Amid reports of a major national retail chain shutting some of its formats, a prominent traders' body in Uttar Pradesh claimed that big retail chains were not suitable for a poor country like India.
"India is a tropical country where per capital income is low. The large retail formats, which are successful in the US, Canada and Europe are bound to fail here," Uttar Pradesh Udyog Vyapar Pratinidhi Mandal president and Rajya Sabha MP Banwari Lal Kanchal told reporters.
The organisation was at the forefront of the anti-Reliance Fresh protests in the state last year forcing its abrupt closure.
Kanchal said the establishment expenses of large retailers amounted to almost 20 per cent, while it is hardly 4-5 per cent for small retailers. "In the days to come, other major retailers would also face the heat," he added.
Kanchal said the Parliamentary Standing Committee on Commerce was studying the impact of big malls on small retailers and is expected to submit its report to the central government soon. He is one of the committee members.
Several countries such as Malaysia and Poland have promulgated the Shopping Mall Regulation Act to strike a balance between large and small retailers. The committee is also studying the Malaysian and Polish legislations in this regard.
Kanchal claimed that, in the last five years, an estimated 20 million traders had been rendered jobless due to the sprouting of big shopping malls in the country.
He criticised the Mayawati government for implementing Value Added Tax. "The current spate of recession and implementation of VAT would cost the UP exchequer almost Rs 3,500 crore (Rs 35 billion) this fiscal," he added.