Reliance Fresh gets Park Circus Market – retail, displacement, and joblessness

News Contents:

1. Latest Updates
2. Penetrating Retail in Bengal – the Reliance Juggernaut : Analytical piece by Partho Sarathi Ray
3. Reliance Fresh – A domestic behemoth analysed with reference to FDI

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1. Latest Updates

August 28 – CPIM gives Reliance assurance of protection
August 28 – Reliance Fresh stores temporarily close in West Bengal
August 20 – The Forward Bloc-run agriculture marketing board today threatened a “law-and-order problem” if the government doesn’t stop Reliance from entering Bengal’s farm retail market.
August 18 – Forward Bloc supporters ransack Reliance outlet
Details at : http://sanhati.com/front-page/342/

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2. Penetrating Retail in Bengal – the Reliance Juggernaut

By Partho Sarathi Ray, Sanhati

The latest neo-liberal onslaught on the lives and livelihoods of working people in India is taking place in the retail sector. After agriculture, the retail sector employs the largest number of people in India. Of the 40 million people involved in retailing as an economic activity, 0.5 million are in organized retail whereas around 39.5 million people are employed in unorganized retail trade. This includes all sorts of small retailing operations ranging from neighbourhood “mom-and-pop” shops to street vendors to small farmers who travel to cities daily to sell their produce to the small-scale transporters who transport the retail goods. These 40 million adults in the retail sector roughly translates into 160 million dependents, making the retail sector the source of livelihood for approximately a sixth of India’s population. The decade of liberalization, which has seen stagnation in the agrarian economy and large scale job losses in the manufacturing sector, has pushed more and more people into different aspects of retailing in absence of any other opportunities.

On the other hand, the small but burgeoning middle class in India, with immense spending power compared to the vast majority of the poor people in the country, has been eyed for quite some time by both multinational corporations involved in the retail trade and by Indian corporations which want to enter the arena sensing it to be a source of huge profits. Walmart from USA, known for its hated business practices, Metro AG of Germany and Carrefour of France have all been trying to enter the Indian retail market. As the Indian government has still not allowed foreign direct investment (FDI) in the retail sector, Walmart is trying to enter the Indian market in a joint venture with Bharti, an Indian company.

Leading the charge among Indian corporations in this field is the Reliance Industries limited, which has opened a chain of retail stores called “Reliance Fresh” in most of the major cities in India. Other
Indian corporations that have gone into the retail sector are Bharti, ITC, Godrej, Big Bazaar and Subhiksha. Reliance has an ambitious agri-retail plan, variously described as “farm-to-table” or “field-to-fork” , whereby it will directly source produce from the fields, route it through its national distribution centres and bring it to the urban consumers in the ambience of air-conditioned stores displaying packaged produce under artificial illumination. Being able to handle large volumes and to absorb initial losses, they can sell cheap and therefore undercut the market, pushing small vendors and groceries out of business, as happened over most of USA. Once a monopoly is set up, they can increase prices at their will. On the other hand, by handling the entire supply chain, and probably by going into corporate farming in the near future, they will push numerous people involved in the production, procurement and transportation of retail goods out of their means of livelihood. This is
probably going to spell disaster for the large number of people employed in the retail sector.

As Reliance Fresh outlets started operating in a number of major cities, small-scale vegetable and fruit sellers started reporting reductions in sales by as much as 40% within a few days. Protests erupted in May in a number of cities such as Ranchi, Patna, Indore, Jaipur and Delhi. Protesters, mostly comprising of vegetable vendors and fruit sellers, picketed Reliance Fresh outlets or went on hunger strikes. The protests had turned violent in Ranchi and Indore, and the protesters were beaten up by the police. In Chennai (Madras), there was a protest march on May Day that proceeded from the wholesale Koyambedu market, which is suffering huge losses due to the opening of Reliance Fresh, to the Reliance Fresh shop, where the protestors were arrested. These protests by small retailers, to protect their livelihood and to prevent their being pushed into extinction, are spreading and need to be supported and organized into the general struggle against neo-liberal economic policies unfolding in India.

