FDI in India’s Retail Sector
More Bad than Good?

By Mohan Guruswamy Kamal Sharma Jeevan Prakash Mohanty Thomas J. Korah

CPAS Centre for Policy Alternatives 94 Uday Park New Delhi 110049 Website: www.cpasind.com Email: cpasind@yahoo.co.in Telephone: 51650995/7 Facsimile: 51650996


Retailing is the interface between the producer and the individual consumer buying for personal consumption. This excludes direct interface between the manufacturer and institutional buyers such as the government and other bulk customers. A retailer is one who stocks the producer’s goods and is involved in the act of selling it to the individual consumer, at a margin of profit. As such, retailing is the last link that connects the individual consumer with the manufacturing and distribution chain. The retail industry in India is of late often being hailed as one of the sunrise sectors in the economy. AT Kearney, the well-known international management consultancy, recently identified India as the ‘second most attractive retail destination’ globally from among thirty emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes. With a contribution of 14% to the national GDP and employing 7% of the total workforce (only agriculture employs more) in the country, the retail industry is definitely one of the pillars of the Indian economy1. (see Table 1) The Indian Scenario: Trade or retailing is the single largest component of the services sector in terms of contribution to GDP. Its massive share of 14% is double the figure of the next largest broad economic activity in the sector. (see Table 1)


Singhal, Arvind, Indian Retail: The road ahead, Retail biz, www.etretailbiz.com

2 Source: Presentation to FICCI by MBN Rao (Chairman.Ramachandra Reddy and P. Organised retailing refers to trading activities undertaken by licensed retailers.1 7. 15.1 4.3 7. convenience stores.6 9455. on the other hand.0 Hotels & Restaurants 1.0 Communications 6.9 3123. Unorganised retailing. those who are registered for sales tax. Arpita Mukherjee. income tax.2 3480. 2004) The retail industry is divided into organised and unorganised sectors.3 6.5 Trade 1. paan/beedi shops. and also the privately owned large retail businesses. (see Table 2) Table 2: Growth of Retail Outlets in India (‘000) Outlets 1996 1997 1998 1999 2000 2001 2769.6 8983. etc. Business/Legal Services 5.1 -7.6 Retailers 8542.4 11165. hand cart and pavement vendors.0 4.M.0 6332.5 10534. B.com .6 9966.8 Storage 3.9 Real Estate.3 Table 1: Components of Service Sector in India Components Share % in Growth during GDP (2002-03) 2002-03 5. refers to the traditional formats of low-cost retailing.3 Defence 7.7 Railways 4. Evolution of Food Retail Chains: The Indian Context.G.C.3 7055.9 11. for example. Indian Bank): “Strategy for Financing Service Sector” (Sept.0 3682. Lalith Achoth.6 Banking & Insurance 6.2 6666. 2003.1 5. 5-6th Nov.5 7482. www.4 3300. etc.8 6.1 5.5 22. that is.1 Non-Food 5773.3 Construction 14.Chengappa. the local kirana shops.9 5.ficci.9 Food Retailers 6040.0 Other Transport 0.Ravi.0 2943.0 Total Retailers Source: P.2 Other Community & Social Services Total 56. These include the corporate-backed hypermarkets and retail chains. owner manned general stores.

Arvind. AT Kearney estimated it to be Rs. 1999.4 Unorganized retailing is by far the prevalent form of trade in India – constituting 98% of total trade.ksa-technopak. 2003. it deserves very special focused attention. 4 Chengappa. The question then that arises is that since there is obviously no dearth of indigenous capital.C.000 crores or 44% of GDP4. Saby. Efficiency enhancements and increase in the food retail sales activity would have a cascading effect on employment and economic activity in the rural areas for the marginalized workers. 11. Technopak Projections. www.000 crores. increasing to Rs. Food retail trade is a very large segment of the total economic activity of our country and due to its vast employment potential.000 crores by 2005 and keep growing at a rate of 40% per annum. According to this report dated Nov.indiaonestop. 3. 2003.G. 4.00. if one used the Government’s figures the retail trade in 2002-03 amounted to Rs. Achoth. the corporate owned sector is expanding at a furious rate.35.3 In a recent presentation.000 crores and poised to double in 2005. 5-6th Nov. P.2 On the other hand. while organised trade accounts only for the remaining 2%. Mukherjee. 2 3 Ganguly. Lalith. Estimates vary widely about the true size of the retail business in India. Ramachandra Reddy B. P.com Singhal.com .100 billion from just Rs. 15. sales now account for 44% of the total GDP and food sales account for 63% of the total retail sales. www.ficci. Retailing Industry in India.00. Thus even without FDI driving it. 38. One thing all consultants are agreed upon is that the total size of the corporate owned retail business was Rs.com. Evolution of Food Retail Chains: The Indian Context. www.82. Arpita. FICCI has estimated the total retail business to be Rs.1 billion in 1996. what is the need for FDI? It is not that retailing in India is in the need of any technology special to foreign chains.000 crores in 1999 and poised to grow to Rs.M. & Ravi. Changing Retail Landscape.

