Foreign direct investment (FDI) in the retail sector would help contain inflation while transforming the manner in which perishable items in the agriculture sector is acquired, a study by Columbia University has stated.
"It (FDI in retail sector) will transform the way perishable agricultural produce is acquired, stored, preserved, and marketed — and thus help control India’s persistent food inflation," Nandita Dasgupta of University of Maryland, wrote in Columbia FDI Perspective which was published on Monday.
Food inflation in India remained over 10% for many months, primarily due to supply side constraints. For the week ended November 22, it stood at 8%. Though inflation showed signs of easing it continues to remain a concern.
FDI in the retail sector would bring in foreign capital, technology and managerial expertise of big international retailers while developing an efficient linkage between the back-end supply chain and the front-end operations, the paper suggested.
“In Indonesia, even after 10 years of opening FDI in multi-brand retail, 90% of the business remains with small traders,” the study noted.