IndiaRetailBiz

Rajan Mittal, Vice-Chairman of Bharti Enterprises, which owns Bharti group’s retail arm Bharti Retail, has pitched hard for allowing foreign investment (FDI) in front-end, multi-brand, retail. Currently, there is a complete ban on inducting FDI in this segment, which accounts for bulk of retail business, in India.

FDI in retail has traditionally been opposed by small traders (mom & pop -kirana- stores) as well as most political parties of India, as it is feared that this will lead to loss of livelihood security for millions of traders and workers engaged in this sector.

Bharti Retail, which has formed a 50:50 retail joint venture with the US-based world’s largest retailer-Walmart-two years ago, as such, has been forced to presently operate its front-end retail business (under the brand name of “Easyday”) on its own. “Easyday” currently operates 28 supermarket and 2 mini-hypermarket format stores in Punjab and Haryana. It is currently in the process of expanding its network in Delhi and surrounding areas (popularly known as NCR) by stting up around 40 “Easyday” stores before the end of this calendar year.

Rolling out the blueprint of Bharti Retail’s future plans, Mittal said that it is well on its way to reach the turnover of $1 billion in the next five years. By 2015, retail business of the group would employ 60,000 persons.

“We employ about 2,000 people… We are going to employ 60,000 people by 2015,” Mittal told PTI. He was of the opinion that a large number of jobs would open up, if FDI is permitted by the government in this sector. “I am saying that if the sector opens up, it will have two million people employed… The government should recognise that,” said Mittal.

According to Mittal, retail offers employment opportunities more inclusively than other sectors as it opens up jobs for people with less education as well as women.

“About 25 per cent people working at Bharti’s ‘Easyday’ stores were matriculate who would find jobs only at places like retail stores. Besides, about 22 per cent of the people employed by the sector are retired and housewives, who work on flexi timings,” said Mittal.

Bharti and Walmart in a PPP initiative have set up a skills development academy in collaboration with the state government of Punjab. The academies provides necessary skills to unemployed and rural youth in retail operations. “We are training them and we have skill set academies in Ludhiana and Amritsar to train them,” said Mittal.

Talking about advantages of opening up the retail sector to foreigners, Mittal said, “You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap.”

Mittal, to begin with, will be happy with up to 49 per cent FDI in multi-brand, front-end retail sector. “That’s for the government to decide but I would say, to begin with, 49 per cent…” Incidentally, according to current FDI policy framework, up to 51 per cent of FDI in single-brand, front-end retail, and up to 100 per cent FDI in “cash and carry” wholesale retail is allowed in India.

According to Mittal, apart from investment, FDI will also bring much needed technology and sourcing skills in the sector. Walmart is prepared to invest $100 billion in India.

“You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap,” said Mittal. “If you really see… Tea, fruits, vegetables, rice, brassware, handlooms, handicrafts, jewellery, I think we have enough to supply,” he added. This will also provide impetus to expansion of private label business in the sector. “People who manufacture for FMCG companies will do same for Easyday stores tomorrow,” said Mittal.

Exhorting policy makers to look at the big picture, Mittal said, “I think, they (the policy makers) are not looking at the larger picture. They only see one small constituent…”