The Indian government's decision Friday to let big department stores like Wal-Mart Stores into the country could dramatically impact everything from the country's food chain to its roads.
A sizable portion, some estimate as much as 40 percent, of the food Indian farmers grow rots before it gets to a consumer, and giant stockpiles of grain and other essentials often spoil before they are distributed.
The government has laid out some very specific conditions, even as it has opened the door to Wal-Mart and others, designed to protect the livelihood of some of India's tens of millions of small shopkeepers. They include:
-Retail stores can only be opened in states which have agreed to the policy.
-Retail stores can only be set up in urban areas with populations of more than a million (India has more than 50 of them), and must provide “transport connectivity and parking.†Stores can be set up in states without a city of more than a million, if the state approves the policy, in the city of the store's choice “preferably the largest.â€
-Brands much make a minimum of $100 million in investment, with half that in rural areas.
-At least 50 percent of the total foreign direct investment brought in should be made in “`back-end infrastructure,†which does not include building stores or any land costs. It does include: “investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, ware-house and agriculture market produce infrastructure.â€
-Retail chains are expected to source at least 30 percent of the goods they sell from Indian smal l and mid-sized businesses, or set up their own manufacturing facilities in India.
The government's statement concludes:
“The decision would benefit stakeholders across the entire span of the supply chain. Farmers stand to benefit from the significant reduction in post-harvest losses, expected to result from the strengthening of the back-end infrastructure and enable the farmers to obtain a remunerative price for their produce.
Small manufacturers will benefit from the conditionality requiring at least 30 percent procurement from Indian small industries, as this would enable them to get integrated with global retail chains. This, in turn, will enhance their capacity to export products from India.â€
