Friday, June 13, 2008

India to import larger quantities of edible oil

by Jo Black

While the government is weighing all the pros and cons of FDIs liberal entry into Indian retailing and its possible implications on domestic retailing, it will import larger quantities of edible oils in the current oil year to keep in check their price rise, says the Secretary, Indian Ministry of Consumer Affairs, Mr. Y S Bhave.

Releasing the ASSOCHAM Study on Indian Retailing : A Way Forward with President ASSOCHAM, Mr. Venugopal N. Dhoot and its Secretary General, Mr. D S Rawat, Mr. Bhave disclosed that despite the latest record production of wheat, rice and pulses,edible oil imports in current oil year are not going to be lesser in view of edible oil’s domestic demand because the mis-match between their demand and supply would still be by about 5 million tonnes.

The Secretary, however, clarified that the edible oil imports in present oil year would be effected almost at the price level in which their imports were conducted in the last oil year.

The government is of the view that with increased edible oil imports, it would be able to keep a check on price rise, which currently is a great concern for the entire government.

On the issue of entry of FDIs into retail, Mr. Bhave said that the matter has been referred to Parliamentary Consultative Committee attached to Ministry of Commerce & Industry in view of divergent views on entry of MNCs into retail held by right stakeholders.

The Consultative Committee is currently examining the subject which would come into public domain at the appropriate time, indicated Mr. Bhave.

Mr. Bhave further said that the government cannot intervene on pricing patterns of retailers as these would be governed by the market forces but it is definitely concern about the price rise of essential commodities and shortly public distributions system would be revamped so that a large number of consumer obtained certain essential commodities at fair prices from PDS distribution centres.

The ASSOCHAM Study has called for a comprehensive `National Retail Policy’ to facilitate co-existence of modern and traditional retailers within a jurisdiction of independent regulatory authority.

In the Study, in which 150 established retailers as well as 300 consumers were interviewed, over 95% of organized retailers opposed the retail sector being jointly regulated by Ministries of Commerce & Industry on the one hand and the Consumer Affairs on the other, suggesting that retail operations be regulated by a regulatory authority.

A vast majority of established retailers have alleged that FDI’s element is in the hands of Commerce & Industry Ministry and Consumer Affairs Ministry, which regulates retailing in terms of taxes, licenses, legislation, Essential Commodities Act, Weight & Measurement Act.

It makes it cumbersome to operate retailing function when two nodal Ministries are required to regulate the retailing.

This way, co-existence of modern and traditional retailing is impossible and therefore, an Independent Agency should be put up to which the retailers can look for addressing their grievances under a suitable new National Retail Policy, said Mr. Dhoot

35% of the domestic retailers pointed out lack of quality and trained manpower as one of the constraints in the growth of retail business in India.

Lack of specialized personnel, shortage of educational institutes imparting formal training and lack of awareness among youth regarding career prospects in retail are cited as some of the obstacles being faced by the Indian Retail Industry.

Approximately 20 per cent of the respondents pointed out the need to analyze consumer data and buying habits and development of suitable marketing strategies in order to increase consumer purchasing at the outlet as one of the requirements of promoting organize retail growth.

Similarly, around 15 per cent of the retailers stressed on imparting formal training to retail personnel so as to upgrade their skills to match the international standards in retail business.

Some other retailers said competitive pricing of the merchandise as well as investment and upgradation of technology has become important with India becoming a sourcing hub for international retailers.

Mr. Dhoot also said that the growth of organized retailing largely depends on the government policies and regulations.

When surveyed regarding the measures to be taken by the government for exponential growth of modern retailing in India, 40 per cent of the respondents strongly recommended the need for granting Industry Status to the retail sector.

Around 30 per cent retailers feel that the existing muti-point taxation structure needs to be rationalized and restrictions on interstate movement of goods should be removed.

Other respondents believed that pubic-private partnerships in the development of infrastructure should be promoted and a national retail policy defining the clear cut guidelines for governing the Indian retail sector should be announced.

On challenges faced by the organized retail industry, half ot the respondents feel that high real estate and labour cost is the biggest challenge in the growth of modern retailing in India.

Around 15 per cent of the domestic retailers pointed out that a large unorganized retail market capturing 96 per cent of the total retail is one of the major challenges to the organized retail in India.

The other 10 per cent believed that coping with consumer’s psychology in the middle income group and their familiarity with the mom and pop stores in their residential area is the challenge in front of modern retail in India.

One-fourth of the respondents feel that all the three factors mentioned above are critical for the future of organized retail in India.

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