In West Bengal, ruled by the Left Front, led by the so-called Communist Party of India (Marxist) (CPIM), which is a darling of capitalists in India and abroad because of its abject surrender to all their demands, the situation is developing along a different trajectory. Reliance has been trying to enter the retail market in Bengal as a part of their Rs 25,000 crore national roll-out, but has been opposed not only by the people of the state but even by the non-CPIM parties in the Left Front. A major obstacle in their path has been the fact that the agriculture marketing department of the West Bengal government, which is the relevant authority in this sector, is controlled by a minister from the Forward Bloc, a junior partner in the government which is much closer to the people on this issue than the CPIM. To circumvent this obstacle, Reliance had tried to put a food-processing tag to its national distribution centres, as the food processing department is controlled by the CPIM. As this tussle
continued between the two parties in the Left Front, Reliance found another way to penetrate the market in West Bengal. The municipal corporation in the West Bengal state capital of Kolkata (Kolkata municipal corporation, KMC), controlled by the CPIM, declared in May that it was going to hand over a major market in the city, the Park Circus market, to Reliance on a ninety-nine year lease. This was part of a process in which bids had been called for renovating and rebuilding this 76-year old market located in a prime location in the city, for which Reliance had emerged as the highest bidder.

The same process is supposed to happen for all the KMC-owned markets of the city. These civic markets of Kolkata, referred to locally as “bazaars”, are not only the sources of livelihood for hundreds of thousands of people, they are also an organic part of the culture of this teeming city of millions. These are places where buyers and vendors directly interact with each other, and where farmers and fisher-folk from the outskirts of the city bring their produce, helping sustain the economy of the entire hinterland of Kolkata, one of the most densely populated areas in the world. In face of opposition in the KMC legislature, and from the agriculture marketing minister of the Forward Bloc who wanted the job of developing the civic markets to be transferred to the agriculture marketing board, Bikash Ranjan Bhattacharya, the CPIM mayor of the KMC, declared that Reliance would only be responsible for rebuilding and renovating the Park Circus market, not in using it for their retail trade. However, the proposal that was passed by a majority vote in the CPIM controlled KMC legislature states that Reliance “shall have the right of usage” of its portion for commercial purposes like “markets, offices, seminar halls, multiplexes, restaurants, entertainment hubs, etc, or for any other purpose as mutually agreed upon by the KMC and the private partner”.

According to the plan, 150,000 square feet of the renovated market will go to Reliance on a 99-year lease, whereas the rest 55,000 square feet will go to KMC and existing stall owners. This again seems to be a case of doublespeak by the CPIM, where the mayor declares that Reliance would not use the Park Circus market to get into the retail trade but the actual agreement with the company does not explicitly say so on paper.

When asked about the protests by the traders who have been carrying out their business in the Park Circus market for generations, the mayor is reported to have said “The traders have no right to oppose the civic body’s decision to hand over the Park Circus market to a private party. If they don’t accept our decision, they are free to carry on their trade somewhere else.

In addition, when reminded about the plight of small vendors, a large number of whom sell their stuff in and around the market, the mayor had to say “KMC is not responsible for the future of these vendors. They will have to fend for themselves once the new and improved market is constructed,” This portrays the callous disregard of the CPIM for the lives and livelihoods of these people who not only depend on this market as their source of income, but have also developed close, mutually helpful relationships with the regular buyers of the market.

The corporatization of Kolkata’s markets is another neo-liberal assault by the CPIM on the people of Bengal in the name of development. This would result in the handing of public assets, maintained on
tax-payers’ money and sustaining huge numbers of working people, on a platter to corporations. Opposition against it needs to be built up among all sections of the people, and the small traders and vendors who are at the receiving end of this policy, needs to be supported as part of the general struggle against capitalist development being thrust over the people of India. Another imperative is the proposition of alternative models for the solution of this issue.

