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FDI in retail: Who will it hurt the most..
By Shekar Swamy / thehindubusinessline.com


The general belief is that Muslims came into India with their invasion of the sub-continent and the formation of the Mughal Empire from the early 16th century.

However, historical facts show that Arab traders visited the Malabar coast of Kerala as early as the 7th century, brought Islam with them, and engaged the local population in a robust and profitable trade in pepper and other spices. They intermarried with the local people and this resulted in the evolution of the large Muslim Maplah community of Kerala.

The Muslims of India thus have a rich tradition of engaging in trading activities for over 1,300 years. Trading is a major source of sustenance for them all across the country.

Will history repeat itself?

However, their trading activities in Kerala were rudely interrupted by the arrival of the Portuguese, in the early 16th century. As often happened in those times, the Portuguese attacked, looted and set fire to the town of Calicut. The Mappila community lost the spice trade — and a whole lot more — that they had carefully built over centuries to the invaders.

Can a 21st century version of this scenario unfold with the UPA Government opening the gates to Foreign Direct Investment (FDI) in multi-brand retail? When a historical parallel like this is suggested, the reaction of most people is to reject it under the loose argument that such things cannot happen in current times. While I do hope they are right, it would still be worthwhile to see how vulnerable the minority community is to the new FDI policy and its implications.

We can review this with the help of the Government’s study of the status of the minority community conducted by the Sachar Committee.

Sachar panel findings

Appointed in 2005 by the Prime Minister, the Sachar Committee was commissioned to prepare a report on the social, economic and educational condition of the Muslim community of India. The committee’s extensive report was presented to Parliament on November 30, 2006.

Table 1 drawn from the report shows the distribution of workers in socio-religious category by industry groups. The classification of Wholesale and Retail trade employs 17 per cent of the working Muslim population, compared with 8 per cent for Hindus and 10 per cent for other minorities. The Muslim community is twice as likely as the majority community to be engaged in trading and retail, the source of their livelihood that the UPA Government is handing over to multinational companies.

A category of employment related to Wholesale and Retail Trade is Transport, Storage and Communication. This category employs 6 per cent of all Muslim workers, compared with 4 per cent of all Hindus. At an all-India level, there are an estimated 16 million people in this category who are under threat by retail FDI. The likely impact on this group is not even under any consideration from any quarter.

By looking at the worker participation rate and applying it to the population, we can estimate the actual number of workers by socio-religious category and by employment category. Table 2 provides this summary. It shows that 20 per cent of the people engaged in Wholesale and Retail trade are Muslims, although they represent only 13 per cent of the total population, and just 11 per cent of total worker population.

There is thus a disproportionate dependence of the Muslim community on Wholesale and Retail Trade. Of course in sheer size, the majority Hindu community has nearly four times the number of people as Muslims engaged in wholesale and retail trade.

Muslims by States

If one looks at Table 3, it will be no surprise that the top three States in terms of Muslim population — UP, West Bengal and Bihar — have promptly said they will not entertain FDI in retail in their States. The leaders of these States know their voters and the state of this community. The Congress-run government of Kerala, where one-fourth of the population is from this community, has also refused to agree to FDI in retail. The problem arises in States such as Maharashtra, Assam, Andhra, J&K, Rajasthan, Delhi and Haryana that have agreed to FDI in retail.

The Government claims to have put in safeguards in the policy. Unfortunately, such claims ring hollow since the rules are easily changed by administrative notifications and everyone is aware of how lobbies are adept at getting this done. The silver lining is that since this Government has shown the way, it is equally simple for the next Government to amend these rules and protect the millions of Indians engaged in the trade.

Employment for displaced?

Whenever it is pointed out that huge numbers of people will be displaced by the multinationals for whom the doors have been thrown open in retail, even educated and responsible people blithely argue that such people will have to be retrained and redeployed. What are the possibilities of this happening for the Muslim community? Look at Table 4, which highlights education level of different communities. With nearly two-third of the literate Muslims just at the Upper Primary School level — the highest proportion at this level among all communities — it will be well near impossible for those displaced to find any other employment.

Communities will come together

FDI in retail is an issue that will have a major impact on all communities. This is going to be one case where everyone will have to come together to send a clear message to the Government on what is acceptable and what is not. This is already evident in the united opposition of all political parties to this development.

The Congress has spent decades cultivating its self-styled role of taking care of the minority groups in the country. With this one act of opening FDI in retail, the Congress has cast away the largest minority community in order to support the multinationals. As the popular saying goes, action speaks louder than words. In this instance, it is blaring from loudspeakers.

(The author is Group CEO, R K Swamy Hansa, and Visiting Faculty, Northwestern University, US. Views are personal.) 

The Congress has cast away the largest minority community in order to support MNCs.


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FDI in retail: Who will it hurt the most..