Need for 21st Century Regulatory and Liability Framework for Investments in Indian Retail Sector

[IFP.E...@googlemail.com]

Dear All,

As you all know, the department related parliamentary committee on
commerce had asked the public to give its opinion on foreign and
domestic investment in the retail sector of India. Today, the
committee had organized a meeting with us to hear our views. Mr. Vijay
Prakash Jain, General Secretary, Bhartiya Udyog Vyapar Mandal
presented our concern and submitted our charter of demand for retail
democracy (see below). Mr. Murli Manohar Joshi, Chairman of the
committee along with scores of members of parliaments including Mr.
Banwari Lal Kanchhal (India FDI Watch associate) and other concerned
officials were present during the presentation.

Charter of Demands Submitted to the Parliamentary Commerce
Committee :

1. Dedicated Study :
1.1 Scrap the ICRIER Retail Report and dedicate resources for the
ongoing study of retail and its related industries by the NSSO or
another reputable institution.

2. FDI Policies :
2.1 Maintain current ban on FDI in multi-brand retail.
2.2 Review current FDI policy on single-brand retail and its affect
on domestic manufacturers and retailers.
2.3 Correct loopholes in cash and carry licensing policy toward
foreign firms.
2.4 Protect SME's with no further liberalization or increase in the
FDI cap on Small Scale Industries.

3. Regulatory Framework :
3.1 Licensing
3.1.1 Issue moratorium on the issuance of new licenses to operate
corporate and chain retail outlets until all of the following
regulations are implemented.
3.1.2 Require all corporate and chain retailers to obtain licenses
of prior approval for every new outlet from a local committee/board/
department with representation of street vendors and small retailer
associations and to be set up by the urban local bodies.
3.2.1.a Require license applicants to pay for independent economic,
social, cultural, ecological and traffic impact assessments by
consultants chosen by the local committee/board/department.
3.2.1.b Cap the number of these licenses on the basis of a population
criterion.
3.1.3 Ensure that every individual outlet of a chain store must
independently meet every licensing requirement.

3.2 Urban Planning
3.2.1 Immediately ban corporations and chains from entering the
format of neighborhood convenience stores.
3.2.2 Impose blanket ban on corporations and chains from selling
fruits, vegetables, groceries and items of daily use.
3.2.3 Allocate 80 per cent of all urban commercial space for street
vendors/hawkers and small (less than 500 square feet) independent
retailers.

3.3 Supplier Codes
3.3.1 Ensure that no single retailer monopolizes procurement
operations in a district or area.
3.3.2 Regulate and monitor contract farming to protect the interests
and land of farmers.
3.3.3 Prohibit vertical agreements between retailers or
intermediaries and seed and fertilizer companies.
3.3.4 Prohibit product bundling and selling below MRP.
3.3.5 Require all corporate and chain retailers to reveal their
supply sources and buying prices.

3.4 Competition :
3.4.1 Prohibit tax incentives or tax holidays of any kind for
contract farming, corporate and chain retail, or any stage of the
retail supply chain.
3.4.2 Ensure that no single corporate or chain retailer will be able
to obtain a large market share in any city, state, or region.
3.4.3 Strengthen the Competition Commission.
3.4.3.a Within the Competition Commission there should be a special
Retail Regulatory Authority to act as a watchdog over this sector.
3.4.3.b This Authority needs to have the power and resources to
directly intervene and take action against anti-competitive practices
without requiring a complaint.
3.4.3.c The purview of this Authority should include hawkers and small
traders as a legitimate and large portion of the retail sector who are
potentially affected by anti-competitive practices.
3.4.3.d Small retailers, suppliers, and farmers should be able to
appeal to the Authority for free or at minimal cost
3.4.3.e The Retail Regulatory Authority should enforce national hours
of operation. Under no circumstances should corporate or chain
retailers be allowed to operate 24 hours.

3.4.4 Punish predatory pricing and other anticompetitive
practices that undermine the ability of smaller businesses to
compete.

3.5 Fairness :
3.5.1 Support cooperatives and Public Procurement Agencies.
3.5.2 Maximum Retail Price (MRP) must not be left open for suppliers
and there needs to be a reasonable cap on MRP in proportion to input
cost of a product.

