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Friday May 24, 2024
Front Row:
Who Kept Wal-Mart Out?
Vol: 1 Num: 3    Summer 2006

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.

is the publisher and editor-in-chief of Mood Indico magazine, a niche publication for the affluent South Asians living in the north America


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