On August 6, the mobile telephone service provider, Bharati Mittal signed an agreement with the world’s largest retailer, Wal-Mart of USA to form a joint venture for setting up giant stores that will serve smaller retail stores. Bharati signed yet another agreement with Wal-Mart for obtaining the know-how and technology for retail stores that Bharati will set up all over the country. On August 12, Mukesh Ambani’s Reliance opened its first large store in Ahmedabad. So far Reliance had opened only small stores selling vegetables and groceries in the country under the name of Reliance Fresh.

The Indian big bourgeoisie, alone or in collaboration with foreign multinationals, is charging ahead with full force to take control of retail trade in the country. Both foreign and Indian monopolies believe retail trade is the new goldmine in the country for making their super-profits.

On the other hand, there is mounting concern amongst people about the adverse consequences to society if monopolies take control of trade. There is concern that the entry of the monopolies will affect the livelihood of lakhs of small traders, shopkeepers and hawkers.

The National Sample Surveys carried out in the country have already indicated a decline of more than 12.5 lakh retailers in urban India between 1999-2000 and 2004-05. Another survey carried out in Mumbai found that small retailers around large retail chain stores have seen their sales drop to half in the last year. So a disastrous impact on small retailers and vendors is inevitable if large corporate retailers enter the field. This is the natural course of development of capitalism – the small players in the sector get wiped out by the biggest monopolies that have the economic and political clout to ruin their business.

We have witnessed in recent times that as the monopolies enter the retail trade sector they are ensuring that they have very little competition to contend with. They are using their enormous clout to ensure that the Central and state governments pursue policies in their favour, against their rivals, as well as against the people. The retail monopolies are an important part of the force pressing the government to carry out the ceiling and demolition drive, and the anti hawkers drive. The reason is clear. Despite all the claims about efficiency, etc, these monopolies will not have an easy time in retail if they were forced to compete from shops run from homes, as well as street vendors. They have to forcibly deprive the small shopkeepers and hawkers of the right to sell— that is forcibly depriving them of their livelihood. And together with the small shopkeepers losing their livelihood, the workers in these shops will also lose their livelihood.

Why are the monopolies so keen to enter retail trade sector?

The total value of retail trade business in the country is currently estimated to be over Rs. 12,00,000 crore (US$ 300 billion). The value of business is expected to double up in next five years. Of the Rs.12,00,000 crore retail market, Food & Grocery retail is the single largest segment and estimated to be around Rs.7,50,000 crore. Clothing, textiles and fashion accessories constitute the second largest segment of the retail business. There are around 15 million retail outlets in India, with 96% of them occupying less than 500 sq feet in area. Almost all are family owned shops and establishments. Much of this is classified as "unorganised" sector. The retail sector presently contributes about 10-11% of the GDP and employs 4 crore people.

In 2006, the organized retail trade by big companies was only Rs.55,000 crore and thus was only 4.6% of the total retail trade business in the country despite the annual growth rate of around 40% during the last few years. The value of organised retail is expected to grow to Rs.2,00,000 crore (US$ 45 billion) in just 4 years. One of the attractions, therefore, for big companies is the potential for growth. The ambition of the largest Indian companies and multinationals is to enlarge their market share to 15-20% of the country’s total retail trade in the next 5 years itself.

While it is obvious that the monopolies want to exploit the huge retail market for the potential profits in it, a great deal of propaganda is being carried out as to how their entry into retail trade is to the benefit of the people. The claim is that prices will be lowered, quality will be better, time will be saved, customers will have a cleaner environment to buy in, overall wastage will be reduced, and even that farmers will get better value for their return as "middlemen" will be "eliminated". In other words, a rosy picture is painted of how the working class, the peasantry and the urban middle strata will all have their quality of life improved by the entry of these monopolies in retail trade.

This rosy picture is painted to hide the reality that the take over of retail trade by large corporations is part and parcel of the overall takeover of wholesale trade as well as retail trade by giant Indian and foreign monopolies with the singular aim of maximum profits. What this will surely ensure is that the competition is wiped out gradually, there will be but a couple of private companies that will control the market, and the peasants, the small shopkeepers, as well as the workers and working people will be at their mercy.

