Empirical study of Indian unorganised retail sector and the reality of FDI in organised retail

Small and medium enterprises dominate the Indian retail scene. The trading sector is highly fragmented, with a large number of intermediaries. So also, wholesale trade in India is marked by the presence of thousands of small commission agents, stockiest and distributors who operate at a strictly local level. Apart from these, in many cases small producers such as artisans and farmers sell their goods directly to end consumers (often one family member is a producer and another sells the products). The existence of thousands of such individual producer-cum-sellers is an example of ‘vertical integration’ as it is found in the Indian retail sector. There is no ‘barrier to entry’, given the structure and scale of these operations. The entry of big players in retail seems to be beneficial and opulent for the Indian people at the first sight, but when analyzed economically, it clearly reveals that the emerging pattern comes with more important and well pronounced drawbacks. This is because that the term ‘people’ includes all sections of the society as a whole – producers, manufacturers, consumers, middle tradesmen. The retail outlets have their own plans to open and operate in different parts of the country and abroad. So, in turn the producing companies find it easy to distribute and market their products through such retail chains. Their advertising and marketing work is eased and decreased. Apart from this, they get security in the market and new companies find a good platform to begin. Yet, the established ones find a better than existing system of retail outsourcing. Next however comes the plight of the middle tradesmen, wholesale dealers and small scale shopkeepers constituting the country's unorganized retail. The pattern definitely puts them before a multidimensional loss. To start with, these people genuinely fear underemployment, and eventually unemployment i.e. the shutdown of their business. In this paper I have presented the current scenario of retail giving some distinct feature of unorganized retail. I have tried to find out the impacts of organized retail on the unorganized sector along with some bare facts of FDI reality.