Traders and kirana store owners in the country are not fully prepared to face foreign retailers, said Mr Madan B. Desai, Former President of the Karnataka Chamber of Commerce and Industry (KCCI).
Addressing the members of KCCI, Mr Desai said, "If the Union Government allows 51 per cent foreign direct investment (FDI) in retail trade and multi-brands, it may lead to more unemployment and competition with capitalists for which we are not fully prepared."
Companies like Wal-Mart and CarreFour are already showing their strong hand in the international market. "These companies will eliminate lakhs of small traders and create unemployment for few crores of people and ultimately help major countries like China, Japan, South Korea, Thailand and Hong Kong," said Mr Desai.
"By outsourcing nearly 80 per cent of the products they need for marketing in India as they are more competitive in price and quality over their Indian counterparts," he added.
Once the share of overall modern retail in food reaches about 25-30 per cent, it is bound to affect kirana and small traders, Prime Minister's Economic Advisory council Chairman C Rangarajan said on Friday.
Organised retail out-competes traditional retail on prices, variety and quality and offers greater convenience, he said.
Mr. Rangarajan, however, sought to allay apprehensions over the government move to allow FDI in multi-brand retail, saying that kirana stores will survive and can become part of modern retail by organising themselves and getting assimilated into the organised sector.