It is plausible that the KMC is unable to maintain these markets out of its limited finances. The disturbing thing is that the only solution that is part of the dominant discourse is the handing over of these markets to private operators. The possibility that the small traders and retailers, who carry out their trade from the market, might be able to get together and mobilize finances to buy or lease out the market is not even being explored. This would not only prevent the wiping out of their source of livelihood, but would also make them stakeholders in it. Such alternative possibilities need to be constantly raised as part of the discourse in order to resist the neo-liberal policies being imposed by the CPIM in West Bengal.

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3. Reliance Fresh – A domestic behemoth analysed with reference to FDI

The following two articles analyse the effect of Foreign Direct Investment (FDI) in Indian retail. The analysis can be extended to domesic behemoths like Reliance Fresh. Reliance plans to invest 25000 crores in the next 4 years in their retail division and plans to begin retail stores in 784 cities across India. There have been violent protests by displaced vendors and laborers in Ranchi.

A question of jobs, not ownership

By Kamal Sharma and Jeevan Prakash Mohanty (Published in Business Line, September 29, 2005.)

After farming, retailing is India’s major occupation. It employs 40 million people. A sizeable majority of owner/employees are in the business because of lack of other opportunities. The decade of liberalisation has so far been one of jobless growth. It is no wonder that retail has become the refuge of these millions. Lopsided economic development is transforming India from an agrarian economy directly to a service oriented post-industrial society.

In the Indian perspective, any policy that creates jobs is good policy. Any industry, Indian- or foreign-owned, that generates employment is welcome. The question over foreign direct investment (FDI) in retail is not as much about ownership as about jobs.

The Indian retail industry is highly fragmented. According to AC Nielsen and KSA Technopak, India has the highest shop density in the world. In 2001, it was estimated that there were 11 outlets for every 1000 people.

Since the agriculture sector is over-crowded and the manufacturing sector stagnant, millions of young Indians are virtually forced into the service sector. The presence of more than one retailer for every hundred persons is indicative of how many people are being forced into this form of self-employment, despite limitations of capital and space.

Trade/retailing is the single largest component of the services sector in terms of contribution to the gross domestic product. It accounts for 14 percent of the service sector, i.e., twice that of the next largest economic activity in the sector — banking and insurance. The total number of retail outlets (both food and non-food) was 8.5 million in 1996 and 12 million in 2003, a 41 per cent rise.

The CSO’s employment numbers give a comprehensive picture of the importance of this form of livelihood in India. Organised retail trade employs roughly 0.5 million people and unorganised 39.5 million. The fact that about 4 per cent of the population is employed in the unorganised retail trade speaks volumes about how vital this business is to the socio- economic equilibrium in India.

In 2004, Wal-Mart had a turnover of $256 billion and it recorded a net profit of $9 billion. Its 4,806 stores employs 1.4 million persons. The average size of a Wal-Mart outlet is 85,000 square feet and the average turnover about $53 million. The turnover per employee is $1,82,000.

By contrast, the Indian retailer had a turnover of Rs 1,86,075 ($4,100 approximately) and only 4 per cent of the 12 million retail outlets occupied space larger than 500 square feet. The total turnover of the unorganised retail sector, which employs 39.5 million persons, was Rs 735,000 crore.

India has 35 towns each with a population of over one million. If Wal-Mart were to open, on an average, one store in each of these 35 cities and if each achieved the average Wal-Mart performance per store, the turnover would amount to over Rs 8,033 crore and number of employees to only 10,195.

Extrapolated to the rest of the country, it would mean displacing around 4,32,000 persons. In other words, every new Wal-Mart employee will render 40 retailers surplus. If FDI retailers with deep pockets were to take over 20 per cent of the retail trade, this would mean a turnover of Rs 1,47,000 crore. This represents an employment of about 43,000 persons, displacing nearly eight million persons in the unorganised retail sector.

