Indian Industry is optimistic about the announcement of foreign direct investment (FDI) in retail and viewed that this move will have no major negative impact on the the interest the of small and medium retailers in the country.

“I do not think there will be major impact on the mortality. It is just a fear, which has been created by the vested interests. But the natural fact is that the small retailers, they say, they will improve their formats and will have a competitive strength.” said Rajiv Kumar, Secretary General of the Federation of Indian Chambers of Commerce and Industry (FICCI) while addressing a press conference on the impact of FDI in multi-brand retail on SME sector in New Delhi on Monday.

The cabinet headed by Prime Minister Manmohan Singh last week allowed up to 51 percent FDI in multi-brand retail and raised the limit in single-brand retail from 51 to 100 percent.

Further, Kumar also said SMEs are willing to give the big foreign retailers a fight and will stand for future competition. They (SMEs) will give the big giants a run for their money.

Opining his views on the positivity of opening up FDI in retail, Kumar also mentioned, “30 percent of food wastage will be reduced and that will bring down the inflation. More immediately, Indian large format stores will be benefited from the announcement of FDI in this industry.”

Further he added, “Many of these small cities, the malls which has opened are probably closed down as they cannot stand the competition from these smaller retailers.”

“In many cities, the malls are empty. Nobody is going there. That is the reality. I do not think there will be a major impact.” Kumar said.

“In any case, if there is an impact then on the employment there will not be any impact. And, if there is an impact, it will be made up then what is happening...,” he pointed out.

Allowing FDI in retail, it is a game changer because the sector is very backward and is completely lagging behind in terms of growth with rest of the economy, he said.

Further, the government should work towards building proper infrastructure in the local market and encourage retail innovation, Kumar added.

On a similar tone during a CII event, Thomas Varghese, chief executive officer, Aditya Birla Retail Limited said, the move would increase income of producers across sectors by USD 35-45 billion per year, create 3-4 million jobs with the retail chains and 4-6 million jobs in the logistics sector, other than creating a demand for more contract labour in distribution and repackaging centres and functions such as housekeeping and security.

"People should take a much larger view of this and look at it for what benefit it offers to the country, states and to the people of the states, what happens to consumers and their daily lives in terms of their ability to combat inflation and get on with their lives," added Varghese, who also heads CII's national committee on retail.

"Being an Indian retailer, I can tell that a lot of these concerns are misplaced. We have seen in the last five years that not a single kirana store has ever shut down. A lot of these concerns are exaggerated and misplaced," said Varghese.

"People should stop giving it a political overtone and look for it with the benefit of view to their state, their labour in terms of employment and of course the benefit it offers to the consumers at large," he added.

Industry body also said they would try to convince political parties and state governments that the move was in the interest of the economy and the country and they should stop politicising it.

Both houses of parliament were adjourned for the day Monday as a united opposition stalled the day's proceedings protesting the move of the government.

Political parties have been opposing the reform saying it will wipe out the small retailer. Various trader associations are also against it.

The present size of Indian retail market is USD 450 which is expected to increase USD 850 billion in the next 10 years and the sourcing from SMEs will grow to USD 298 billion in 2020 from the present USD 157 billion.