wal-Mart and others can really do good to us as they did to China. Mr. Yechury has left. I think, my Left friends have made the statement and gone away. Wal-Mart has a history in China. I am not comparing India and China but that is what we should learn from them. Wal-Mart has been able to produce a substantial expansion of exports of the Chinese products. Now, it doesn't mean that we would be able to do that because we do not have that manufacturing capacity. The Chinese have that manufacturing capacity. Somebody was saying that they went there and they found that Chinese were producing pens and everything and we only produce Haldiram. They have a manufacturing capacity. But the fact of the matter is that Wal-Mart helped Chinese exports all over the world and piggy-backing on Wal-Mart, Chinese companies came forward and they got into the whole world to export their products. If you can do that, if you can impose that thing on Wal-Mart, Wal-Mart will take it only if they can make money out of this and it is perfectly possible to make money on this in India; getting this thing sourced from India, they would do that. That will increase our exports; that will increase our employment and that will protect -- that is a particular kind of thing that we can now do -- millions of jobs that Mr. Sitaram Yechury was thinking that we shall lose. So, Mr. Chairman, I would request the Minister now to come out with a proper FDI in Retail Trade Policy which is consistent with the UPA and the Common Minimum Programme and which is consistent with the protection of the poor and the vulnerable. It can be done. There is no reason to shy away from this. The FDI's merits have been established by everybody. My friends on the other side believe that they tried to introduce FDI through back channels in all different ways because they were also opposed by their Mr. Joshi types. So, this is an old debate. There is nothing new in it. But the only point that I would like to submit to Mr. Kamal Nath is, please realise that you are now the Commerce Minister of a Government which is not just old-fashioned, liberal, free-trade Government. It believes in free trade; it believes in reforms, but specifically with a set of policy that will protect the poor. Thank you.
SHRI SHARAD ANANTRAO JOSHI (MAHARASHTRA): Thank you, Mr. Vice-Chairman, Sir. Before I state my position, I would start by saying how did I come to that. From 1975 to 1990, I led a farmers' movement which stated that the Government deliberately depressed agriculture prices and that was the reason of the poverty of farmers and indebtedness of farmers. In 1991, luckily our present Prime Minister, who was the Finance Minister at that time, opened the new door of liberalisation. Even though we did not really go to the extent of scrapping the Essential Commodities Act, I saw the winds of change that had come in and advocated a three-points programme for the farmers. One was that women should carry out a research in the backyards.
(MR. DEPUTY CHAIRMAN, in the Chair.)
They should play with plants and find out what is good and what is bad. I would not go into the details. Second thing that was advocated kitchen food processing. And the third thing was the super market network in Maharashtra. Unless we have an alternative to the Agricultural Produce Marketing Committee, we would not be able to ensure the quality of the produce and we would not be able to sell our commodities abroad. (Contd. by 3f/GSP)
SHRI SHARAD ANANTRAO JOSHI (CONTD.): Why did I choose the supermarket type of retailing rather than the ordinary type of traditional retailing that Banwari Lalji eulogized and Dr. Murli Manohar Joshi eulogized. Sir, for hundreds of years, Indian agriculture has lost all links between the farm and the dinner table or the kitchen. There is no organized system for storage, for processing, for trading and for grading. All these things are left, by hazard, by chance, to such organisations, as might come up.
When the Food Corporation of India was given the task of procurement of wheat, it was expected that the Food Corporation of India would build up the chain that was lacking. Unfortunately, the Food Corporation did not do that. What we needed was that the APMC should be replaced; the whole chain of Artiyas should be replaced by some interface that will put the farmers in as close a contact as possible with the consumer himself. That was what was necessary and we found that this would be best attained by supermarket networks.
People have talked very bitterly about the Wal-Mart, about the bigger Harrods and all that. I would like to start by quoting George Mickish. He is not an economist but a humorist. He is on record saying, 'Marks and Spencer have done much more for the poor masses than Marks and Angles. It is the Marks and Spencer who permitted a shop girl to dress like a Duchess. That is what he has said.