That about 4% of India’s population is in the retail trade says a lot about how vital this business is to the socio-economic equilibrium in India. this is only indicative of the magnitude of expansion the retail trade is experiencing. India’s workforce is proportionately much larger. Table 3: Share of retailing in employment across different countries Country Employment (%) 8 India USA 16 Poland 12 Brazil 15 7 China Source: Presentation to FICCI by Alan Rosling (Chairman. . China.atimes. because of the demographic profile and the preponderance of youth. 31.” 5 Iyengar. Given the recent numbers indicated by other studies. whereas the unorganized retail trade employs nearly 3. It must be noted that even within the organised sector.5 Employment in Retailing: A simple glance at the employment numbers is enough to paint a good picture of the relative sizes of these two forms of trade in India – organised trade employs roughly 5 lakh people (see Tables 8 & 9). India Confront the Wal-Marts. the number of individually-owned retail outlets far outnumber the corporatebacked institutions. Online Asia Times.2004.95 crores5! According to a GoI study the number of workers in retail trade in 1998 was almost 175 lakhs. Jayanthi. January. both due to economic expansion as well as the ‘jobless growth’ that we have seen in the past decade. Jardine Matheson Group): “International Experience on Policy Issues.com. www. Though these numbers translate to approximately 8% of the workforce in the country (half the normal share in developed countries) there are far more retailers in India than other countries in absolute numbers.

which together form the bulk. Thailand. South Korea and Philippines. India still predominantly houses the traditional formats of retailing. and bazaars. and what role it plays in the lives of its citizens. These figures quite accurately reveal the relative underdevelopment of the retail industry in India. weekly haats. 6 . Compare this with the figure of just 0.6 Organised retail is still in the stages of finding its feet in India even now. Indian retail is highly fragmented. Most importantly. Though organised trade makes up over 70-80% of total trade in developed economies. all of whom have figures hovering around the 20-25% mark. yet catering to more than 13 times of the Indian retail market size. 18. Figures quoted from Anil Sasi’s article “Indian Retail Most Fragmented”(Aug. India’s figure is low even in comparison with other Asian developing economies like China. implying lean employment and high automation) Table 4: Retail Trade in India & South East Asia Countries Organised Unorganised 2 98 India 20 80 China 15 85 South Korea 25 75 Indonesia 35 65 Philippines 40 60 Thailand 50 50 Malaysia Source: CRISIL 6 Retail as a ‘Forced Employment’ Sector: It is important to understand how retailing works in our economy. that is. convenience stores. from a social as well as an economic perspective. 2004) The Hindu Business Line. with about 11 million outlets operating in the country and only 4% of them being larger than 500 square feet in size. (Here development is used in the narrowest sense of the term. hardware stores.9 million in the US. the local kirana shop. paan/beedi shop.

7 The Indian retail industry was.com 8 Iyengar. India has the highest shop density in the world. Online Asia Times. provided the sector is opened up significantly.com. highly fragmented. depending on his or her means and capital. www. 7 Singhal.atimes. which should be the prime concern of the policy maker. January. One of the principal reasons behind the explosion of retail and its fragmented nature in the country is the fact that retailing is probably the primary form of disguised unemployment/underemployment in the country. and the stagnating manufacturing sector. and continues to be. a retailer is born. it is almost a natural decision for an individual to set up a small shop or store.” www. seemingly out of circumstance rather than choice. 31.2004. “ A Strong Pillar of Indian Economy.8 It does not talk about creating additional jobs however. And thus. . Jayanthi China. given the lack of opportunities. a report prepared by McKinsey & Company and the Confederation of Indian Industry (CII) predicted that global retail giants such as Tesco. Kingfisher. Carrefour and Ahold were waiting in the wings to enter the retail arena. This report also states that the Indian retail market holds the potential of becoming a $300 billion per year market by 2010. According to the global consultancy firms AC Neilsen and KSA Technopak.ksa-technopak. India Confront the Wal-Marts. Given the already over-crowded agriculture sector. This phenomenon quite aptly explains the millions of kirana shops and small stores. Arvind. In 2001 they estimated there were 11 outlets for every 1.7 Further. The explosion of retail outlets in the more busy streets of Indian villages and towns is a visible testimony of this. and the hard nature and relatively low wages of jobs in both. many million Indians are virtually forced into the services sector. Here.000 people.