3.5.3 Food retailers or other agribusiness companies should not be
allowed to corner and hoard foodgrains stocks under any circumstances.
To prevent cornering of stocks by corporates, there should be rules
for public disclosure of stock holding levels. Public agencies should
be empowered to purchase foodgrains from the private holders at pre-
specified prices.

4. Labour Laws :
4.1 Corporations must respect basic labor rights, including the
rights to freedom of association and collective bargaining and
protections against illegal firings, off-the-clock wage violations,
intimidation, sexual harassment, health and safety hazards, and
discrimination of any sort.
4.2 Ensure that all suppliers adhere to the highest internationally
recognized labor and human rights standards, as well as national labor
laws, to be verified by independent third parties.
4.3 Ensure that all retailers pay living wages and provide reasonable
benefits such that employees are able to afford food, clothing,
shelter, and healthcare.
4.4 Reform pricing practices to ensure that the prices negotiated
with suppliers are not so low that they severely undermine the ability
of these firms to meet the labor, human rights and environmental
standards delineated herein.

5. Environment & Health :
5.1 Provide clear and accurate information to the public about company
products and services. This includes information on the nature and
source of ingredients (including chemicals), potential health hazards,
as well as materials and processes used to produce products and their
risks to health and the environment.
5.2 Require suppliers to phase out the use of all chemicals that are
linked to cancer, birth defects, brain damage, or other health
problems in humans and animals, beginning with the most dangerous.
Phase out chemicals that persist in the environment or bioaccumulate
through the food system. Clean up all toxic waste on its sites and
require suppliers to do the same.
5.3 Reduce waste by requiring suppliers to minimize packaging,
eliminate nonrecyclable materials, maximize the use of recycled
materials, and take back their products free of charge at the end of
their life. Provide recycling education and incentives.
5.4 Prevent further sprawl, unnecessary consumption of land, and
excessive automobile traffic by building on "infill" sites (vacant or
under-utilized property in already built up areas) or restoring old
commercial sites instead of developing "greenfields" projects on
previously undeveloped land. Promote smart growth by choosing sites
near public transportation and providing a safe pedestrian and biking
environment.
5.5 Give preference to sustainably sourced products that are
independently certified by credible third parties. These products
include local, union-made, organic, and fair trade products.

6. Democracy :
6.1 Recognize the rights of communities to determine which companies
may do business within their jurisdictions and to establish their own
economic, social, environmental, and planning policies and standards
for retail operations.
6.2 Solicit community input in all stages of store development by
setting up listening sessions and advisory groups to give affected
people a stronger voice in the location and scale of proposed
projects.
6.3 Require all corporations to maintain a Board of Directors that is
representative of all major stakeholders affected by the corporation's
business activities to ensure democratic governance. Maintain a full-
stakeholder engagement process that is open and responsive to civil
society feedback and concerns.
6.4 Ensure that any national legislation is comprehensive and doesn't
leave practical operations to the Rules, which can easily be changed
without the approval of Parliament.
6.5 Eliminate illegal products that have been sourced in violation of
a foreign country's law by setting a blanket policy to that effect and
actively enforcing it in every product line with a transparent and
independently verified system.

7. Social Security and Employment Regulation :
7.1 Social Security for Informal workers.
7.2 Reserve 20% of floor space in corporate and chain retail outlets
for direct sales by farmers and producers from the tiny, handloom and
handcraft sector.
7.3 Require corporate and chain retailers to provide employment to
100% of unorganized retailers put out of business by their outlets.
7.4 Amend Sections 283 and 431 of the Indian Penal Code, Section 34
of the Police Act, and relevant sections of state and municipal acts
so as to decriminalize street vending.
7.5 Implement the National Policy on Urban Street Vendors, 2004 in
every city and state.
7.6 Corporate and chain retailers should be made to pay a cess that
will go towards social security for hawkers and small retailers.
7.7 Ban corporate and chain retailers from directly employing street
vendors/hawkers.
Require all corporate and chain retailers to source 90% of their goods
locally.