The advantage is that they spread out their network; they have a backward strategy for procurement and they have a forward strategy for contacting the consumer making him purchase as much as possible. There is nothing wrong about that. And that is where the interest of the farmers lies. And, therefore, Sir, in Maharashtra, we actually started a farmers' supermarket network, which is still working, and if Murli Manohar Joshiji were present here, rather I would have liked to tell him that his very close friend, Mr. Bindu Madhav Joshi, who is a leader of the Consumers' Movement was with me, and, he has himself started a supermarket in Pune which is doing pretty well, the Grahak Panchayat.
The traders are good people, honest people and nice people. I am not differing with Banwari Lalji or with Murli Manohar Joshiji, but it is not in their nature to provide the kind of services of post-harvest and pre-kitchen processing; they are not in a position to furnish that at all. That is the reason why we need to have another kind of interface that will give maximum advantage to the producers and the lowest possible prices and assured quality to the consumers. That is exactly what I expected the supermarket networks to do.
Now, many people have talked as to why is that the supermarkets come here to make a lot of profit, supermarkets come here to exploit and they cannot give employment. I think, rather than quoting statistics etc., I would give a very simple example, Sir. At one point of time, in the farmers' movement, we were thinking of boycotting all the industrial products of cities and propagate the Khadi and Gramodhyog products instead. One of the products that we took up for examination was an ordinary soap. You might have seen the Khadi Gramodhyog soap, and, we started wondering that why is it that Khadi Gramodhyog is not able to compete with the Lux toilet soap -- Lux toilet soap comes in so many perfumes in nice packing; so much money is spent on advertisements, and, beautiful stars, actresses come in the advertisement -- and why is it that the Khadi Gramodhyog soap is not able to undersell even the Lux toilet soap of the Hindustan Levers. We examined the whole question. While the Khadi Gramodhyog soap was not able to use a particular chemical that is formed when soda and oil are added, which the Hindustan Lever is able to use, and, therefore, by technological advancement, they make a margin, which explains their profits.
(Contd. by 3G/sk)
SHRI SHARAD ANANTRAO JOSHI (CONTD.): Sir, similarly, where do they give the employment from? It was said, "How would they increase employment?" Then, my answer is, if you say that only 10 per cent of the agriculture produce is processed today, then, there is a scope for increase in the employment to the extent of purchasing 90 per cent of the agriculture produce. This is where actually the multinational, all the super market networks, retail traders will score over the existing system. Sir, the statistics and the report that were quoted here etc. were very well-researched. But, I would like to say that this is not really a dispute amongst facts or dispute of opinions. There were two different mindsets. When I find that Murali Manohar Joshi -- I don't think he would be annoyed if I called him a sanatan Hindu, because Gandhi himself said that he was a sanatani Hindu -- and Sitaram Yechury come to ...(Interruptions)..
DR. MURALI MANOHAR JOSHI: Sanatan is always modern. ...(Interruptions)..
SHRI SHARAD ANANTRAO JOSHI: You don't mind it. That is the thing. If Murali Manohar Joshi and Yechury come together, then, there must be something very special about it. And what is so special about it? I will tell you one thing. Sir, in case of the people on the right hand side, there is a sense of nostalgia. They do not like any changes. Old was gold and what we have continued with will continue to be good. That is the first thing. They have, in addition, a sort of a neurosis or an inferiority complex. They feel that every time we come in touch with the foreigners, we will be the losers and the foreigners will always be the gainers. That is possibly the lesson they have learnt from history. But, that is not necessarily true. At least, in the new scenario, they are going to commit it may not happen at all. The third thing is, there is a matter of self-interest. Banwari Lalji is, of course, interested in it because he comes from the trading community and he would like to preserve the trading community. And, Sitaram Yechury has a vested interest because the Communists will always advocate methods that would retain and expand poverty, because if the poverty disappears, they will be left with no business to do at all. That is the kind of vested interest that they have. There are several examples. The kind of argument that we have heard here, Sir, today, we heard them when the first industry started, how green was my valley? ...(Interruptions)..