Central Statistical Organisation.7. there were 413. As on January 1st of this year. the Indian retail sector typically suffers from limited access to capital. they find jobs in the informal sector. functioning at a small-scale level. being a free and democratic country.tn.000 jobs have been added in the organised sector in the whole country10 A vast majority is aware of what these figures signify – that they are most unlikely to get such jobs. Retailing is by far the easiest business to enter. No. even this does not annul the fact that a multitude of these so-called ‘self-employed’ retailers are simply trying to scrape together a living. even though much of it is marginal. performs a vital function in the economy as a social security net for the unemployed. one could brand this sector as one of “forced 9 10 As per figures given in www.8 The presence of more than one retailer for every hundred persons is indicative of the lack of economic opportunities that is forcing people into this form of self-employment. only a total of 30. labour and real estate options. Yet. and as such. The typical traditional retailer follows the low-cost-and-size format. India. Because of this fragmentation. In this light. They register at the exchange. and union membership etc. in the face of limited opportunities for employment. pension.in Monthly abstract of Statistics.88 lakhs job seekers registered at the Employment Exchange9. But over the period 199293 to 2001-02.gov. where employment is regulated. provides its people with this cushion of being able to make a living for oneself through self-employment. as opposed to an economy like China. with low capital and infrastructure needs. mostly in retail. Volume 57. GOI . rarely eligible for tax and following a cheap model of operations. Therefore. July 2004. to enjoy the benefits and security that a job in the organised sector provides – lifetime employment.

purely because of the paucity of opportunities in other sectors. Let alone the average Indian retailer in the unorganized sector. The total turnover of the unorganized retail sector was Rs. This is a normal predatory strategy used by large players to drive out small and dispersed competition.000 crores employing 39..walmart.ft and the average turnover of a store was about $ 51 mn. www. The average size of a Wal-mart is 85.ft in size. 186.075. In 2004 its net profit was $ 9. 2004. where the retailer is pushed into it.11 By contrast the average Indian retailer had a turnover of Rs.4 mn persons.000. In 2004 Wal-Mart had a 9% return on assets and 21% return on equity. Only 4% of the 12 million retail outlets were larger than 500 sq.000 sq.5 mn persons. The turnover per employee averaged $ 175. Wal-Mart Corp. and is growing annually at an average of 12-13%. 735.com .000 mn. This entails job losses by the millions. Of these 1355 were outside the USA. 11 Annual Report. It had 4806 stores employing 1. no Indian retailer in the organised sector will be able to meet the onslaught from a firm such as Wal-Mart – when it comes. The Waiting Foreign Juggernaut: The largest retailer in the world ‘Wal-Mart’ has a turnover of $ 256 bn.9 employment”. With its incredibly deep pockets WalMart will be able to sustain losses for many years till its immediate competition is wiped out.

with arguments to support both sides of the debate. a great deal of prudence should go into policymaking. 14 Dec. In this context. This would mean an employment of just 43. the role that could be played by organised retail chains. In this context we must be concerned about the statement the Finance Minister. Times of India. made while making the mid year review for 2004-05. If large FDI driven retailers were to take 20% of the retail trade. as the now somewhat hard-pressed Hindustan Lever Limited anxiously anticipates. including international ones merits careful attention. particularly processed and semi-processed agro-products.”12 The Question of Foreign Direct Investment (FDI) in Retail: Given this backdrop. P. If Wal-Mart were to open an average Wal-Mart store in each of these cities and they reached the average Wal-Mart performance per store – we are looking at a turnover of over Rs. pp 1-15.540 persons displacing nearly eight million persons employed in the unorganized retail sector. “On retail. It is widely acknowledged 12 Review hints at FDI in retail.10 India has 35 towns each with a population over 1 million.330 mn with only 10195 employees.2004 .32. 80. Chidambaram.800 billion on today’s basis. Extrapolating this with the average trend in India. Mr. We need to take a deep hard look at FDI in the retail sector. this would mean a turnover of Rs. the review notes that creating an effective supply chain from the producer to the consumer is critical for development of many sectors.000 persons. With possible implications of this magnitude. the recent clamour about opening up the retail sector to Foreign Direct Investment (FDI) becomes a very sensitive issue. it says. Rather we seem to moving towards a policy steamrolled obviously by vested interests acting in concert with the CII & FICCI. it would mean displacing about 4.

