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Government may ease FDI in retail

business Updated: Dec 17, 2007 21:11 IST
Hindustan Times
Government

The government on Monday indicated that the foreign investment norms in the retail sector could be eased if a study commissioned by it found that a large organised industry would not hurt standalone small retailers.

“India may open up its $330 billion retail market after being convinced that kirana stores would not be affected by big retailers,” Food Processing Industries Minister Subodh Kant Sahai said here at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Sahai said that the Department of Industrial Policy and Promotion (DIPP) has engaged an agency for an in-depth study on the impact of foreign direct investment (FDI) in food retail on our domestic market and the report is expected to be available by March 2008.

The minister said that big organised retail players would not harm the interest of neighbourhood mom-and-pop stores.

“Some people, particularly ex-politicians without job, are making cheap slogans (against organised retail) without actually realising that they were hurting the farmers,” he said.

Organised retail backed by efficient supply chain has the potential of raising the rate of growth of the food processing sector from 13 per cent to 20 per cent in the next three to five years, he said.

Sahai said the government would launch a revamped comprehensive cold chain infrastructure scheme during the 11th Five Year Plan period (2007-2012). “Since deterioration of produce sets in within a few hours of harvesting, farm-level cooling and primary processing was critical to empower farmers. Such infrastructure at the farm gate would help farmers preserve and add value to the produce, leading to better realisations,” he said.

At the collection centers, he said, the produce from individual farms in the hinterland would be aggregated and sorted out and kept in cold storages for onward supply to strategic distribution centres (SDCs).

Sahai also said 30 mega food parks were proposed to be established throughout the country. The proposed parks would bring together farmers, processors and retailers and link agricultural production to the market. “Contract farming has also become another topic of debate, but the government is clear that if we want to help farmers we need to have farmers in cluster farming,” Sahai said.