Farmers associations and industry bodies have backed a plan to allow foreign investment in the food processing sector, but local traders are opposed to the move.
The government is learnt to be examining a proposal to allow foreign direct investment (FDI) in multi-brand food retail as part of its signature Make in India initiative.
“They (foreign investors) will invest millions to create logistics, warehouses, supply chains and many other bank-end functions, which will provide safe, fresh and variety of food to consumers,” said Mayank Jalan, co-chairman, CII national committee on food processing.
Moreover, it can control food inflation as well.
“As the system will remove middlemen, pricing of goods will become transparent. Also, it is noticed that companies where modern retail is well established, food inflation levels are moderate,” Jalan added.
For farmers, the proposal could result in more profits and better technology. “It is a welcome move as it may remove the chain of middlemen,” said Jagdeep Singh Cheema, president, Young Farmer’s Association, Punjab.
Balbir Singh Rajewal, president of Bharatiya Kisan Union, said: “The move will bring better know-how in terms of technology and marketing support.”
Food processing minister, Harsimrat Kaur Badal told HT in an interview last month that she had written to Prime Minister Narendra Modi, asking the government to have a “relook at our FDI policy in multi-brand retail in food processing as a part of the Make in India initiative, so that both farmers and consumers are benefitted.”
The Confederation of All India Traders (CAIT) has expressed dissatisfaction over the letter. “It appears that perhaps Mrs Badal has not taken cognisance of report of Indian Council of Agricultural Research released in year 2010, which stated that food wastage in India is 0.8% to 10% which is not that much alarming for which we need MNCs,” said Praveen Khandelwal, secretary-general, CAIT. “The government is committed for not allowing FDI in retail and any move to allow MNCs into Indian retail trade will amount betrayal of confidence of the small businesses in India.”
“It will provide a platform for make in India as it will ease the distribution system in food industry and transparent distribution becomes stimulus for high growth,” Jalan explained.
Companies, including Bharti Retail and Walmart, remained unavailable for comment.
India currently allows up to 51% FDI in multi-brand retail as part of a policy notified by the previous UPA government.