The 900 pound gorilla that is Wal-Mart
has been devouring the retail markets across the world with a ravenous appetite.
So why isn’t it in India?
The answer maybe found in the
political muscle of India’s more than 12 million mom-and-pop and large retail
stores. Led by the local giants, Pantaloon and Spencer stores of RPG
Enterprises, Indian retailers have been making it difficult for the likes of
Wal-Mart, Tesco and Carrefour to enter the Indian market. Taking a cue from
Calvin of Calvin and Hobbes comic strip, who famously said, ‘I know the world is
unfair but why is it not unfair in my favor’, Indian retailers have so far
successfully persuaded the Indian politicians to maintain foreign investment
policies that are keeping Wal-Mart and others out of India.
Even though Pantaloon and other local retail giants are aggressively increasing floor space squeezing smaller retailers, local politicians are more concerned about the possible job loss due to Wal-Mart’s entry. Center for Policy Alternatives (CPA), a New Delhi think-tank, estimates that if Wal-Mart opens up stores in 35 cities with a
population of more than one million then it could generate sales of Rs. 80.3
billion with only 10,195 employees. On the other hand these Wal-Mart stores
would eliminate 432,000 jobs in the unorganized retail sector. According to CPA,
if MNCs capture 20% of retail market worth Rs. 1.47 trillion then they would
eliminate eight million jobs.
Such potential effects create hurdles that Wal-Mart’s promises of lower prices and more efficient supply chain are not able to overcome.