This is a major step towards providing liberation to farmers, says Sharma
Ridiculing claims that opening of foreign direct investment (FDI) in multi-brand retail will lead to displacement and unemployment, Union Commerce and Industry Minister Anand Sharma on Friday asserted that this bold move would lead to creation of 10 million jobs and billions of dollars in investments during the next three years.
Brushing aside the criticism by the Opposition parties, including from key UPA ally Trinamool Congress, Mr. Sharma said that necessary guidelines and press note would be issued by next week giving details of the approved policy. “Our initial estimates are that it will create over 4 million jobs in the small and medium industries and another 5-6 million jobs in the logistics sector in the coming three years,” he told journalists at a press briefing here.
The guidelines regarding the decision to allow 51 per cent FDI in multi-brand retail will be issued by next week. He said many State governments had favoured opening of the sector and the government had responded to those demands. “The fear that small and marginal traders would stand displaced is wrong. In Indonesia, even after nine years of opening FDI in multi-brand retail, 90 per cent of the business remains with the small trader,” he added. Asserting that it was the prerogative of the government to decide the policy and timing of its decision, Mr. Sharma said this was a major step towards providing liberation to the farmers from middlemen and ensuring remunerative price for their produce. “This step will help in not only attracting huge investment but also creating jobs in the agro and food processing industries and bring FDI to build the much needed infrastructure in rural India,” he added.
Stating that the thrust of the policy was for the benefit of the farmers and to ensure huge inflow of funds into the rural infrastructure, Mr. Sharma said this was why a mandatory provision had been made that 50 per cent of the investment would be in rural back-end infrastructure. “India has put out its own policy on FDI in multi-brand retail with 51 per cent limit. China, Indonesia, Russia, Thailand, South Africa, Argentina and Chile have allowed 100 per cent FDI in multi-brand retail. We are not following any nation but guided by national interest,” he said.
The Commerce Minister said all proposals relating to multi-brand retail would be cleared by the Foreign Investment Promotion Board (FIPB) and retailers would have to take licence from the respective State governments for opening the mega stores. The government's decision would pave way for global retail giants such as Wal-Mart, Tesco and Carrefour to set up their mega store retail chains in the country.
Mr. Sharma said that the government would have the first right to procure agricultural products. The move will not impact small and marginal retailers. The Minister said the government had also increased the FDI cap in single brand retail to 100 per cent from the current 51 per cent. “Single brand product retailing would cover only products which are branded during manufacturing. The foreign investor should be the owner of the brand. In respect of proposals involving FDI beyond 51 per cent, 30 per cent sourcing from SMEs/village and cottage industries artisans and craftsman would be mandatory,” he added. This would benefit Indian SMEs, especially in sectors such as textiles, gems and jewellery, leather and jute.