State encouraging private monopolies taking over wholesale trade

In order to fully exploit the opportunities in retail trade, these private monopolies are simultaneously eyeing wholesale trade as well. Here too, they have the full backing and support of the Central and state governments.

There are steps that have been taken by the Central government directly in favour of the multinationals and the big companies. Warehousing which is an important back-end activity in retail trade has been opened up to 100 per cent foreign equity. Similarly, government has permitted 100 per cent FDI in the real-estate sector under the automatic route, subject to certain conditions.

Likewise, state governments are going out of their way to help big companies. To enable big companies to buy directly from farmers, the Agriculture Produce and Marketing of Commodities Act (APMC) has been modified by many of the States using the new Model Act draft provided by the Central government.

On August 3, 2007, the Uttar Pradesh government announced a new Agriculture Infrastructure Investment Policy along with its decision to amend the UP Krishi Utpadan Mandi Act, 1964. This policy will allow big bourgeoisie to interface with the peasants directly. Investors with net worth of more than Rs 500 crore will be allowed to invest in "creation of agriculture infrastructure" under the policy and they will be permitted to procure agricultural produce from anywhere in the State. Contract farming is another new and vital component of the new policy.

The corporate middleman

Big Indian and foreign companies are claiming that the biggest beneficiaries of their entry into trade will be the small producers and farmers who will now be able to secure better prices for what they produce because of the monopolies’ potential to procure directly from the producers, to set up cold chains and effective anti-spoilage warehousing and transportation, and to sell through their retail chains, thereby eliminating the middlemen.

In reality, far from the elimination of middle men between the farmers and the working people of cities, these monopoly corporations will play the role of the biggest middlemen. Today, both the peasant in the village and the working person in the towns are exploited by the wholesale traders in agricultural commodities. Big retail companies are promising a better deal to both the peasant and the working person in the city. But the corporate retailer is not merely a retailer - he is a middleman, a trader between town and country, and a very, very, big middleman at that! He wants the profits that the wholesale trader makes, as well as the profits that the retail trader makes, all rolled into one in his pockets. He will soon be a monopoly buyer and farmers will be pitted against these monopolies to obtain a fair price for their produce. The corporate middleman is setting up the retail outlets and investing crores, not for charity to the peasants and to the urban working people who come to his shop to buy their needs, but to make maximum profits. Holding monopolistic control will enable these multinationals to manipulate prices whenever they wish, in the same manner as the big traders do today, with the same aim and result — super profits through ruining the peasant and robbing the urban working people, except that this will be done on a much bigger scale.

The approach to wholesale trade must be defined by people's interests

Trade between countryside and cities is a crucial economic activity that impacts peasants, workers and working people at large. Neither the way trade between countryside and city is conducted today, nor the direction that the state of the big bourgeoisie is pushing — its control by big Indian and foreign monopolies serves the people. Then what is the way forward? Agricultural produce – grains, pulses, oil seeds, and vegetables — should be provided at affordable prices to the working people in the towns and countryside. Trade between the cities and countryside has to ensure that the peasants are not exploited as they have hitherto been, and the working people in the cities are not fleeced, as they have hitherto been. This is possible if wholesale trade is not run in the interest of private gain and super profits, rather for the maximum social good. Such an activity cannot be left in the control of monopoly traders whose sole interest in investing their capital is maximum profits.

The state is fully capable, technically and organizationally, to establish the most efficient system of storage, preservation from spoilage, transportation and retail distribution. It is an established fact that with this kind of infrastructure, both the peasants and the working people in the cities will stand to gain.

The crucial question for the people is - who should control wholesale trade in our country. It is the responsibility of the state to ensure a fair price to the peasants and availability of all goods of mass consumption at affordable price to working people of town and country. We must raise the demand that wholesale trade is nationalized in the interests of the peasants and masses of people in the cities and countryside and that procurement and distribution of produce is carried out in the most efficient manner, not driven by profit nor mired in bureaucracy and waste.

The workers and peasants must demand that the State immediately stops helping the entry of multinational and Indian trading and retailing monopolies. They must agitate for the nationalisation of wholesale trade. We must agitate and fight to establish a workers and peasants government that will actually re orient the economy, including trade, to benefit the workers, peasants, and other toilers of the country.