Reliance has delayed plans to open hundreds of supermarkets in the north and east of India days after Uttar Pradesh shut 10 stores following protests from small traders.
The move by Uttar Pradesh to close the supermarkets underlines how efforts to modernise India’s economy face political obstacles amid fears that millions of small shop keepers and traders could lose their jobs.
Officials from Wal-Mart Stores Inc, the world’s biggest retailer, faced protests when they came to India to work on a deal with Bharti Enterprises to enter the fragmented USD 350 billion sector.
The industry, of which only 3 per cent is made up by modern retail, is forecast to double by 2015.
Reliance Retail Ltd, a subsidiary of Reliance Industries Ltd, has delayed opening stores in West Bengal to gauge whether they will be safe from attacks by traders and activists.
“We want to be completely sure that once we open a store, it won’t get vandalised,” Chief Executive Raghu Pillai said on Monday.
The company said there had been attacks on sites slated for Reliance Fresh stores. Mortaza Hossain, the state’s minister for agriculture and marketing, said he opposed Reliance’s plans.
Reliance has also put on hold plans to open 102 stores across Uttar Pradesh, as well as seven distribution centres.
“We are sitting, waiting and watching,” said a senior Reliance official, who asked not to be identified.
The Uttar Pradesh stores could be shut for up to 60 days as authorities look into law and order problems, but the official said there were no plans to take the state government to court over the closures.
Other stores have also suffered. In Noida and Ghaziabad, two booming middle-class towns on the outskirts of New Delhi, 15 stores have been shut by police, the Reliance official said.
In West Bengal, Pillai said Reliance had the state’s support.
“The state government is completely supportive, and we are assessing the situation. We will take a decision on our stores in a couple of days,” he said.
A business daily had also reported Reliance Retail planned to invest Rs 20 billion (USD487 million) in 145 grocery stores, six processing centres, nine distribution centres and 23 collection centres in West Bengal.
“At the end of the day, we have to follow the law of the land, and if the state says there is a law and order situation, we will have to respect that,” Pillai said.
“It will obviously affect our roll-out plans, but in no other state has there been a move by the government on retailers,” he added when asked if there was a danger that other states might also oppose moves by modern retail to expand.