The most important argument against modern retailing and supply chain integration is that it displaces labour in a labour-surplus society. Till such time that we are in a position to create jobs on a large scale in manufacturing and construction, it would make eminent sense to keep on hold any policy that results in the elimination of jobs in the unorganised retail sector.

The primary task of the government is still providing livelihoods and not create so-called efficiencies of scale by creating redundancies. If we assume 40 million adults in the retail sector, it would translate into around 160 million dependents. Opening the retailing to FDI means dislocating millions from their occupation and pushing vast number of families under the poverty line. The Western concept of efficiency is maximising output while minimising the number of workers involved. This will only increase social tensions in a developing country like India, where tens of millions are still seeking gainful employment. Companies such as Wal-Mart boast about how they give the consumer better value. Not surprisingly, Wal-Mart procured $20 billion worth of goods from China and just $1 billion worth of goods from India. This is simply because China is a better producer of manufactured goods and not because Wal-Mart has stores there.

Consider a chain such as Wal-Mart with a single point of procurement entering India. Since it already procures huge quantities from China, this make for a massive entry point of China’s largely state-owned consumer goods industry into the insatiable market made up of the new consuming elite. It is true that it is in the consumers’ best interest to obtain quality goods and services at the lowest possible price. However, this vocal assertion by the chattering class cannot override the responsibility of any government to provide economic security for its vulnerable population. Countries such as China, Malaysia and Thailand, which have opened their retail sector to FDI in the recent past, have been forced to enact new laws to check the horrific expansion of the new foreign malls and hypermarkets.

In a recent Oxfam study, a decade ago coffee producers earned $10 billion from a global market worth $30 billion. Now they receive less than $6 billion in a global market over $60 billion. Large numbers of producers now interact with monopolistic marketing structures and these chains transfer a large and growing proportion of added value away from producers to companies in industrialised countries.

Neither scale nor efficiency has raised the incomes of the coffee producers. The lessons are clear, bulk procurement plays havoc with producer’s margins. Enabling legislation and positive regulation is required to expand our industrial sector whose contribution to employment generation and GDP is much lower than that of the services sector. The percentage contribution of industry to GDP growth in 1992-96 and in 1997- 03 was 30.9 per cent and 23.7 per cent respectively, while for China over roughly the same period it was 62.2 per cent and 58.5 per cent.

We need to address issues at home before we inviting problems from abroad. Vocal proponents of FDI need to ponder a bit more about India’s true circumstances.

Excerpt from a paper on the entry of big corporations in Indian Retail

The most important factor against FDI driven “modern retailing” is that it is labour displacing to the extent that it can only expand by destroying the traditional retail sector. Till such time we are in a position to create jobs on a large scale in manufacturing, it would make eminent sense that any policy that results in the elimination of jobs in the unorganised retail sector should be kept on hold.

The primary task of government in India is still to provide livelihoods and not create so called efficiencies of scale by creating redundancies. As per present regulations, no FDI is permitted in retail trade in India. Allowing 49% or 26% FDI (which have been the proposed figures till date) will have immediate and dire consequences. Entry of foreign players now will most definitely disrupt the current balance of the economy, will render millions of small retailers jobless by closing the small slit of opportunity available to them.

Imagine if Wal-Mart, the world’s biggest retailer sets up operations in India at prime locations in the 35 large cities and towns that house more than 1 million people. The supermarket will typically sell everything, from vegetables to the latest electronic gadgets, at extremely low prices that will most likely undercut those in nearby local stores selling similar goods. Wal- Mart would be more likely to source its raw materials from abroad, and procure goods like vegetables and fruits directly from farmers at pre-ordained quantities and specifications. This means a foreign company will buy big from India and abroad and be able to sell low – severely undercutting the small retailers. Once a monopoly situation is created this will then turn into buying low and selling high.

