On the retail trail

August 30, 2007
Lucknow
 
It's been exactly one week since Uttar Pradesh Chief Minister Mayawati ordered the closure of organised retail outlets in the state. BT's destination for the day is the state capital Lucknow-the city of nawabs and kebabs. Dotted with countless hoardings of Mayawati, the city is the centre of another controversy-the rollback of state agricultural policy that allowed contract farming and the entry of private sector players in agri-business. The major stakeholders impacted by the hullabaloo are the farmers and the big organised retail players.

It's 7.30 a.m. as we come out of the Amausi Airport. As the local newspapers report overwhelming farmer support to Reliance Fresh, we (BT lensman and I) decide to hear them out first and head to the local wholesale mandi (market) at Nawabganj, which is a small town in Unnao district, situated around 25 km from Lucknow. The local vegetable mandi and the Reliance procurement centre are situated 200 metres apart. The centre is open, but is not procuring. As we talk to the store manager, a farmer from Jagdishpur comes with a cartful of vegetables, but is told the centre is not functioning. "We want to sell vegetables to any company that would give us value for our produce as half of our produce in mandis gets wasted," he says, turning his cart back to the mandi across the road.

More than 2,000 farmers come to the Nawabganj mandi twice a week while "over a thousand came" to the Reliance procurement centre on the couple of days it functioned.

Most farmers (there are a few of dissenting voices) at the mandi say that they are demonstrating at the village and block level and will take their protests to Lucknow and other major cities to be allowed to sell to big organised retailers.

One such protest happening at Rambagh village in Gosaiganj block is one of our stops. A group of 50-odd agitated farmers is engaged in a heated discussion. The main issues: weighing of produce at the mandi-"the computer kanta of Reliance is much better"-the handling charges, police harassment, the middlemen who control the prices in mandis, the rising cost of taking produce to local mandis and the rollback of the farm policy. "The new policy meant we could sell our produce to anyone, but the rollback means we need to go back to the mandis, and now face ridicule for having sold our produce to Reliance for a couple of days," says Ram Sagar Verma of Barabanki.

Interaction with farmers over, it's time now to hit the retail trail. Our first stop is the Adarshganj-Alam Bagh outlet of Reliance Fresh. It is shut. From there, we move to Vishal Mega Mart's standalone store in Tulsi complex near Parivartan Chowk. It is business as usual here. "We have never been asked to shut shop," says a store employee. Spencer's at Munshi Pulia in Indira Nagar is open, too. Visiting one retail store after another, it's clear that barring Reliance Fresh, all 10 of whose stores were closed, retail outlets are unaffected. "The authorities have imposed Section 144 at Reliance stores," a company official later told BT.

Reliance Retail was asked to close operations just a day after Reliance Fresh outlets were opened in Lucknow and Varanasi. Mayawati had then announced at a press conference that due to law and order problems stemming from the protest against entry of big retailers, the Reliance Fresh stores in Lucknow and those that were slated to be opened in Varanasi have been ordered to shutter.

This law and order problem was in the shape of a protest by a group of traders, led by Samajwadi Party mp Banwari Lal Kanchal. This group ransacked the Reliance Fresh store at Janakipuram in Lucknow and another under construction in Varanasi. Spencer's outlet in Lucknow was attacked as well but is now functioning normally.

However, this could just be the proverbial lull before the storm. There seems to be trouble brewing all over again for the organised retailers. Kanchal, who is National President, Rashtriya Vyapar Mandal, is still at his vociferous best against organised retail. "All big retail stores across India will be forced to close on September 20 as part of our protest. Bade log bada kaam karen, chhote logon ke pet par laat na maaren (Big retailers should focus only on big things and should not make small retailers starve)," he announces. In the same breath, he clarifies, "We are not opposing FDI or big corporates in retail, but we want a policy that does not make people unemployed." Farmers are all supporting us, he claims.

The industry is clear that the action is negative. "All business entities in large format retailing will be impacted. It will have an adverse impact on the pace of inclusive growth. We hope it is a temporary phenomenon and have told the up government to reconsider its decision," says Deepak Malik, Chairman, Uttar Pradesh State Council, CII.

However, Shailesh Krishna, Principal Secretary to the cm, tells BT: "Reliance had opened a few shops to sell agri-products. Certain law and order situation arose so it was decided to close those stores. It was a temporary measure." On the agri-policy rollback, Krishna says, "If the farmers come to us saying that they need a rollback of these measures, we'll re-introduce them."

Reliance Retail is in a wait-and-watch mode. Raghu Pillai, President and Chief Executive, Reliance Retail, told BT: "There is nothing we can do. We are waiting to hear from the authorities."

Everything now seemingly hinges on the five-member state committee that has been formed to look into the issues raised during the protests. This committee will review the feasibility and operational issues of organised retail giants in the state.

While Mayawati's jury is out, organised retailers wait with bated breath for the final verdict.