Safeguards planned for domestic stores before FDI in retail

A minimum space requirement of 10,000 square feet for a foreign retailer’s store would ensure that foreign players set up shop in suburbs, where there are less Mom and Pop stores. Even if a player sets up shop in a prime area, the huge investment required for real estate alone would ensure that the organized foreign retailer won’t be able to compete with the local Ma and Pa stores.

“We could also ask foreign retailers to bring in a certain amount of money for each store they set up, to ensure that sufficient FDI comes in to the country,” Dua said. Another idea is to allow foreign players to set up only one store per city in a year. “This would ensure that the effect of FDI is staggered,” Dua pointed out.

Stating that the empirical evidence on organized retail’s effects on smaller local retailers is mixed, Dua said, “The economic logic is there for allowing FDI, but it should be done in a way that suits us. We have examples of it helping people.”