Such re-orientation of sourcing of materials will completely disintegrate the already established supply chain. In time, the neighbouring traditional outlets are also likely to fold and perish, given the ‘predatory’ pricing power that a foreign player is able to exert. As Nick Robbins wrote in the context of the East India Company, “By controlling both ends of the chain, the company could buy cheap and sell dear”. The producers and traders at the lowest level of operations will never find place in this sector, which would now have demand mostly only for fluent English-speaking helpers. Having been uprooted from their traditional form of business, these persons are unlikely to be suitable for other areas of work either.

It is easy to visualise from the discussion above, how the entry of just one big retailer is capable of destroying a whole local economy and send it hurtling down a spiral. One must also not forget how countries like China, Malaysia and Thailand, who opened their retail sector to FDI in the recent past, have been forced to enact new laws to check the prolific expansion of the new foreign malls and hypermarkets.

Given their economies of scale and huge resources, a big domestic retailer or any new foreign player will be able to provide their merchandise at cheaper rates than a smaller retailer.

Source: indiafdiwatch.org

Protests intensify against Reliance Fresh stores in Jharkhand

Ranchi, May 17, 2007

Protests against Reliance Fresh outlets are intensifying in Jharkhand as vegetable vendors on Thursday took out rallies in the state, accusing the firm of undercutting and pushing them out of the market.

The protesters were shouting slogans against the Mukesh Ambani-controlled Reliance Industries and demanding closure of the stores in the state.

“If the Reliance does not wind up its shops then we will be left with no other option but to go for violent protests that happened in Ranchi,” said Vinod Baitha, a member of Vegetable Sellers Association (VSA) of Dhanbad district.

Echoing his sentiment Kunti Mahto, another vegetable vendor, said: “The state government is helping Reliance and acting against the poor who earn daily livelihood by selling vegetables. If Reliance is not stopped from selling vegetables then we will starve to death.”

Vegetable vendors also staged sit-ins in front of the deputy commissioner’s office in capital Ranchi and demanded closure of the Reliance Fresh outlets and release of the six arrested vegetable vendors.

On Saturday, vegetable vendors had attacked three Reliance Fresh outlets in Ranchi and damaged property worth Rs 5 million. Police baton-charged the protesters in which about two dozen vendors were injured.

Police arrested 17 people in Saturday’s attack and two cops were suspended for dereliction of duty. The Special Task Force of Jharkhand Armed Police has been deployed at Reliance Fresh stores.

Reliance Fresh in Chennai

Source: Arasu Balraj

Reliance, a corporate rogue which is built with deceit, forgery and all sorts of fraudulent acts at each and every step from its inception, has opened its chain of stores named ‘Reliance Fresh’ in Chennai. It has opened 14 stores covering major locations with expanding its tentacles every nook and corner of the city.

The wholesale grocery market at Koyambedu, a location at North Chennai which is delivering the groceries to Chennai and its surroundings has felt the instant tremors. Sales have fallen by 40% percent than before and the Number of small traders coming to Koyambedu for procurement has got reduced. Labourers dependent on the market have lost their income and jobs. As a whole, the lives of one lakh families dependent on Koyambedu Market are at stake.

Following Reliance, Tata and Birla also foray in to the Retail market with their chain of stores all over India. Moreover, American Wal-Mart, Metro from GermanyIndia. and Carrefour of France had announced their plans to open their retail outlets in the major cities of India.

India stands fourth in the Retail sales in the International level. The Indian reatil sector is estimated to be worth of 12 Lakh Crore per annum and the Chennai Market alone is of 20 Crore. It has been roughly estimated as more than 4 Crore people are engaged in Retail Sector. The MNC’s, TNC’s and the Vultures of Shining India are trying to swallow this entire market and to wipe out the ‘hurdles’ that come across their way.

Finance Minister P.Chidambram, the living example of all colonial traitors says that by allowing MNC’s and the comprador capitalists like Tata, Reliance etc., the farmers will be assured of fair rates and with the ‘elimination’ of Intermediaries consumers can also enjoy low costs. According to that ‘Intelligent’ definition, from the wholesale dealer who buys vegetables from farmers to the road-side grocery vendor, all are ‘Intermediaries’ and they are the ones who are getting ‘eliminated’ now. The crux of the issue is not only the loss of business of small retail traders with the MNC entry but it’s far above that. Markets, whoesale sales and retail form an axis of the economy while productive sectors like Agriculture, textile, industries form the other axis. By exerting their might on the former axis, MNC’s try to control the latter axis of economy.

