Days after the Icrier report was submitted to the department of industrial policy and promotion (DIPP), the government seems to be in no mood to mire itself in any further controversies regarding retail. Out of line with the Icrier report the union government isn’t likely to take any steps of strength. “The matter is now going to be with the state governments, who would have to take independent initiatives to promote unorganised trade”, government sources said.
At present the government has asked all the stake holders to submit their comments on the report.
With a clean chit given to organised retail and the spill over effects on the farmers and consumers being highlighted in the Icrier report, sources say that the central government, ?is not going to bring out any national retail policies and would rather let the states plan more localised strategies to give an impetus to unorganised retail trade?.
The report had also suggested various policy measures to ease the growth of organised retail and save consumers from predatory pricing in future.
The report had said that “unorganised retailers in the vicinity of organised retailers experiences a decline in the volume of business and the profit in the initial years after the entry of large retailers, the adverse impact however weakens over time.
Amongst its policy recommendations the economic think tank had suggested, “better credit availability to the unorganised retailers from banks and micro-credit institutions, strengthening the Competition Commission’s role for enforcing rules against predatory pricing and collusion.
The Icrier report had strongly recommended that the government must look at the way South East Asian countries (Taiwan, Singapore and Hong Kong, China and the Philippines), which revamped the unorganised retail trade and upgraded it.
For instance, in these countries wet-markets, traditional shops and hawkers were encouraged to locate to uncongested areas and their physical infrastructure was improved, they were sedentarized (for hygiene and tax payment) into fixed sites. Some countries such as Hong Kong and China also experimented with privatising wet markets. The report had made recommendations to the government to encourage private codes of conduct by organised retail for dealing with small suppliers, which may then be incorporated into enforceable legislation. The think tank had also recommended the government to encourage formation of co-operatives and associations of unorganised retailers for direct procurement from suppliers and farmers, as this would enable them to reap economies of scale by being able to buy in bulk like the large retail chains can buy.
It had mentioned facilitation of cash and carry model like the Metro AG for sale to unorganised retail. Currently there is no such pan-India retail policy and it more or less falls in the domain of state subject.
Last year, UP government had banned Reliance Fresh stores from operations in the state citing law and order problem as the cause. There have been reports of the government mulling at zoning restrictions as had been adopted by some South east Asian countries like Malaysia.
However, government sources say that such legislation is not feasible and would be a deterrent to organised retail trade itself.