Government Should Protect Small Shopkeepers, Says Metro Cash & Carry India CEO
Asking for a level playing field for six crore small shopkeepers, Metro Cash & Carry India Chief Executive Officer and Managing Director Arvind Mediratta on Friday said the government should look into the deep discounting practices of "top three global retailers".
These global retailers have deep pockets and lost around $6 billion (around Rs 45,000 crore) in the Indian market last financial year as they are selling below cost, he said at the Confederation of Indian Industry India Retail Summit in New Deli.
"One of the areas where I would seek intervention from the government to make sure that there is level playing field because some of them (global retailers) have very deep pockets and probably they can sustain losses for probably another 10 years," he said.
In next 10 years, a kirana store or small shops selling goods like garments or footwear may not survive, he said.
"We have seen in the other markets also, in the U.S. market, once small retailers disappear, the big retailers suddenly start increasing prices," said Mediratta.
Seeking long-term sustainable solutions, Meridatta said these big retailers want profit and are not here for charity.
"They are interested in India because India is a big market. Prices are low, because they are buying market share selling below cost. There are people who are selling sugar at Re 1 per kg from last one year. Is that sustainable? Can kirana stores compete with that?”
"So we would request the government to look at level playing field to protect the interests of the small shopkeepers in this country because if they die, if six crore shops are closed, we are going to have massive social problem," he said.
There are around six crore shopkeepers in the country, which includes 1.2 crore kiranas and 4.8 crore other shopkeepers, Mediratta said.
"The top three global companies in retail, the total losses incurred by them in last financial year is staggering $6 billion dollars. They lost almost Rs 45,000 crore in the Indian market in the last financial market.”
"Retail is one sector where more the losses, higher is the market value. Again I do not know how sustainable it is going to be," he said.
However, he also complimented the government for bringing demonetisation and Goods and Services Tax, saying these steps have stopped malpractices like tax avoidance and also encouraged digital payments.
He also highlighted the challenges faced by the modern retail system, saying still around 35 to 40 licenses are required to open one store, and many of them are required to be renewed annually.
Metro Cash & Carry entered the Indian market in 2003. The company currently operates 27 wholesale distribution centres.