If production, sales and retail will fall in to the hands of 10-20 MNC’s, then all prices will be under their dictate and nobody can defy them. Like the cement traders of today, they will dictate the prices of all essential commodities and will plunder the people. The arguments of Chidambaram is rubbish as Ambani is not coming to Chennai with 3000 Crores to ensure fair rates for the farmers or for ensuring cheap prices to consumers. Middle class fools too buy this argument by astonishing at the A/C showrooms and the attractive schemes of Reliance.

In the name of hygiene and consumer consciousness, a vicious propaganda is on set by the State that people shouldn’t buy products which are not sealed and not to buy goods without bill. What is the state of hygiene in MNC Products? isn’t the glossy covered Cadbury’s chocolate was found with worms and got banned in Maharashtra? The Killer Coke bottles were found with cockroaches, lizards, nails and even condoms. Was the Coke and Pepsi were banned even after it was proved that they had pesticide residuals that could cause cancer? What about the tightly sealed ‘Lays’ chips that hang around in all petty shops? Isn’t the chemical mixtures added in ‘Lays’ to avoid decomposition were clinically proved to cause cardiac arrest?

Is bill is the sole criteria for consumer safety? Ofcourse Reliance billed its consumers who used its mobile services to make calls to US and UK. But it forged those calls as local calls and deceived the Indian Government for about 3000 Crores. This fully deserved financial crime of Reliance was forgiven by its friend Dayanidhi Maran, the communications minister with a meager fine. A ‘Consumer’ from Chennai has filed a case on the fraudulent act of Reliance Mobiles. Last year it has announced a contest named ‘Film Dhamaka’ and this ‘Consumer’ sent 6000 SMS messages at the cost Rs.6/- per message to the Number 8888. After paying 36,000/- as bill, now he is fighting at the Court that Reliance has not actually conducted the contest and had not given any prize to anyone till date. Do we need any other example to show how cheap tricks can reliance play?

Retail trading in India is the last resort of people who are driven out of all other trades. State and Capitalist vultures want to ‘eliminate’ them even from that verge. Supreme Court showed its complicity by locking the shops of Delhi small traders. In Metros, Platform shops were bulldozed. As a final decisive blow, VAT was implemented to facilitate the entry of MNC’s all over India.

All the parliamentary firebrands are conspicuously maintaining their silence or had washed their hands with formal statements. Even the so-called Left parties are satisfied with their ritual statements. India is not a sovereign country. It has been sold to World Bank, WTO, US and MNC’s. Nationalism, Regionalism, and all those sorts of political trends of India are just jugglery of words and they are not even capable of throwing even a tomato away from the Reliance Shops.

Ambani is not the only one and Koyambedu is not a separate issue. MNC’s are entering in Retail sector only on the pretext of Privatisation and Liberalisation, and the traders of Koyambedu cannot defeat them individually. All compradors of India are backing Ambani. State Machinery, Police, Courts, Political parties and MNC’s are behind them. To defeat such a big enemy, all people affected due to Globalisation need to stand one and by fighting alone they will not be able to move even an inch.

Hunger strikes of traders will not give any results. Strikes and Ghereos are to be organised in the door steps of Reliance Shops. People should boycott Reliance shops and should realise that the so-called freshness assured is just a farce and each and every paisa spent at Reliance shops is nothing but a nail on the coffins of Lakhs and Lakhs of fellow people who served us all these days with all their hard work. We shouldn’t be like Nero’s guests who stood muted to the burning of slaves for the party lights.

Reliance is the first Serpent that had poured its venom in the retail sector. More and more massive serpents are on the pipeline. The only option left out is to slay the snake instead of shivering with fear and get bitten.