After months of discussion,  the issue of FDI in retail is being deliberated in the Lok Sabha today.  In September 2012, the Cabinet had approved 51% of FDI in multi-brand retail (stores selling more than one brand).  Under these regulations, foreign retail giants like Walmart and Tesco can set up shop in India.  Discussions on permitting FDI in retail have focused on the effect of FDI on unorganised retailers, farmers and consumers. Earlier, the central government commissioned the Indian Council for Research on International Economic Relations (ICRIER) to examine the impact of organised retail on unorganised retail. The Standing Committee on Commerce also tabled a report on Foreign and Domestic Investment in the Retail Sector in May, 2009 while the Department of Industrial Policy and Promotion (DIPP) released a discussion paper examining FDI in multi-brand retail in July, 2010.  Other experts have also made arguments – both in support of, and in opposition to, the move to permit FDI in retail sales. The table below summarises some of these arguments from the perspective of various stakeholders as collated from the above reports examining the issue.

Stakeholder

Supporting arguments (source)

Opposing arguments (source)

Unorganised retail
  • No evidence of impact on job losses (ICRIER).
  • The rate of closure of unorganised retail shops (4.2%) is lower than international standards (ICRIER).
  • Evidence from Indonesia and China show that traditional and modern retail can coexist and grow  (Reardon and Gulati).
  • Majority of small retailers keen to remain in operation even after emergence of organised retail (ICRIER).
  •  Unorganised retailers in the vicinity of organised retailers saw their volume of business and profit decline but this effect weakens over time (ICRIER).
  • Other studies have estimated that traditional fruit and vegetable retailers experienced a 20-30% decline in incomes with the presence of supermarkets (Singh).
  • There is potential for employment loss in the value chain. A supermarket may create fewer jobs for the volume of produce handled (Singh).
  • Unemployment to increase as a result of retailers practicing product bundling (selling goods in combinations and bargains) and predatory pricing (Standing Committee).
Farmers
  • Significant positive impact on farmers as a result of direct sales to organised retailers.  For instance, cauliflower farmers receive a 25% higher price selling directly to organised retailers instead of government regulated markets (mandis).  Profits for farmers selling to organised retailers are about 60% higher than when selling to mandis (ICRIER).
  • Organised retail could remove supply chain inefficiencies through direct purchase from farmers and investment in better storage, distribution and transport systems.  FDI, in particular, could bring in new technology and ideas (DIPP).
  •  Current organised retail procures 60-70% from wholesale markets rather than farmers. There has been no significant impact on backend infrastructure investment (Singh).
  • There are other issues like irrigation, technology and credit in agriculture which FDI may not address (Singh).
  • Increased monopolistic strength could force farmers to sell at lower prices (Standing Committee).
Consumers
  • Organised retail lowers prices. Consumer spending increases with the entry of organised retail and lower income groups tend to save more (ICRIER).
  • It will lead to better quality and safety standards of products (DIPP).
  •  Evidence from some Latin American countries (Mexico, Nicaragua, Argentina), Africa (Kenya, Madagascar) and Asia (Thailand, Vietnam, India) reveal that supermarket prices for fruits and vegetables were higher than traditional retail prices (Singh).
  • Even with lower prices at supermarkets, low income households may prefer traditional retailers because they live far from supermarkets, they can bargain with traditional retailers and buy loose items (Singh).
  • Monopolistic power for retailers could result in high prices for consumers.

Source: ICRIER [1.  "Impact of Organized Retailing on the Unorganized Sector", ICRIER, September 2008]; Standing Committee [2.  "Foreign and domestic investment in retail sector", Standing Committee on Commerce, May 13, 2009]; Singh (2011) [3. "FDI in Retail: Misplaced Expectations and Half-truths",  Sukhpal Singh, Economic and Political Weekly, December 17, 2011];  Reardon and Gulati (2008)  [4. "Rise of supermarkets and their development implications," IFPRI Discussion Paper, Thomas Reardon and Ashok Gulati, February 2008.]; DIPP [5. "Discussion Paper on FDI in Multi-brand Retail Trading", Department of Industrial Policy and Promotion, July 6, 2010]


According to a recent press release, the Cabinet has approved a proposal to introduce a Bill in Parliament to amend the Indian Penal Code, 1860 (IPC).  While the draft Bill is currently not available, its highlights are specified in the press release.  As per the press release, the Bill aims to make rape laws gender neutral.  The key features specified are:

  • Substituting the word “rape” with “sexual assault”;
  • Increasing the age of consent 16 to 18 years;
  • Excluding sexual intercourse between a married couple from the definition of rape, where the wife's consent has not been obtained and the wife is at least 16 years of age.

