Global retailers like Wal-Mart are likely salivating over this week’s big (some say long-overdue) decision by the Indian government to allow foreign retailers to operate in the country. Foreign supermarket chains will now be able to own up to 51% of joint ventures with Indian partners.
This is significant from a global expansion perspective—as global retailers confronting low growth in developed markets will likely quickly move in to exploit the rapidly growing Indian economy. It’s also a milestone in India’s economic and political history, given the country’s long history of state control of the economy and restrictions on foreign investment.
But there’s another important aspect of this decision: The shift could have a transformative social impact. If you’ve traveled in India, you don’t have to go far—whether in major cities like Kolkata, or smaller cities and villages—to encounter numbing starvation and malnutrition. Yet, surprisingly, food spoilage and waste are a major issue, with The New York Times reporting that as much as “35 percent of Indian fruits and vegetables spoil before they get to market, largely as a result of an antiquated supply system….” The current system also is unstable, leading to pain for poor consumers when prices rise in response to supply disruptions.
Here’s the good news: As major retailers enter the Indian market, it is expected that they will bring with them significant investment to create and maintain the efficient supply chains that they use to operate their businesses elsewhere around the globe. This will result in large-scale improvements in food processing and logistics that will likely force competitors to up their game, magnifying the positive impact even further.
As global retailers enter India, society will benefit hugely from simple supply chain innovation as more, and better quality food will more dependably reach the marketplace. It’s a simple yet powerful example of how market forces and evolved business operations can drive social good.
-Craig Bida, Executive Vice President of Cause Branding and Nonprofit Marketing