triggering a series of reactions that in the long run can lead to greater efficiency and improvement of living standards. will render millions of small retailers jobless by closing the small slit of opportunity available to them. Till such time we are in a position to create jobs on a large scale in manufacturing.11 that FDI can have some positive results on the economy. brought about by the technology and know-how of foreign players in the market. But the most important factor against FDI driven “modern retailing” is that it is labour displacing to the extent that it can only expand by destroying the traditional retail sector. no FDI is permitted in retail trade in India. not yet. Entry of foreign players now will most definitely disrupt the current balance of the economy. apart from greater integration into the global economy. As per present regulations. This is because the primary task of government in India is still to provide livelihoods and not create so called efficiencies of scale by creating redundancies. or at least. it would make eminent sense that any policy that results in the elimination of jobs in the unorganised retail sector should be kept on hold. This in turn can lead to greater output and domestic consumption. Allowing 49% or 26% FDI (which have been the proposed figures till date) will have immediate and dire consequences. the world’s biggest retailer sets up operations in India at prime locations in the 35 large cities and towns that house more than 1 . Supporters of FDI in retail trade talk of how ultimately the consumer is benefited by both price reductions and improved selection. Though most of the high decibel arguments in favour of FDI in the retail sector are not without some merit. Imagine if Wal-Mart. it is not fully applicable to the retailing sector in India.

12 million people13. these persons are unlikely to be suitable for other areas of work either. “The World’s First Multinational. the neighbouring traditional outlets are also likely to fold and perish. WalMart would be more likely to source its raw materials from abroad. As Nick Robbins wrote in the context of the East India Company. It is easy to visualise from the discussion above. One must also not forget how countries like China. The producers and traders at the lowest level of operations will never find place in this sector. In time. Once a monopoly situation is created this will then turn into buying low and selling high. Registrar of Census. 13. 2004) . which would now have demand mostly only for fluent English-speaking helpers. Malaysia and Thailand. from vegetables to the latest electronic gadgets. how the entry of just one big retailer is capable of destroying a whole local economy and send it hurtling down a spiral. This means a foreign company will buy big from India and abroad and be able to sell low – severely undercutting the small retailers.” The New Statesman. The supermarket will typically sell everything. Such re-orientation of sourcing of materials will completely disintegrate the already established supply chain. given the ‘predatory’ pricing power that a foreign player is able to exert. (Dec. the company could buy cheap and sell dear”14. at extremely low prices that will most likely undercut those in nearby local stores selling similar goods. and procure goods like vegetables and fruits directly from farmers at preordained quantities and specifications. Having been uprooted from their traditional form of business. who opened their retail sector to FDI in the recent 13 14 Census 2001. GOI Robbins. Nick. “By controlling both ends of the chain.

override the responsibility of any society to provide economic security for its population. Disturbing the Hornet’s Nest: If you assume 40 mn adults in the retail sector. it would translate into around 160 million dependents using a 1:4 dependency ratio. one must not forget that the western concept of efficiency is maximizing output while minimizing the number of workers involved – which will only increase social tensions in a poor and yet developing country like India. 6. a big domestic retailer or any new foreign player will be able to provide their merchandise at cheaper rates than a smaller retailer. have been forced to enact new laws to check the prolific expansion of the new foreign malls and hypermarkets15. But this is a privilege for the individual consumer and it cannot. The Financial Express. 15 Vijay. It is true that it is in the consumer’s best interest to obtain his goods and services at the lowest possible price. Given their economies of scale and huge resources. where tens of millions are still seeking gainful employment. Opening the retailing sector to FDI means dislocating millions from their occupation. “Debate: Should FDI Be Allowed In Retail Branding?”. whereas the State does have the prerogative in whether foreign entry in the retail sector should be stalled or not. 2004) . in any circumstance. Plus. But stopping an Indian retailer from growing bigger is something current public policy cannot do. (Dec. Tarun. and pushing a lot of families under the poverty line.13 past. Clearly collective well-being must take precedence over individual benefits.

