In an indication that the government is gearing up to build consensus on 51 per cent foreign direct investment (FDI) in multi-brand retail, Commerce and Industry Minister Anand Sharma has written to the Punjab, Uttar Pradesh and Odisha Chief Ministers, seeking their support for this policy move. Though the Union Cabinet on November 24, 2011 approved 51 per cent FDI in multi-brand retail and 100 per cent FDI in single brand, the government has kept the move in abeyance following strong opposition from the main UPA ally, Trinamool Congress, and the BJP-ruled States.
Mr. Sharma has now initiated a move to seek the support of big States in order to roll out the 51 per cent FDI in multi-brand retail, possibly after the presidential polls in July. The government will now have to only notify the new guidelines on multi-brand retail and need not go back to the Cabinet for approval.
Job opportunities
In identical letters to the three Chief Ministers Parkash Singh Badal (Punjab), Akhilesh Yadav (U.P.) and Naveen Patnaik (Odisha), Mr. Sharma has said opening up FDI in multi-brand retail will bring in much needed investments, technologies and efficiencies to unlock the true potential of the agricultural value chain. “The policy mandates a minimum investment of $100 million with at least half going towards back-end infrastructure including cold chains, refrigerated transportation, and logistics. We have also stipulated a mandatory 30 per cent sourcing from small industry, which will encourage local value addition and manufacturing. It will also unfold immense employment opportunities for rural youth and make them stakeholders in the entire agri business chain from farm to fork. We have taken a conscious decision of leaving the implementation decision to the States and the FDI policy, cleared by the Cabinet, will be an overarching enabling policy framework and the State governments will be free to take appropriate decision on its implementation,” the letter states.
Food security
“We were also mindful of the imperative of ensuring food security for the poorest of the poor and have therefore retained the first right of procurement of foodgrains to rest with government for the public distribution system. Concerns have been expressed that the multinational companies will resort to predatory pricing techniques to drive away small retail. You are aware that the Competition Commission of India has been established by law to ensure that such practices receive great scrutiny. The Indian consumers will undoubtedly gain significantly from this step as they will be afforded much greater choice, better quality and lower prices.”
Keywords: FDI in retail, Anand Sharma
India has hurt itself for the last 50 years by closing it's economy. Hopefully it will change with some strong moves like this from the government to defeat populism!
A Good move from the government. FDI in retail can appreciate the value of rupee by high demand for rupee for their investments. min of 100 MILLION will be good sign of government's rationale behind this..After all it will improve the living condition of milldle class people and helpful for a steady return for poor people for their agricultural products. I think its too late to approve FDI in Multi Brand Retail. Unorganised retailers will not affect this as because the various steps taken by government before launching a single mall in India. When ASIAN agreement signs we witnessed,, all India rebel action by people, by the way what happens to people. I think "CHANGE THAT WE NEED".
FDI in Retail, is not the magical solution to all our problems. That said it will do more good than harm to our country. However I believe there should be a consensus hammered out with the retailers to source the items from India for an initial period, say 5 years. This will enable the local suppliers to develop and become ready to compete with imports. I think that the big retailers will have no problems with that as they get entry into India's lucrative market.
The only people who will be affected are the middlemen who are anyway leeches and do not do anything productive. For the small retailers, I believe that the govt can mandate that cash and carry outlets of the big retailers should provide them goods at a price 1-2% lesser than MRP.
Why do we want foreign companies to strengthen our infrastructure? Is the Indian Govt so incapable of doing the same? These politicians just think of themselves and of their swiss accounts at the cost of the public.
This will repeat the working of the East India Company. Why should we buy our own products from these foreign retailers?
Looks like our Indian companies are incompetent. I understand technologically they behind. For retail they can’t even develop proper process and have to rely on FDI
And he should have added that the prices of food items in these retail stores will be in dollars. And one will have to pay Rs. 57 for a dollar or even more. Earnings of the citizens will be in Rs. but items will be available at the prices considering that the median income of Indian citizen is same as American or European citizens. FDI in dollars will come once but profits will go outside every year much more than the initial FDI received.Excellent business.
FDI in Retail, indeed it is a very good initiative by the Govt. I am indeed saddened to note that those who are apposing it are the outfits, which are in opposition, perse due to their political linkages. It is indeed ia sad commentary on Indian politics where one is denouncing a rational step by misleading masses in the name of of Inflation Etc. What is Inflation ? I bought Onions @ Rs 75/- per Kg during Honorable AB Vajapee Regime. Idon't blame on him. It happens. You cannot blame govt for that. Market dynamics set in due course of time.
10/10 to the Govt for FDI initiative
Why should the government bother about retail trade? It should devote its attention to
promoting manufacturing and agriculture which require inputs like power and water as well
as goods transport infrastructure which only the government can supply on a large scale.
The manufacturers know how to sell their products. Leave that job to them.
This is a great news and flicker of hope for 2nd generation economic reforms that is much needed at this crucial juncture for the Indian economy. I hope this time Dr. Manmohan Singh will hold firm and not buckle under blackmail tactics by 'allies' such as TMC. Dr. Singh knows very well the benefits that will accrue for the economy, supply chain logistics, farmers remuneration and rural job opportunities. He understands clearly that India needs this along with other pending reforms to get it back to the high growth trajectory that is needed to alleviate mass poverty. I hope PM Singh and Sonia Gandhi stand their grounds and the nation will stand with them.
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