Big-box Indian retail’s nightmares
Arvind Singhal writes in WSJ that Indian retail companies face significant regulatory challenges:
Yet once such a company, Indian or foreign, manages to set up shop, the regulatory challenges are just beginning. Whereas back home Tesco or Carrefour might build relationships directly with farmers or middlemen of the retailers’ choice, in India farmers are allowed to sell their produce only to government-appointed Agricultural Produce Marketing Committees. Regulators have discouraged the development of agricultural futures markets, so retailers are forced to manage their purchases through spot buying.
Shipping produce across state lines is a nightmare—not only is physical infrastructure bad, but states impose their own tariffs and regulations. Stocking up on nonperishables to manage inventory can run afoul of antiquated “anti-hoarding” laws. And every state and district has the power to impose its own retail regulations, including trading hours, employment of female workers, weekly days off and a range of other licensing rules. The absurdity can be seen in the National Capital Region of Delhi itself. Delhi now allows seven-day operation of retail stores with prior regulatory permission, yet in the neighboring suburb of Gurgaon, even shopping malls have to observe a weekly day off.
My previous posts on addressing food security in India are here and here
Your WSJ link is broken. Please fix it.
Thanks. done.
If farmers are allowed to sell to anyone, Govt will not even be able to buy some at reasonable prices for PDS. I think prices have to be kept stable this way for the large poor population.
The large retails stores have the capability to keep the prices down. I remember a few years back reliance Fresh tried the model of buying directly from the farmers. The middlemen (Agricultural Produce Marketing committee or APMC) called a strike and reversed the policy. Now the farmers get a lower rate and the customers get a higher rate. The only people this policy benefits is the APMC.
It is time that the large retail stores are allowed to purchase from farmers and store as required. This will also help in reducing inflation.