Indra’s Drishtikona (Viewpoint)

Organised Retail Sector and Rural India

Posted : November 28, 2006 at 9:06 pm [IST]

As clear from the story on Reliance Fresh and Metro, organized retail sector can bring a revolutionary change in rural India unless it goes for quick short-term gains. With Wal-Mart famous for its ‘Always Low Prices’ coming in India with Bharati as equal partner, Indian farmers and rural craftsmen can hope for a better direct deal. Wal-Mart sources some $20 billion worth items from China for its international operations. It has developed the rural small manufacturers in China, ensured the quality of production, and cut its unit cost to be globally competitive and profitable too. I wish the mission remained the same for its Indian alliance too. Wal-Mart directly procures from the producers and sells to the consumers with no intermediaries. The super-efficient supply chain management tools and methodologies developed by Wal-Marts are its differential over its competition. Wal-Marts can open the doors of Indian produces to the world market.

Surprisingly, Wal-Mart remained as the largest retailer of the world and at the top of Fortune Global 500 till last year. It has slipped to the second place but with profits of $11.2 billion on revenues of $315 billion, still something that is something no company in India still dreams of. But India is attractive enough with its $300 billion worth retail market, both organized (only 3% of total) and traditional, and its projected size of $637 billion by 2015. Organised sector is expected to reach a share of 10% or more by 2010 with surging economy.

My interest is only that Wal-Mart would move the same as it did in China and develop India as a source for its international operations that no other Indian retailer can think of at this moment. Other retailer such as Metro, though limited to cash and carry business, is focusing on training farmers, fishermen and even sheep rearers who supply to Metro. India needs many more big retailers to do that and spread its sources to rural India. Indian rural folks can be trained very easily in many skills such as embroidery, knitting, printing, etc. and become the cheapest labour source. Rural India can also be source of organic food products and herbal products. Scope is unlimited. The initiative goes for the people with business mind to exploit it.

I hope and expect Sunil Mittal, the hero of the alliance keep the promises of “providing profitable linkages to the producers and growers.” The venture will start with a few stores by mid-2007 and the number of stores will be in several hundreds by the end of the year.

With Reliance, Birla, Tata, Wal-Mart Bharati and then ITC through its Choupal Sagar coming up in retail in big way India will help a new revolution for the farmers and small producers. Who knows by next year India opens its retail sectors for many more global players, once the apprehensions are gone.

And with the global retails, the export will certainly grow because of cost advantages and new innovations will be imperative. One such came to my knowledge today itself. IIT, Delhi, Chemistry Department has developed a liquid solution-natural, safe, non-toxic and tasteless that slows the complex process that takes place within the vegetables and fruits leading to rotting fast. I wish many such useful innovations helped the rural producers.

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- Indra

Category: Government Policy/Administration |