To ensure orderly growth of malls in cities while protecting the interests of mom-and-pop shops and organised retailers, the government is planning to set up a retail sector regulator. According to a consultation paper floated by the department of consumer affairs, there would be a two-tier regulatory structure – at the central and state levels – on the lines of the electricity sector.
This is because development of malls and other retail outlets fall under the jurisdiction of state governments with clearances mandatory from local municipal authorities. The department has sent the consultation paper to state governments for comments.
Efforts to set up a retail regulator come at a time when the government has floated a consultation paper on whether 100% foreign direct investment should be allowed in multi-brand retail. Currently, FDI in retail sector is haphazard, lacking in uniformity. While no FDI is allowed in multi-brand retail, it is permitted up to 51% in single brand retail and 100% in cash and carry segment. Multi-brand retail, however, is the most lucrative segment where FDI has been opposed by various political parties on concerns that small grocery shops would be wiped out, leading to mass unemployment.
According officials, the paper proposes that state-level regulators earmark zones in various cities for setting up hyper markets and super markets. This would ensure that there are separate zones for them and local kirana shops. Regulators would also broadly oversee pricing of products so that small retailers do not fall prey to predatory pricing by the bigger ones.