FDI in retail could help consumers, farmersFebruary 25th, 2011 - 5:01 pm ICT by IANS
New Delhi, Feb 25 (IANS) Consumers could benefit with prices coming down and farmers get a better deal for their produce if India allows foreign direct investment (FDI) in multi-branded retail, says the Economic Survey 2010-11.”Permitting FDI in retail in a phased manner beginning with metros and incentivising
the existing retail shops to modernize could help address the concerns of farmers and consumers,” said the document tabled by Finance Minister Pranab Mukherjee in the Lok Sabha Friday.
“A quicker, method to curtail the margin between farm gate and retail prices is to bring in modern supply chain management systems and retail sellers into the picture. A quick way to get at this is to allow foreign direct investment (FDI) in multi-product retail into India,” it added.
The annual report on the economy, however, called for regulatory measures to be in place before any move to open up the sector.
Allowing foreign players into multi-branded retail has been a hotly debated topic with those opposing it arguing that global retail companies would wipe out existing small mom-and-pop stores, thus taking away livelihood of millions of people.
Domestic trade associations have also warned that big retail players would eventually control pricing and use their huge procurement requirements to bully farmers into selling at lower prices.
But those in favour have been arguing that all such fears are unfounded and that entry of established global companies will strengthen India’s weak supply chain, reduce wastage, bring down prices of various goods and assure farmers of procurement of their produce at right prices.
“We are at a juncture where FDI in multi-product retail is worth considering. It could enable farmers to get higher prices and consumers to have to pay less. As a first step, consider limiting international multi-product retailers to a few outlets in each major city,” the survey said.
“This will prevent them from getting full control of the market and, at the same time, set an upper bound on the prices that other retailers will be able to charge for their products.”
Currently FDI up to 51 percent is allowed in single-brand retail, while cash-and-carry stores can have 100 percent foreign ownership. However, none are allowed in multi-branded retail.
During the period, April 2006 to March 2010, foreign investment inflows into the retail sector are valued at $194.69 million, accounting for 0.21 percent of the total FDI inflows during this period.
FDI in retail trading is permitted in Brazil, Argentina, Singapore, Indonesia, China, and Thailand without limits on equity participation, while Malaysia has equity caps
on FDI in the retail sector.
- Some states against FDI in multi-brand retail: Montek - Mar 01, 2011
- The pros and cons of foreign equity in retailing - Nov 24, 2011
- India opens doors to global retail chains (Roundup) - Nov 24, 2011
- Pros and cons of foreign equity in retailing - Nov 25, 2011
- Farmer association supports FDI in retail - Dec 22, 2011
- Industry lauds decision to allow FDI in multi-brand retail - Nov 24, 2011
- FDI in multi-brand retail will reduce prices, says RBI - Nov 26, 2011
- Recall of retail FDI regressive, disappointing: India Inc (Roundup) - Dec 07, 2011
- BJP opposes FDI in multi-brand retail - Nov 24, 2011
- FDI will help create 1 crore new jobs in retail: Government - Sep 21, 2012
- Fact sheet on India's retail trade industry - Nov 24, 2011
- Government for FDI in multi-brand retail, invites feedback - Jul 06, 2010
- Government to talk to states on FDI in multi-brand retail - Oct 27, 2010
- FDI in multi-brand retail will lift mood: Economic advisor - Jun 13, 2012
- Top retailers seek 51 percent FDI in multi-brand retail - Aug 12, 2010
Tags: economic survey, fdi in retail, finance minister, foreign direct investment, global companies, juncture, livelihood, Lok Sabha, pop stores, pranab mukherjee, procurement requirements, product retail, product retailers, regulatory measures, retail companies, retail prices, retail sellers, retail shops, supply chain management, supply chain management systems