8 22.90 So far Indian economy has been heavily geared towards the service sector that contributes 56% of our GDP. That leaves us with manufacturing as the only other alternative. What is anomalous in the Indian case is the fact that in other fast developing economies. The service sector’s contribution to the increase in GDP over the last 5 years has been 63. you wonder where this new accommodation can be found? Agriculture already employs nearly 60% of our total workforce. (See Table 5) Table 5: Sectoral GDP.5 16.14 This dislocated and unemployed horde has to be accommodated somewhere else. manufacturing contributes a mere 23.7 56. With only 17% of our total workforce already employed in industry.70 6. say China. which contributes altogether only 21. Employment & Growth Rates (%) Sectors Agriculture Share % in GDP (2004) Employment Cumulative average Growth Rate during 1994-2004 Industry Service Source: FICCI (2004) & NSS 55th Round Employment Survey (1999-2000) 22.9%.2 60. (see Tables 5. But if you look at the growth rates of labour in manufacturing and industry. this sector can hardly absorb more without a major expansion.7 2.1% of the GDP. manufacturing accounts for a significant share of GDP.53 7. 6 and 7) . and is in dire need of shedding excess baggage. Having a high contribution from services is an attribute that is characteristic of developed economies.7% of our GDP. whereas in India.1 21.

5 35. (Dec.3 13 Agriculture & allied sectors 30.9% growth over the corresponding period goes mostly to the service sector. Ugly Duckling”. but that still cannot undermine the seriousness of 16 Calculated from World Development Indicators 2003. If there aren’t any goods being manufactured. getting rid of the flab and getting ready to compete.9 Services Source: Bhanoji Rao – “Industry. 1. .2 58.4 Agriculture 62. the credit for its 5.3 6. 2004) The Economic Times It is evident that the manufacturing sector has been the engine for economic growth in China.1% since 199116. Ironically it would seem that the Indian economy is getting a post-industrial profile without having been industrialised! Retailing is not an activity that can boost GDP by itself. In India. It is only an intermediate value-adding process.5 Industry 28.1 Services Source: Bhanoji Rao – “Industry.8 63.9 23. 2004) The Economic Times Table 7: China: Sectoral Sources of Growth (Percentage Contributions to Increase in GDP) 1990-96 1997-2002 9. then there will not be many goods to be retailed! This underlines the importance of manufacturing in a developing economy. Ugly Duckling”. One could argue that the alarmingly low contribution of industry is attributable to the structural adjustments going on the sector.1 Manufacturing.15 Table 6: Indian Economy: Sectoral Sources of Growth (Percentage Contributions to Increase in GDP) 1992-93 1997-98 to to 1996-97 2003-04 20. (Dec.1. which has been growing at 10. construction & quarrying 48.

Only until the tardy growth of the manufacturing sector is addressed properly and its productivity chart starts to look prettier. domestically manufactured merchandise and imported goods. Giant shopping centres must not add to our existing urban snarl. . Recommendations: 1. in that only 6.215 million out of productive cohort of 600 million is employed in organised manufacturing. Policies that encourage unorganised sector retailers to migrate to the organised sector by investing in space and equipment should be encouraged. The retail sector in India is severely constrained by limited availability of bank finance. The Government and RBI need to evolve suitable lending policies that will enable retailers in the organised and unorganised sectors to expand and improve efficiencies. disturbing the hornet’s nest would be one very painful experience for the economy. These conditionalities must be aimed at encouraging the purchase of goods in the domestic market. The proposed National Commission should evolve a clear set of conditionalities on giant foreign retailers on the procurement of farm produce. state the minimum space. the ratio of floor space to parking space etc. Until that day. A National Commission must be established to study the problems of the retail sector and to evolve policies that will enable it to cope with FDI – as and when it comes.16 the issue at hand. size and specify details like. construction and storage standards. 3. 2. could one begin thinking of dislocating some of the retailing workforce into this space.

