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small players' market

Mom & pop, and no one else


The political debate after the Cabinet's decision to bring FDI into retail has made it amply clear that retail in India is a small players' market, but just how tiny most retail establishments are may still be something of a revelation.

Data from the fifth Economic Census of India (2005), the most recent such exercise, shows that retail is a big part of what India does - the sector is the biggest employer in urban India. In rural India it comes in a close second to manufacturing among non-agricultural establishments.

Over 40 per cent of all non-agricultural establishments in the country were in the retail sector. Divided almost equally over rural and urban areas, there were 15 million retail establishments in India employing a total of 25 million people.

Two-thirds of retail establishments were "Own Accounts Establishments" which did not hire any workers and were run by members of the household - in short "mom-and-pop " stores. OAEs are more common in rural than urban India and employed an average of 1. 2 persons per establishment. A fifth did not own space to operate out of and the vast majority had no electricity.

Neither were the remaining one-third of retail establishments which hired outside workers, just under 5 million in all, big stores. The average employment rate of such establishments was under 3 persons per establishment.

Just 13 per cent of all non-agricultural establishments in the country with hired workers had more than five people usually working there, whether employees or family members. Less than 5 per cent had more than ten people working there.

Most retail establishments in India had no external source of financing other than the household's own finances. Just 1 per cent got funding from any government sources, while 3 per cent borrowed from financial institutions.

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