Govt plans to set up nationwide retail chain

Written by Varun Jaitly | New Delhi, Oct | Updated: Oct 29 2007, 06:59am hrs
The retail cauldron is set to overflow. The Centre is planning to foray into the sector with a countrywide organised format under a single entity. For the purpose, the government would leverage its presence in the supply-chain segment to provide a pan-India vendor service.

It has been established that a cooperative model is best suited to sustain a retail venture. Thus, the government thinks that National Agricultural Cooperative Marketing Federation of India (Nafed) would be an ideal agency to carry the proposal forward, and they have already been approached, said a senior government official.

Sources in Nafed confirmed that they had received the proposal. However, they were apprehensive about entering the retail segment. Retail is no childs play. With players like Reliance and Spencers, who have deep pockets, we would simply not be able to match the competition in the sector. Besides, Nafed does not have the funds to invest in the front-end, as realty prices are ruling very high, said officials in Nafed.

Sources said the federation was best suited for the supply-chain segment, where it has a proven track record. With a strong presence in the back end, Nafed already procures foodgrains, oilseeds, pulses, spices and horticultural crops to supply to various institutions such as government hospitals, hotels and the para-military forces.

The federations also has 13 retail stores under the name Nafed Bazaar in the country through which it caters to retail consumers. It is already selling pulses, mustard oil, packaged spices, pickles and jams under the Nafed brand name. It also sells onions and potatoes at subsidised rates when their prices in the retail markets rise. Besides, the federation also has contract farming agreements with farmers in states such as Madhya Pradesh, Orissa and Tamil Nadu.

The Centres take on the situation is different though. Nafed is a trusted body. Farmers have been dealing with it for 50 years. Getting Nafed to start the retail chain would mean a win-win situation for farmers and consumers. If Nafed is willing to be a vendor for other retail chains, why not enter the market. They already have a retail operation, it is just a matter of expanding upon it, said the government official.

Thus, with the Centre planning its entry into the most buzzing sector of the country, activity is sure to hot up in the retail sector.