The government must actively encourage setting up of co-operative stores to procure and stock their consumer goods and commodities from small producers. it becomes imperative to develop and improve the manufacturing sector in India. If this sector is given due attention. This will address the dual problem of limited promotion and marketing ability. Volume 57. Entry of foreign players must be gradual and with social safeguards so that the effects of the labour dislocation can be analysed & policy finetuned.com. This is more than just a sizeable portion of the pie and what makes it even more significant is the fact that in this segment. as well as market penetration for the retailer.7. thereby lowering the capital costs for the small retailers. Prices for perishable goods like vegetables. say. Central Statistical Organisation. and allowed to take wings. agro products and food processing sector in India is responsible for $69. GDP figures from India Observer Statistical Handbook (2004). branded textiles) and therefore. returns are likely to be much higher for any retailer. Make the costs of entry high and according to specific norms and regulations so that the retailer cannot immediately indulge in ‘predatory’ pricing. this is where economies of scale are likely to kick in and benefit the consumer in the 17 Calculated from Monthly abstract of Statistics.17 4. Initially allow them to set up supermarkets only in metros.06 lakhs over the period 1998 to 2001. July 2004. 6. etc. The government can also facilitate the setting up of warehousing units and cold chains. fruits. According to IndiaInfoline. then it could be a source of great compensation to the displaced workforce from the retail industry. are not fixed (as opposed to. while its contribution to the GDP has grown at an average rate of only 3. . No. There has been a substantial fall in employment by the manufacturing sector.7%17. to the extent of 4.4 billion out of the total $180 billion retail sector (these are 2001 figures). In order to address the dislocation issue. GOI. 5. 7.

15 as in the case of tomatoes now. Ravi.C. Reddy. packing. upkeep of refrigeration equipment. 8. 2003) . they can more directly ensure the welfare of producers and the interest of the consumers. government and private colonies with a thrust on easier logistics and hygiene will enable greater employment and higher hygiene consciousness. Mukherjee.M. maintaining hygiene standards. B. transporting. – “Evolution of Food Retail Chains: The Indian Context” (Nov. Often the producer loses out. And by doing so. storing. etc. is an area where ITI’s and SISI’s can play a proactive role. 1. and faster turnaround of transport and higher rollover of produce. Recommendations for the Food Retail Sector: With 3. grading. Set up an Agricultural Perishable Produce Commission (APPC). The Government themselves can tap into the opportunities of this segment. Creation of infrastructure for retailing at mandis. 2.6 million shops retailing food and employing 4% of total workforce and contributing 10.. Provision of training in handling. P. rather than letting it be lost to foreign players. 18 Chengappa. for example. to ensure that procurement prices for perishable commodities are fair to farmers and that they are not distorted with relation to market prices. when the goods are procured at Rs.9% to GDP18.18 form of lower prices. Arpita. community welfare centers.G. Achoth. sorting. Ramachandra. But due attention must be given to the producer too. the food-retailing segment presents a focused opportunity to the Government to catalyze growth & employment.2 and ultimately sold to the consumer at about Rs. P. Lalith.

e) Provide scope and opportunity for productive self-employment (since Govt. fish and fruit have been evolved in India. freeze frying. d) Seek markets in India and abroad (provide charter aircrafts. c) Maintain regulatory standards in hygiene. Cross integrations of these unique food supply chains will provide new products in new markets increasing consumer choice. economic activity and employment. 6. At a subsequent stage. enhance nutritional status of producers and increase caloric availability. 4. b) Need to provide market for casual and distant self-employed growers and gatherers. these interventions can be integrated into the supply chains of the foreign retailers in India and abroad. can’t provide employment).19 3. These one off interventions can be replicated in all states. Credit availability for retail traders must be encouraged with a view to enhancing employment and higher utilization of fixed assets. packing facilities for small producers at nodal points). dehydrating. certification & price administration bodies can be created at district and lower levels for upgrading the technical and human interface in the rural to urban supply chain. Government intervention in food retail segment is necessitated by: a) The lack of any other body at remote/grassroots level. vacuuming. Several successful models of integrating very long food supply chains in dairy. 5. vegetable. Quality regulation. segments and areas. creating . This would lead to less wastage (India has currently the highest wastage in the world) of perishables.

. market realities. globalization.20 synergy between national priorities. so that their higher costs are not duly nullified by the presence of big supermarkets and hypermarkets. and private-public cooperation. In this fashion. The small retailers must be given ample opportunity to be able to provide more personalized service. the Government can try to ensure that the domestic and foreign players are approximately on an equal footing and that the domestic traders are not at an especial disadvantage.