SHRI TAPAN KUMAR SEN: Sorry to interrupt, Sir. We only deal with what Mr. Sharad Joshi and company create for the people of the country.
SHRI SHARAD ANANTRAO JOSHI: Now, when the first computers came, these people were saying that if the computers come, there will be massive large-scale unemployment. It has not happened and unemployment has increased. Every time there was anything like a change to take place, these people have, by their mindset, opposed it. I would like to tell them that if we had that kind of a mindset, or, people had that kind of mindset, then, we would never have even underground drainage and we would have continued with the practice of scavengers carrying the maila head load, because no economist can justify the construction of an underground drainage. And if you make calculations of that type, then, you go on opposing. And every time the history has proved you false. Computers created employment; computers did not destroy employment. And, I can tell you that the retail shops are going to increase employment. In fact, that would be the beginning of the problem of programme of eradication of poverty in India and for the farmers. I would like to congratulate the Minister. Arjunji made three or four references to Joshi, and I thought, at least, one reference was to me. And, I must say that long before Kamal Nath probably thought of FDIs in retail trade, I had been writing about it and advocating it. And, as far as the WTO is concerned ...(Interruptions)..
SHRI MATILAL SARKAR: Sir, I have a point of order.
MR. DEPUTY CHAIRMAN: No, wait, wait. ...(Interruptions)..
SHRI SHARAD ANANTRAO JOSHI: What point of order? Show the book. Show the book. ...(Interruptions)..
SHRI MATILAL SARKAR: But in reply to my question, the hon. Minister said that the unemployment now ...(Interruptions)..
SHRI SHARAD ANANTRAO JOSHI: Show me the rule. ...(Interruptions)..
MR. DEPUTY CHAIRMAN: No, there is no point of order. ...(Interruptions).. There is no point of order. The Minister has not stated anything yet. ...(Interruptions).. Please, Mr. Sarkar. (Followed by ysr-3h)
SHRI MATILAL SARKAR: Out of the workforce, 40 per cent is unemployed.
MR. DEPUTY CHAIRMAN: There is no point of order in this. Just to intervene you are saying that you have a point of order.
SHRI SHARAD ANANTRAO JOSHI: I think most of the people, who talked about retail trade, Harrods, and Walmart, have only seen their consumer outlets. They have not seen how much life is behind them. If they see even Harrods, or if they see the Walmart, there are hundreds of factories which prepare different things, purchase raw material, process them, package them, and carry out sales activity. There is a whole economic empire which goes behind it. Sir, since Independence the Government, whether under the name of socialism or liberalism, has failed to produce the kind of development cycle that we expected. And since the Government has failed, we think with the FDI and the enterprise and innovativeness of the Indian entrepreneur, we will certainly make progress. Thank you, Sir. (Ends)
MR. DEPUTY CHAIRMAN: You just want to intervene.