Present Law According to section 375 of the IPC, an allegation of rape has to satisfy the following criteria:

  • sexual intercourse between a man with a woman in the following circumstances: (a) against the will of the woman; (b) without her consent; (c) under duress; (d) consent obtained by fraud; (e) consent obtained by reason of unsoundness of mind or intoxication.
  • If the woman is below the age of 16 years, sexual intercourse is deemed to amount to rape.  Even if the woman has consented, it would be considered rape under the law.
  • There is however, an exception to this definition of rape.  Un-consented sexual intercourse between a man and his wife would not amount to rape if the wife is 16 years or older.

This definition of rape does not include use of other body parts or foreign objects by the offender upon the victim’s body.  Such offences are classified as “use of criminal force to outrage the modesty of a woman” (see here) and are punishable with two years imprisonment or fine or both.  Rape, on the other hand, is punishable with imprisonment for seven years to a life term. Proposals to amend the law on rape Through an order in 1999, the Supreme Court had directed the Law Commission to review the law on rape (Sakshi vs. Union of India).  The Law Commission had in its 172nd Report, dated March 25, 2000 made recommendations to amend the law to widen the definition of rape.  In its report, the Commission had recommended that rape be substituted by sexual assault as an offence.  Such assault included the use of any object for penetration.  It further recognised that there was an increase in the incidence of sexual assaults against boys.  The Report recommended the widening of the definition of rape to include circumstances where both men and women could be perpetrators and victims of sexual assault.[1]   Amendments to the law on the basis of these recommendations are still awaited. The High Court of Delhi has recognised the need to amend the laws on rape.  It observed that the law did not adequately safeguard victims against sexual assaults which were included by the Law Commission within the scope of rape.  It was observed that the definition should be widened to include instances of sexual assault which may not satisfy the penile-vaginal penetration required under the existing law. The 2010 draft Criminal Laws Amendment Bill, released by the Ministry of Home Affairs, attempted to redefine rape.  The draft provisions substitute the offence of rape with “sexual assault”.  Sexual assault is defined as penetration of the vagina, the anus or urethra or mouth of any woman, by a man, with (i) any part of his body; or (ii) any object manipulated by such man under the following circumstances: (a) against the will of the woman; (b) without her consent; (c) under duress; (d) consent obtained by fraud; (e) consent obtained by reason of unsoundness of mind or intoxication; and (f) when the woman is below the age of 18. Variation between proposals The existing legal provisions, the Law Commission Report, the 2010 Bill and the recent press release are similar in that they provide an exception to marital rape.  Under the law, un-consented sexual intercourse is not an offence if the wife is above a certain age.  (Under the existing law the wife has to be over 16 years’ of age and as per press release she has to be more than 18 years old.)  This is at variance with the proposal of the National Commission of Women (NCW).   An amendment to the IPC recommended by the NCW deleted the exemption granted to un-consented sex between a man and his wife if she was more than 16 years old.  It therefore criminalised marital rape. As per the press release, this exemption has been retained in the proposed Bill.  Furthermore, as per the release, while the age of consent for sexual intercourse will be increased to 18 years, for the purpose of marital sex, the age of consent would be 16 years.


[1] Review of Rape Laws, Law Commission of India, 172nd Report, paragraph 3.1.2,  "375.  Sexual Assault:  Sexual assault means - (a) penetrating  the  vagina (which term shall include the labia majora), the  anus  or  urethra  of  any person with - i)      any part of the body of another person or ii)   an object manipulated by another person except  where  such penetration is carried out for proper hygienic or medical purposes; (b) manipulating any  part  of  the  body  of  another person  so  as  to cause penetration of the vagina (which term shall include the labia  majora),  the anus or the urethra of the offender by any part of  the other person's body; (c) introducing any part of the penis of a person into the mouth of another person; (d)    engaging in cunnilingus or fellatio; or (e) continuing  sexual  assault  as defined in clauses (a) to (d) above in circumstances falling  under  any  of  the  six following descriptions: ... Exception:  Sexual intercourse by a man with his own wife, the wife not being under sixteen  years  of  age,  is  not sexual assault."