India Is Expected To Open Up Retail Market

According to India media reports, the cabinet of India will decide to open its huge domestic retail market to Carrefour, WAL-MART and other foreign supermarket giants as early as this week.

There are 1 billion 200 million consumers in India, whose retail market is worth about $450 billion a year.

But such a huge market has refused foreign investment, which is considered to be one of the largest economic reforms in India in recent years.

What is the details of the decision in India? Why did it finally agree with the entry of foreign capital? This network connects Wang Chao, a reporter for China Radio International to India, introducing this agreement.

Reporter: actually, whether foreign direct investment is allowed to enter.

As for the details of this decision, it is necessary to explain that India stipulates that all foreign-funded enterprises must enter the India domestic market in the form of joint ventures. As for the number of shares in foreign capital, the government has detailed provisions.

In the retail industry, at present, the government of India only allows foreign investors to open their own brand direct selling stores in India by joint ventures. Only stores that sell their own brands can be sold in stores. For example, NOKIA's chain stores can only sell NOKIA, and CK clothing stores can only sell CK clothing.

Under such circumstances, foreign stocks can reach up to 51%, that is to say, they own shares.

Supermarkets that sell products like WAL-MART and Carrefour are not allowed in India.

So WAL-MART and other international giants in India just opened a few wholesale shops, not facing the masses of users.

If the new regulations are successfully implemented, then the international retail giants such as WAL-MART, Carrefour and Tesco can open a retail supermarket facing the general public in large cities of India with a scale of $100 million, and can occupy 51% of the shares in the joint venture to achieve the purpose of holding.

This means that India has formally opened up the domestic retail market.

Moderator: as you mentioned just now, the debate over whether or not to allow foreign direct investment to enter the retail industry has been going on for more than two years in India. Why is it so long?

Reporter: when it comes to this problem, we have to talk about the way of Indian shopping. Although the pace of modernization in India is getting faster and faster, it is still more conservative in many respects.

Take the journalist's personal experience as an example, my Delhi is a metropolis in India, but there are few modern supermarkets, and most of the daily needs of ordinary residents are bought in small shops in the market.

Delhi has thousands of bazaar, big and small, and the city is full of small shops, many of which are run by a small shop from generation to generation, and the residents around the shop are loyal customers.

Whether it's rice, sauce, vinegar, tea, pots and pans, or even air conditioning appliances, fresh vegetables are all from small shops.

It is based on this situation that when the government proposed to open up the domestic retail market for foreign capital, it was opposed by the opposition political parties and other groups.

They believe that the massive entry of foreign capital will inevitably destroy the traditional small and medium-sized retail enterprises in India, which will lead to bankruptcy of large numbers of enterprises and unemployment of employees.

So the two sides launched a repeated tug of war in the parliament, whether to open or to protect. The members gave different answers on behalf of different groups.

After more than two years of deliberate deliberations, the parliament finally revealed the final decision, pushing the issue called "one of the largest economic reforms in India in recent years".

Host: why can the issue of open retailing be finally agreed? How could this affect India's retail industry?

Reporter: it should be said that the final adoption of this issue reflects the determination of the India government.

Under the background of globalization becoming more and more intense, any "self closing" behavior, whether or not it can get short-term benefits, will eventually bring losses to long-term interests.

India media previously reported that because of the backward warehousing logistics system, India's agricultural products lost up to 40% a year after entering the retail industry.

By opening the market, India can learn the operation concept of modern retail enterprises, back-end support system and how to improve the efficiency of supply chain.

At the same time, as a resident of India, it can enjoy more convenient services.

One of my neighbors who had lived abroad, after hearing the news, was very happy to tell me that he could drive to the supermarket like he was abroad, and the bulk management strategy of big supermarkets would make consumers get cheaper prices and more convenient and efficient services.

In other words, the India government has actually made a multiple-choice question that has been placed before many countries. Is it a "closed door" or "open to the outside world"? No matter through historical experience or the trend of world economic development, I believe that the India government has found the right answer.

From the point of view of impact, the most direct possibility is the loss of short-term interests. Small and medium-sized retailers in India will compete directly with foreign giants in the India market worth about $450 billion a year. There may be a number of enterprises going bankrupt, but there may be a number of enterprises growing up in the competition.

Therefore, in the long run, openness does not mean loss. The ultimate goal of opening up is to promote the progress of the industry.