SHRI ARUN JAITLEY (GUJARAT): Thank you very much, Sir. I had no initial intention of participating in this debate, which I must confess, has been a debate of very high quality. I am fortunate to speak after Mr. Sharad Joshi because that has saved me of the adjectives that he would have otherwise used about what I also intend to say. I don't claim to be like him the sole repository of wisdom on the issue of FDI in retail. But all that I wish to suggest is that this debate has been going on in this country for the last two years, and one factor about a policy is that, unlike a legislation, it does not come up to this House or the other House for approval. But even if a policy, unlike a legislation, does not come for approval or disapproval before the House, yet being a live and a vibrant democracy, I think, it is incumbent upon the Government to have due regard to what a large part of the parliamentary opinion, and hence a national opinion, on the subject is. In a debate of this kind, we have seen speakers almost from all sides, including Shri Arjun Kumar Sengupta, expressing very serious concerns about the idea of opening out immediately in this area. I think even though the Minister is not bound to seek a parliamentary approval for any step that he may take in future, whatever policy he announces he would take the larger opinion expressed by this House, by Members of all sides into consideration while the policy is formulated. Sir, I have four reasons to advise the hon. Minister, through you, Sir, why he must, for the present, go a little slow on this subject. It is normally argued that FDI adds an additionality to our domestic resources; and when an additional resource comes in, it increase economic activity; and increased economic activity will generate more employment, more revenue and hence bring larger prosperity to this country. This is a general argument which is given. My first reason for advising the Minister to go a little slow on this subject is that the Indian economic growth model is developing within its own parameters. There is one fundamental difference when the Chinese example is cited in comparison with the Indian example and it is that the growth model of the Chinese economy has been substantially FDI-driven; it has been substantially Government-driven. The Indian model is substantially entrepreneur-driven. We, of course, have an advantage of being a democracy which at times makes the growth process a little slow -- in China the decision-making is much faster than that we have in India -- but that is the price we have voluntarily agreed to pay. Therefore, having consciously chosen a system, which is entrepreneur-driven, in most of our sectors which have been sustaining this 8 per cent growth now on an average for the last three years, I don't think we should blindly follow the example and say let us go in for an FDI-driven model which, even if there is an additonality of resource, need not be a great asset as far as our growth pattern is concerned. (Contd. by VKK/3J)
SHRI ARUN JAITLEY (CONTD.): The second reason -- and the Minister now is a very experienced trade negotiator -- is, what is the compelling necessity for India to announce a unilateral reform in this area at this stage? Dr. Sengupta mentioned that the trade negotiations are on and one pattern of the trade negotiations of the WTO which is visible is that we have been quite anxious for an expeditious disposal of the negotiations in the services sector. In areas like outsourcing, in areas like movement of natural persons, which is Mode-1 and Mode-4 of the service sector negotiations, India always has a pro-active interest and what we have seen in the course of the last 3-4 years is that there is a conscious attempt being made to put these negotiations on the back-burner. You have requests being made; you have offers being made; you have offers having been exchanged; but nothing substantive on the service negotiations has still come about. There is no anxiety on the part of the developed countries to expeditiously settle as far as service negotiations are concerned because if the service sector negotiations are expedited, India has an obvious advantage. We have a large human resource. We are in a position to even transfer physical individuals to various parts of the world who can manage the economy for them. The demographic changes which are taking place across the world, we have a much younger population profile, they have an older population profile. And, therefore, they need our people more than they have their own. Similarly, in areas like BPO etc., in Mode-1 area, where we are in a position to provide much cheaper services, there is a natural attraction towards India which is taking place. Now, these negotiations are being put on a slower track. What they have been trying is to put the agricultural negotiations on a fast track which really today have been deadlocked and that's why the Doha Round itself was not able to progress. Now, it's one of the basic principles which any experienced trade negotiator like the hon. Minister will keep in mind that when you negotiate, you don't win in every area. There is a give and a take. You will have to make some concessions. Now, whenever the developed countries negotiate with us, there are two areas in the services sector which they want us to open immediately. There is an emphasis that you must open your retail sector immediately and there is a request, particularly from countries like Britain, that you must open your legal services and financial services immediately. I leave that for a moment. Americans are particularly very keen that we open out the retail sector immediately. You are now putting pressure on India as far as the BPO are concerned; you are limiting the number of visas every year so that areas where we have pro-active interest, you obviously are trying to put a shield and block the negotiations. Now, these areas are a very powerful instrument in our hands when we bargain across the table -- our own specific interests in the WTO negotiations. If we go in for an adventurist approach that we unilaterally open the retail sector out, we are going to significantly weaken our negotiating ability at the WTO. We will be conceding to them what they want without taking any reciprocity in return. So, my second piece of advice to the Minister is that even if our growth model is not FDI-driven, trade negotiations compel us not to do anything which actually takes away the bargaining chip which we have in our hands without having received any corresponding benefit for this purpose.
