The growth of modern retail offers multiple benefits to

 •   The Indian Consumer

 •   Agricultural & Rural Sector

1. The Indian Consumer

The Indian consumer would reap multiple benefits from the growth of organized retail, main benefits being improved assortment of goods available, higher quality of fresh/perishable goods, increased reliability and availability of merchandise. However, the biggest benefit for the Indian consumer would be in terms of lower prices. With entry of big houses and the consolidation wave expected in the Indian retail industry, it is likely to be benefited from advantages resulting from scale such as higher bargaining power with suppliers and cost benefits from supply chain initiatives such as disintermediation. The potential benefits through disintermediation are immense e.g. in case of fruits and vegetables it is around 18- 22% of margins, whereas initiatives like contract farming and pack-house provide potential for further increasing margins by 5-8% and 10-15% respectively. A reduction of prices in a typical monthly shopping bill of at least 10% within next 24-30 months can be expected leading to generation of equivalent amount of surplus disposable income.

2. Benefits to Indian Agriculture and Rural Sector

Advantages to rural sector accrue from the rural retailing formats being introduced near villages such as Godrej Aadhar, ITC Choupal Saagar and Hariyali Kisan Bazaar offering quality goods to rural customers at low rates with easy accessibility. The boom in Indian retail sector offers many benefits for the agricultural and rural sector through other means as well as all the major retailers in the food & grocery (F&G) segment plan to enter contract farming and also provide microfinance to the rural sector. A quick look at the Indian agriculture sector shows that despite being the largest producer of milk, pulses, sugarcane and cotton (medium size) India has very low productivity even in comparison to the countries where nature of farming is not different from Indian farming. China produces 400 million metric tons of grain with only one hundred million hectare of agricultural land while India with its 146 million hectares of agricultural land produces on an average 185 million metric tonns of food. There are many issues faced by Indian agriculture that impede productivity. Contract farming solves many of these problems by eliminating middle-men, employing modern farming methods and increasing yields, providing higher margins and better returns to farmers. A green revolution is in the making with big corporations like Bharti, Reliance & Tata getting into contract farming with Indian farmers.