Sunday, August 23, 2009

Is there a fear psychosis?

The above picture was published in today’s “The Hindu” newspaper and shows the Fort St. George which was where the East India Company built a fort and formed a settlement. In a year’s time they had built a warehouse and a stockade.

Retail or trading as it used to be in those days has truly been the building blocks of an empire. Even today Retail in most developed countries is the largest employment provider and a significant contributor to the economy. In India too this might be the case, excepting that no one knows the true picture because of the fragmented nature of this sector.

The above picture prompted another thought. Is there a strong fear psychosis behind not allowing international retailers into India? Is there concern about a repeat of East India Company? The fact of the matter is that retail as a sector would definitely be a strong component of any economy. The government needs to think along the lines of allowing retail FDI while retaining strong control and curbs and not be blind to its benefits because of what happened centuries ago.

Lastly, I am not too familiar with the retail FDI rules in the UK but from what I know there has been no space for Retail players from other countries apart from a few exceptions where international operators have taken over UK Retailers such as ASDA.

Is that an alternative route to go about developing Indian Retail? Focus on enabling local corporates to build a strong and vibrant industry?

Regardless of the route chosen, the government can ill afford to sit on a fence dithering about how to manage this industry while consumers are voting through their wallets for the modern formats and chain stores.


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