The third reason, Sir, why I would suggest to the hon. Minster to go slow in this area is that there is this great debate which goes on all over the world as to what is the impact which large retail organisations when they come up in the country, particularly with very deep financial pockets, will have on our small shops as they have been popularly referred to as the mom-dad or the mom-pop shops etc. Now, those who advocate opening out always say that they both operate in different fields and, therefore, if you have large retail shop coming up, it doesn't have any adverse effect as far as the small street corner shops are concerned. Now, there is no detailed study which has been done. In fact, a lot of studies which are being done by individ0uals are indicating to the contrary.
(Contd. by RSS/3k)
SHRI ARUN JAITLEY (CONTD.): And one of the reasons they suggest to the contrary is that the size of the purchasing power is limited, and if that purchasing power gets diverted into the Wallmart or the area where whichever shop comes up, there is going to be a corresponding impact in terms of reduction of the sales capacity as far as the small shops are concerned. They will not be able to compete with them, and therefore, there is naturally going to be an adverse effect as far as the small shops are concerned. Now, without there being any detailed study on this subject, merely on a premise that they will not be affected, is not correct because, this debate has been on, and every time, I have had an opportunity to go out of this country and travel internationally, I always try and make an informal inquiry as to what effect in those economies these large stores had, particularly, in the agriculture, and the food areas of the small shops, and whatever inquiries I made from shops from where I buy milk or any other product, I came to know that before the organized food chain came into existence, between then and now, I am 30 per cent of what I used to originally be, and the answer is very simple. The size of the purchasing power is limited. If it expands, it expands for all. If this purchasing power is diverted towards the large stores, then, what happens to the small one's. Sir, whenever we have an experience of travel across the States, particularly, the rural areas, you ask them a question as to what are the sources of employment that you have, and you will get only two answers. Either there is no source of employment or they will say £ÖÖê›Íüß ²ÖÆãüŸÖ ÜÖêŸÖß Æîü †Öî¸ü ”ûÖê™üß-´ÖÖê™üß ¤ãüÛúÖ®Ö “Ö»ÖÖ »ÖêŸÖê Æïü…
In large parts of this country, there is no third avenue of employment. Now, if we allow deep pockets to come into this area, and compete with that man, it is going to be an uneven battle, and therefore, is the Indian economy ready today for this?
Lastly, Sir, there is one more reason which the Minister must keep in mind that in every growing economy, there is a space for organized retail, and this space for organized retail in India has just about started picking up. Our own domestic retail organizations, they may be larger in size, we may like them or we may not like them, but, it is only during the last four, five years that they have started emerging. Now, if they are just emerging, they have spent billion of rupees on real estates, they have not started even making profits, if we open them up for competition with those who have been in existence for the last 50 years or 80 years, who have the deepest pockets, and who can, as my friend, Mr. Yechury said, start the predatory pricing immediately, who can undercut and then create monopolies and faces the disadvantages of that, I think, that is a danger which we cannot overlook at this stage. So, Sir, while thanking you for permitting me with this unscheduled opportunity to intervene, my request would be that this is high time for the hon. Minister to consider going slow, particularly, when a majority of theses parties, including Members from his own party, have serious doubts about opening up at this stage. Thank you. (Ends)
THE MINISTER OF COMMERCE AND INDUSTRY (SHRI KAMAL NATH). Sir, I would like to thank the hon. Members for their concerns and their inputs. In fact, this discussion was scheduled in the last Session of Parliament, but because there was a bomb scare that day, we could not have it. I obviously think that this is a matter of great concern, and the concern expressed by the Members in different ways. It is not that it is not a matter of concern to me, or, to my Government. Our Government is committed to a Common Minimum Programme, with our Allies, and one of the crucial aspects and ingredients of that programme is generation of employment, not replacement and displacement of employment. So, obviously, the Government and I would be concerned, and would not like to take chances where there is likely to be displacement of people. I would like to thank Mr. Yechury because he has come.
