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"Key challenges in the retail market in India

"Key challenges in the retail market in India

Account Given the strong growth seen in the various sectors of trade, the current situation in the retail sector in India is undoubtedly bright and promising. However, there are a number of issues that deserve attention:

1. Foreign Direct Investment (FDI)

The most important political issue in the current distribution sector is one of the foreign direct investment (FDI). Before 1997, there were no regulations restricting the entry of foreign players. The two majors, namely ance and Spencer had obtained permission to sell their products directly to customers. In 1997, it was decided that FDI would not be allowed to bargain the same way that would lead to the outflow of foreign exchange, to expel the non-unionized retail firms and raise unemployment. Recently, the Government has notified guidelines Foreign direct investment in single brand, which indicates that 51 per cent FDI is allowed only in single brand product that is marked in manufacturing and selling the same brand internationally. (A current brands available through a network of local franchisees.) This excludes the third bid, for example, only in the case of Bata shoes. The logic behind this move creates more jobs and encourage multinationals to set up manufacturing bases in India. The decision government raised a number of questionable items, such as adverse effects in small jumps

(Kirana Stores) in terms of loss of jobs in the unorganized retail sector and the lack of activity, along with the need to reduce the intermediaries. For advocates of FDI, some of the key benefits of opening the sector to retail are: job creation, environment resulting competitive price and quality advantages for consumers, expanding the industrial base and foreign investment, reward farmers, when the rules of buying products directly from farmers and more alive to meet the rising levels of aspiration of the middle and upper income category.

Against this, FDI in retail sector should benefit the economy significantly. Concerns raised by some industry experts regarding the job change must be offset by job creation with related sectors such as processing industries food and it's OK to move jobs from one sub-segment to another sub-segment. It is said that retail trade has the potential to create 8 million jobs. In addition, from small firms is concerned, the convenience advantage they have in large shopping centers located will remain large. Similarly, the personal relationships small businesses have found it more advantageous than the period of time. Moreover, international comparison, almost all major developed countries and countries have allowed the development of conditions for foreign direct investment, or restrictions such as minimum capital requirements, acquisitions, or with foreign direct investment gradually. For example, China has opened up the retail sector and partly in 1992 allowed 100 percent FDI in 2004. Thus, in a decade He allowed a single point of foreign sales by province. It seems that the government

India also can open the retail sector gradually. Instead of an excess protection "stores mom and pop (which are fewer producers and consumers), particularly when they are risk in terms of survival, the government can continue to allow foreign direct investment gradually.

2. The unbalanced growth

Retail Most of the features found in modern urban and rural retail potential underutilized. Despite the great potential in rural areas, fragmentation and cost of access to markets have a real deterrent effect. Undoubtedly, in a rural area Rural Retail gained ground with the explorations by corporations such as ITC Choupal Sagar (hypermarkets rural), HLL Shakti and Mahamaza. However, the rate at which the retail sector has expanded in rural areas must have been much faster. The purchase of a higher power and semi-rural areas has significantly changed the lifestyle of the people, for example, the phenomenon is a bag of thought to reach the bottom of the pyramid. Many rural people in India are simply not ready to buy a whole bottle of shampoo, but that does not mean they do not buy it. Therefore, the key is in the cutting the value customer segments and develop appropriate formats. If the consumer needs are recognized, there would be no significant expansion in market, thus diverting part of retailing in rural areas and help reduce rural-urban imbalance.

About the Author

R.YUVARANI M.Phil SCHOLAR PERIYAR UNIVERSITY, SALEM-11

Zero Waste Project – Grant

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