92 28.17 0. etc. Storage & Communications (7) Financing. Real Estate.78 194.(5) Mining & Quarrying Manufacturing Electricity.4 9. Hunting.55 65. 1992-1997 (Nos.14 17. Community.37 9. etc. No.94 97.63 3.59 1.97 5.95 73.3 195.62 30.93 17.45 Source: Monthly Abstract Statistics. Quasi Govt.52 93.62 31.85 80.6 5.26 33.92 5.67 1. Hunting.48 30.8 95.5 9.23 16.2 75.54 1.9 35. Community.03 85.18 9.85 Total Employment 271.48 22. Gas & Water Construction Wholesale & Retail Trade* (6) Transport.73 3 0.64 30.02 5.78 16.84 12.46 9.2 35.16 17. Central State Local Bodies Agriculture.97 18. Volume 57.73 94.34 1. Storage & Communications (7) Financing.21 Table 8: Employment in Organised Sector.31 11.44 5. etc.94 1.6 3.45 0.75 275.04 1995-96 1996-97 33.06 16.08 0.07 50.44 Public Sector Central Govt.92 73. Real Estate.61 9.3 0.64 1.95 74.36 35.01 46.4 8.3 69.04 9.96 45.35 11.17 0.85 65.74 29.45 33.77 15. Gas & Water Construction Wholesale & Retail Trade (6) Transport.11 86.83 72.06 9.37 65.67 194. Social & Personal Service 193.83 1.55 3. etc.12 0.57 11.82 15.39 0. in Lakhs) Public/Private Sector 1992-93 1993-94 1994-95 33.56 2.66 29.41 282.2 21.38 11.53 3.25 279.98 9.38 0.92 12.66 74. July 2004.32 8.14 64.5 3. Central Statistical Organisation * This is the figure only for Organised Retail Sector .61 30.92 12.6 Private Sector Large (3) Small (4) Agriculture.76 194.4 0.03 47. Insurance.56 9.79 9.5 69.01 0.45 10.5 79.41 0.14 35.84 9.42 0.86 29. Social & Personal Service 78.53 3.(5) Mining & quarrying Manufacturing Electricity.83 95.06 0.46 11.46 77.49 0.4 0.98 21.61 9.38 29. 7.93 16.92 52.55 2. Insurance.39 10.58 71.93 64.5 22.62 9.51 9.33 9.06 12.76 273.58 2.16 0.58 35.46 21.55 12.(2) State Govt.58 32.19 1.

55 0.67 0.7 9.14 9.41 0.6 277.95 28. Central Statistical Organisation *This is the figure only for Organised Retail Sector .58 64.63 30. Central State Local Bodies Agriculture. Social & Personal Service 194.42 0.57 3.13 22.69 9. July 2004.15 193.04 0.15 9.76 3.09 9.6 63.85 34.71 0.42 Total Employment 281.73 Private Sector Large (3) Small (4) Agriculture. Insurance. Quasi Govt.55 5.89 272.26 34.58 63.78 0.58 17 32.09 12. Real Estate. Gas & Water Construction Wholesale & Retail Trade (6) Transport.85 0.72 29.09 1.7 3.38 187.54 11.91 52.3 9.84 60.35 Public Sector Central Govt.04 0.46 5.18 194. Volume 57.79 50.41 16.95 73.81 98.3 9. No.84 12.73 74.14 191.14 22.94 97.07 1.92 32.03 97.98 86.3 77.5 9.92 1.13 74.13 279. 7. etc.69 3. Storage & Communications (7) Financing.01 22.24 21.26 15.13 0.39 0. Hunting.23 0. Community.(5) Mining & Quarrying Manufacturing Electricity. Storage & Communications (7) Financing.75 14.42 0.68 48.23 32.91 29.83 8. Hunting.27 9.42 12. etc.08 9.94 77.31 9.58 17.46 86.63 30. in Lakhs) Public/Private Sector 1997-98 32.77 12.23 10.84 12.48 78. (5) Mining & quarrying Manufacturing Electricity.27 9.37 16.87 51.77 86.24 15.75 4.62 11.56 30. etc.52 84.33 0.63 30.88 97. etc.64 30.71 77.(2) State Govt.21 9. Real Estate.22 Table 9: Employment in Organised Sector.33 0.81 1.13 29.61 5.81 50.02 8.65 3.46 10.59 5.25 22.53 74.57 3.34 31.61 13.56 3.25 61. Social & Personal Service 87.24 8.96 97. Gas & Water Construction Wholesale & Retail Trade* (6) Transport.71 3.35 10.91 17.35 0.61 74.06 Source: Monthly Abstract Statistics.66 281.3 0.43 9.32 75.41 0.26 1. Insurance.76 3.28 8.19 31.7 17.21 0.19 9.36 29.52 0. Community.16 9.61 35. 1997-2002 (Nos.74 3.37 1998-99 1999-00 2000-01 2001-02 33.