MR. DEPUTY CHAIRMAN: Mr. Yechury, the Minister has just started.
SHRI KAMAL NATH: That is why it was necessary and I consider it necessary, and I immediately said on that day that we must have a discussion to get these inputs and concerns. (contd. by 3l)
SHRI KAMAL NATH (CONTD.): Our Government is committed, and because our Government is committed, let me at the onset say--there was a presumption, which I thought I could sense, as if the Government is on some fast track to announce this--that the Government has already made up its mind. Sir, for the last two years or one-a-half years, we have been studying this. I have said so, amply, on the TV, and I have said so in the Press also. Sir, what is the model? I dug into it; I dug into the records of the past; I held discussions with various stakeholders. I went to the Retailers' Conference, held in Bombay, to understand this. Why? Sir, I am deeply concerned about it, and personally concerned also, because I come from a district which grows the best oranges. My friends from Maharashtra may pardon me for saying so; they grow the best oranges in the district, and I see them rot. I see the vegetables, produced in my district, rot, which cannot be moved. But then, I need to understand this, and this Discussion is only helping me to understand this. It is not that we are going through this discussion as the motions. Let me assure you that there is no question of going through the motions. These are useful inputs with which we are concerned. Those are valid concerns. Sometimes, some of them appear to be, initially, valid, but, later on, those concerns, after studying deeper, appear to be not correctly founded. I had concerns. I looked into what were the efforts made by the previous Government. My predecessor, Mr. Arun Jaitley, himself examined it in detail. I do not want to go into that, and I don't want to make this political. Dr. Murli Manohar Joshi said that we said this at that time and we say this now. I do not want to say. It was you yourself; the then Prime Minister himself was saying; the then Prime Minister, Mr. Vajpayee, himself was announcing that they were going to have FDI in retail. I don't want to make this point. But this is not an issue concerning politics. This is an issue which concerns us all.
DR. MURLI MANOHAR JOSHI: Mr. Minister, a Member from your side started saying it; otherwise, I would not have said like that. You started saying it.
SHRI KAMAL NATH: No; I am not saying that; I don't want to say that.
He may have said so.
DR. MURLI MANOHAR JOSHI: All right.
SHRI KAMAL NATH: We did not. I don't want to mention that this was something which the earlier Government also looked into. And why not? The Government examines everything. I looked into, and I have found the studies made, in the past, by the Governments; leave aside whose Government it was. But my Government itself made studies. I looked into what the Group of Ministers said. And they had taken a view on that. Fine. They were looking into it. No issue. They even went to the extent of saying, "We must have it.!" I don't want to say--I don't want to get into the politics of it because I think it is far too serious a subject. To get into the politics of it, I do not want to say what was said in your own agenda for the 2004 elections--that this is a must. Now when I hear this--and I appreciate Mr. Jaitley for drawing my attention to these concerns. Certainly, as time goes on, we see some more things; some more things come to light, some more inputs come to light. He has drawn my concern to very valid things; I have no contradiction to that. But, Sir, the basic question, about which I felt concerned, was that this became a discussion which got centred around Walmart. I am not bothered about Walmart. Whether it is Walmart or not, is not the issue. The question is: What is good for our country and what is not good for our country? And that is what we should look into. When we are talking about retail, what do we mean by 'retail'? This is one thing which I grapple with. What is 'retail'? Now, there is a big retail; there is a small retail. There is a retail of goods by the kiryana shops, our neighbourhood shops. There is a retail of electronic items; there is a retail of sports goods; there is a retail of foodstuffs; there is a retail of fashion items. So, do we take all kinds of retail under one umbrella? This is what I have studied. I also thought that retail is just generalised.
