Farmers & consumers favour FDI in retail - ASSOCHAM

06 Dec '11

3 min read

A just-concluded random survey by industry body ASSOCHAM shows that an overwhelming majority of consumers and farmers in and around ten major cities across the country support the government's decision to allow 51 per cent foreign direct investments in multi-brand retail while 80% traders and middlemen are against it.

Over 90 per cent of consumers said FDI in retail will bring down prices and offer a wider choice of goods. Responses of over 2,000 people (500 each) covering farmers, consumers, kirana store and traders across ten major cities like Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad, Pune, Chandigarh and Lucknow were gathered earlier this week by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

With increased competition, stores will offer heavy discounts to increase their sales, according to 85 per cent of consumers. When a large number of micro, small and medium enterprises move to the organised sector, quality standards will improve and lead to good shopping experience, they said.

The entry of large retailers like US-based Wal-Mart, British giant Tesco and France's Carrefour will bring in branded goods in apparel, footwear, electronics, home appliances and various other sectors, said 86 per cent of consumers. Food retail will get a massive push as supermarkets start sourcing products directly from farmers.

Nearly 78 per cent of farmers too said they will get the right price from multi-format stores with the number of intermediaries being cut. Fruits and vegetables currently pass through five layers of greedy middlemen and each adds a margin, leading to substantial difference in farm gate prices, wholesale prices and what the consumers ultimately pay at the retail store.

Electronic weights, quality specifications and improved yields will also benefit the farmers. Foreign retail majors will set up their cold storage facilities, bring in investments in back-end infrastructure, reduce the huge wastages and ultimately benefit end-users.

However, over 82 per cent of the kirana stores said big stores cannot offer the convenience of kirana stores. The mom-and-pop stores sell products in the neighbourhood, offer free home delivery and offer monthly credit to regular customers.

Over 75 per cent of the traders said the companies producing consumer items depend on their marketing infrastructure and network to push sales through multiple channels. So the influx of foreign funds into multi-brand retail will change the rules of Indian industry as large retailers bring the new technologies, processes to bring down the costs. Many companies may have to accept lower margins for greater volumes, traders said.

Associated Chambers of Commerce and Industry of India (ASSOCHAM)

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