Online retail by foreign brands to hit Indian SMEs, say trade bodies

Deepak Kumar | The Dollar Business

As per the revised policy, foreign retailers will be able to undertake single brand retail trading and wholesale activities in Indian market

  Allowing foreign investment in manufacturing sector will hit small enterprises and lead to job losses, trade bodies have said and suggested that overseas funding must be restricted to technical, defence and sophisticated research work. The government on last Tuesday allowed single-brand retailers to directly enter the online segment, while also creating a platform for “Indian manufacturers” to boost their e-commerce business. The move is considered as limited opening of business-to-consumer (B2C) e-commerce for overseas investors. As per the revised policy, foreign retailers will be able to undertake single brand retail trading and wholesale activities in Indian market. “We feel that FDI should only be allowed in technical and scientific research work and some part in defence. Even in banking sector, FDI has been raised to 74%; it should not have been increased. The move will highly affect the banking system of India. On one hand, we are talking very highly of ‘Make in India’; while on the other, we are promoting foreign investments,” Bharatiya Mazdoor Sangh (BMS) President Baij Nath Rai told the Dollar Business. Rai pointed out that the government has been, for the past one year, promising to help small and medium-size retailers through its MUDRA initiative, as well as encourage employment and make Indian industries self-reliant. But with the introduction of the new FDI norms, the government seemed to have lost its focus.     FDI regulations in retail sector were revised with an aim to attract more foreign investments in the sector. B C Bhatia, National President of the Confederation of All India Traders (CAIT), while speaking to the Dollar Business, also criticised the initiative and said, “The government has failed to interpret the meaning of development. Instead of giving these facilities to corporates, the government should extend facilities to existing players; instead of making new markets, it should develop existing ones; rather than importing foreigners, it should focus on skill-development within India. Liberalising FDI in retail sector will have a very bad impact on domestic retail environment.” Bhatia emphasised the need to promote domestic retailers, who, more often than not, belong to middle-class and generate employment for crores of people. “Promoting FDI in retails segment may lead of crores of Indians losing their livelihood,” he added.  

November 15, 2015 |4:25pm IST