(Contd. by 3M)
SHRI KAMAL NATH (CONTD.): So, what is retail? First, there is small retail versus big retail. The question of FDI comes much later. It is a question of big retail versus small retail. Today, you have kirana shops. You are having these hundreds of malls open up. You have hundreds of big, big food stores. My friend, Shri Ramdeo Bhandari said "•Ö²Ö ´Öï Æîü¸üÖê›ü ´Öë ÝÖµÖÖ £ÖÖ ŸÖÖê ´Öï®Öê ¤êüÜÖÖ ×Ûú ¾ÖÆüÖÓ Æü»¤üß¸üÖ´Ö Ûúß ³Öã×•ÖµÖÖ ³Öß ×´Ö»ÖŸÖß Æîü - †´Öê×¸üÛúÖ ´Öë ÛúÆüà ÝÖ‹ £Öê - ¾ÖÆüÖÓ †“ÖÖ¸ü †Öî¸ü ´Öã¸ü²²ÖÖ ³Öß ×´Ö»ÖŸÖÖ Æî"… So, what retail are we talking about? Just saying "retail", we may be misleading ourselves and, I thought, maybe, I am misleading myself if I just look at one aspect of retail. What is the retail which is incremental and what is the retail which is not incremental? What is the impact of allowing a big retailer? Today, as India grows, we are growing; we are having 8-9 per cent growth. We are having growth in our manufacturing sector. What is the macro-economic situation? We have people, 20 million people, belonging to the middle class. Our retail sector is growing. Our retail sector is substantially growing every year. Now, that retail sector is going to be serviced by large retailers. Leave aside the FDI for the moment. That is why local Indian retailers, local Indian business houses, are coming into retail and these big business houses, which are coming in, have made a judicious business decision that we want to go into retail because there is a growing market and rightly so. If our retail sector is not going to grow, where is the demand of our growing population, in the middle class, going to be met? So, the first issue is: What is the kind of retail we are looking at? If we are looking at retail to protect our kirana stores--of course, kirana stores, our neighbourhood shopkeepers, the mom and pop stores, as they are called--are a very important part. But that is an urban phenomenon. Unfortunately, nobody talked about rural phenomenon. Other than Sharad Joshiji, nobody talked of the food sector. What percentage of retail is food? Such a large sector of retail is food.
DR. MURLI MANOHAR JOSHI: It is about 70 per cent in food.
SHRI KAMAL NATH: I am saying so. I am not disagreeing with you. I am saying that. Now, how will we ensure that about 30 per cent or 40 per cent of our food does not rot? Rupees fifty thousand crores worth of food and vegetables rot. In my own district, we can't move out the oranges. What is the percentage of oranges that rot? What is the percentage of vegetables that rot because we can't get them into the shelves? There is no back-end. What is retail? Today, retail is not mainly kirana shops. Large retail that is going to be done by Indian companies is technology. It is technology in packing; it is technology in preservation. These are the sources which we have to look at. So, first, we have to look at what is retail, what is the type of retail. I was in Chicago and one large electronics chain retailer met me and he said, "I source two billion dollars from China". This is a large electronics chain which is there. I forget the name. It is "Bylight" or something like that. He sources from China two billion dollars. He says, "I have so many stores in China". Who was that big Indian electronics retailer? It was an Indian. He says, "In India, if I will have to do it, I should source this from India. Why should I source? What can I source from India which I can't sell in India? No logic". So, I said, "No, we are concerned about the small persons". He asks, "Which small person sells electronics? Please tell me which small person in India sells the type of things which I sell". That got me thinking that there were different types of retail. Take, sports goods. They also met me. They said, "We too do. Where do can we ask for sports goods from?". If we are to develop, we have to have an economic chain. I am not talking necessarily about foreigners. I am talking about Indians.
(Contd. by 3N/VK)