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indian family markets in danger August 17, 2006

Posted by Brad Richert in business.

Do you remember a time when you walked down the street and bartered with a vendor for apples and oranges? Probably not. At least not if you live in most western countries. But for culturally-rich states such as India this is a norm of life. There are an estimated twelve million of family-owned and run shops in the Indian state of 1.1 billion people (poised to surpass China as the world’s most populous nation). The question that these 1.1 billion need to ask themselves very soon is whether they want to continue along an ancient marketplace tradition (often seen in National Geographic as a sea of bright clothes) or want to start taking their $200 billion market to American-style big-box megastores.

Reliance Industries is the largest petroleum company in India and the second largest corporation in the state and contributes about 3% of the Indian GDP. Reliance is also starting to diversify. Maybe banking, maybe communications, and maybe well, whatever Wal-Mart does. India has legislation that does not allow for Wal-Mart itself to set up shop, but as a company already crucial to the Indian economy, there appears to be a blank cheque for Reliance to do as they please. Should Reliance start up their megastores, the damage they would do to the majority of Indian citizens would be irreparable. Compare what Starbucks does to family-run coffee house and multiply that several thousand times. The only way for Reliance to survive is by taking a huge percentage of business from small family-run markets. As we see with Wal-Mart in the United States, they will.

This is not just an economic catastrophe for India. It is also a cultural one. Reliance is not looking to just buy out little markets and own a chain of “family-style” vendors. They want to place a giant aethetically-disgusting superstores in every major city in India. The landscape of the nation that has given birth to the religions of Hinduism, Buddhism, Jainism and Sikhism would be cluttered with new temples of capitalism.

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