MOSPI. .23 Table: 10. DE: Directory Establishments. NDE: Non-Directory Establishments. State-wise Number of Workers Engaged in Retail Trade by Type of Enterprises in India (1998) Rural NDE DE 47320 473 20583 19512 2111 17573 2951 2275 2414 36915 35376 26141 30361 61 834 151 382 15367 7207 16027 399 83460 653 29957 29541 296 142 127 289 3872 43 994 433507 94699 3518 57992 91591 3158 46004 12441 10163 6945 83415 165253 58572 109955 1098 8204 743 1999 59629 24517 39612 1434 218380 6963 81505 213391 1186 525 410 375 8693 53 2056 1414479 Urban ALL 780377 9650 297242 565806 16988 285785 106465 63942 54824 450205 503073 503710 633612 17028 18828 3771 7909 495731 150943 279851 5731 690699 36644 817390 1046350 4593 1533 1402 1394 25068 353 6555 7883452 States/UT’s Andhra Pradesh Arunachal Pradesh Assam Bihar Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh West Bengal A&N Islands Chandigarh D&N Haveli Daman & Diu Delhi Lakshadwep Pondicherry India OAE 638358 5659 218667 454703 11719 222208 91073 51504 45465 329875 302444 418997 493296 15869 9790 2877 5528 420735 119219 224212 3898 388859 29028 705928 803718 3111 866 865 730 12503 257 3505 6035466 OAE 446500 2933 82218 306323 13117 365753 124590 17730 56870 276345 71970 437151 635164 19372 7333 7154 9730 136117 185621 256356 2142 297470 14422 753617 416387 1800 11226 260 1518 174315 273 9136 5140913 NDE 217763 706 16768 61316 5390 73445 14999 3706 12082 130703 44521 55169 210386 1046 1840 898 2547 24826 33274 33960 583 248451 1106 86449 171080 794 7532 97 181 109134 63 7249 1578064 DE 267496 3174 68448 171381 10167 196940 67512 10547 21327 243345 125383 166730 519775 5604 9156 1900 9647 70856 101943 113651 2034 531755 8166 401999 556196 1902 8404 545 762 227370 138 10672 3934925 ALL 931759 6813 167434 539020 28674 636138 207101 31983 90279 650393 241874 659050 1365325 26022 18329 9952 21924 231799 320838 403967 4759 1077676 23694 1242065 1143663 4496 27162 902 2461 510819 474 27057 10653902 Source: Economic Census 1998. GOI OAE: Own Account Enterprises.

Thomas J. Harvard University. Ahemadabad. Stephen’s College. Korah is a Research Assistant at the Centre for Policy Alternatives. New Delhi . He is currently pursuing an Economics Degree at St. Jeevan Prakash Mohanty is a Research Associate at the Centre for Policy Alternatives and is a doctoral candidate at the Jawaharlal Nehru University. and is a graduate of the John F. Kamal Sharma is a Fellow at Centre for Policy Alternatives and an independent management consultant. New Delhi and the Indian Institute of Management. Kennedy School of Government. New Delhi. New Delhi was formerly Advisor to the Finance Minister.24 About the Authors Mohan Guruswamy. He also has many years of experience in academia and the private sector. Chairman. He was educated at St. Stephen’s College. Centre for Policy Alternatives.

25 Reports Authored by Centre for Policy Alternatives • • • • • • • • • • • • Will India Catch-up With China? Left Behind: A Case Study of Assam Towards a New Petroleum Products Pricing Policy Economic Growth and Development of West Bengal: Reality vs.cpasind. Perception FDI in Retail: More Bad than Good? Jammu & Kashmir: is there Really a Fresh Vision and Blueprint? A Socioeconomic Comparison of India’s Three Top States Centrally Planned Inequality: the Tale of Two States – Punjab and Bihar The Children of the Ganga and the Politics of Allocation Last in the South: Economic Growth and Development in Andhra Pradesh The Looming Crisis in Indian Agriculture The Economic Strangulation of Bihar To access these reports.com. .in. or email us at cpasind@yahoo.co. Projects Currently Underway • • • • Redefining the Poverty Line of India The Tibet Conundrum Review of the Indian Education Sector Review of the Indian Transport Sector Centre for Policy Alternatives Society is a privately funded think tank focused on the study and review of public policy in India. CPAS is registered under the “Society Registration Act (XXI) of 1860”. please visit our website: www.

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