Multinational Corporations in Indian Food Retail: Why and How Size Matters

Abstract

Over and above the political debates, policies and latest developments that hit the headlines regarding the issue of foreign direct investment (FDI) in food retail in India, the question will benefit from conceptual work that demonstrates how retail corporations in general and retail multinational corporations (MNCs) in particular are different in their structure and logic of operation from the existing retail arrangements in countries like India. This article attempts to rephrase the problematic vis-à-vis FDI in retail so as to bring an analytical lens to the heart of the problem. It develops four themes—(i) it argues that FDI induced MNC-led retail needs to be re-imagined as a single global movement spearheaded by a handful of powerful corporations; (ii) it then investigates the retail corporate structure and logic to point to the built-in tendencies towards monopsony and oligopoly/monopoly in them; (iii) it goes on to draw the links between this corporate structure, its logic and the resultant impacts of ‘supermarketization’ that have been noted in literature globally; and (iv) finally, the article articulates how the nature and scope of impacts differ between corporate retail led by national corporations and FDI induced multinational retail. Without such an analytical exercise, terminologies such as formal–informal, organized– unorganized, modern–traditional, free market–state regulated and even foreign–national can only prove misleading and limited. This article covers an extensive range of impacts of supermarketization to demonstrate that they are widely dispersed over space and time. While the focus of most debates has been on the negative consequences for the traditional retail sector, there are equally significant implications for suppliers (farmers and manufacturers), consumers, markets and society in general.