Thursday, December 27, 2007

India's retail revolution

This is regarding the retail article in IEB. Two of the things that are often missed in the road towards modern retail is the expansion of organized labor and the addition tax base. The fragmentation of current retail system makes it easier to evade taxes at various levels and almost all the labor belong to the unorganized sector with no mentionable rights. One of the goals for India is to move its massive unorganized labor into organized sector where they could get more rights and the same time there will be better accountability. Also, with bar-coding and automatic billing the modern retail aids in tax collection - sales, corporate taxes and employee income taxes.

In the end it would benefit everybody - farmers, investors, infrastructure developers, laborers and also the government would have more tax revenue at its coffers to spend on the people. The jobs of few middlemen are not worth to stop such a massive potential to change the contours of Indian economy. If the middlemen are enterprizing enough they could adapt to the new India that will enable the creation thousands of new opportunities for entrepreneurship - supply chain management, cold storage, back end data processing.


just mad said...

What are the possible organizable sectors ?

Also how will it benefit / help the farmers directly ?

Shankar AVSB said...

Bala, you have said it well in the last couple of lines. The forces of opportunity in organized retail are much bigger for a few middlemen to fight it. Just yesterday Mukesh Ambani said Reliance Retail faced only half the political challenges it was expecting. My experience is somewhat similar based on what I have seen in Indian organized retail. The end-customers and farmers are both on your side, and for a company that wants to do big things, these are great times in India.