India is examining a proposal to allow up to 100% foreign direct investment (FDI) in multi-brand retail for food products aimed at reducing wastage, helping farm diversification and encouraging global giants to produce locally rather than importing items.
“The government should allow 100% in multi-brand retail of food and food products produced and manufactured in India,” food processing minister Harsimrat Kaur Badal told HT in an interview.
Last month, Badal 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 and which will result in creation of critical infrastructure.”
She has followed this up with another letter to Modi earlier this month, underlining the need for fully opening up the food sector to overseas investors. Besides, the minister has also asked to offer a 10-year tax holiday for food processing units.
India currently allows up to 51% FDI in multi-brand retail as part of policy notified by the previous UPA government.
The Bharatiya Janata Party (BJP), however, has been persistent in its opposition to allowing foreign giants to set up deep discount stores in India arguing that such mega supermarkets will endanger the livelihood of millions of neighbourhood mom-and-pop stories and street vendors.
The BJP, which stormed to power in Parliament in a landslide victory in 2014, has not scrapped the existing policy, although it has not actively encouraged FDI in multi-brand retail.
European mega chain Tesco, which set up a joint venture with the Tata group in 2013, is the only foreign multi-brand retail outfit operating in India currently.
Sources told HT that the government is now actively examining the proposal on allowing 100% FDI in multi-brand retail for food products under the condition that these items are completely produced in India.
Badal, wife of Shiromani Akali Dal leader and Punjab deputy chief minister Sukhbir Singh Badal, told HT that FDI in multi-brand retail will help benefit farmers with better price realisation, increased employment generation and reduce wastages.
The minister also called for a comprehensive food policy under one umbrella ministry. “There should be one system that handles all matters related to food,” she said, obliquely arguing for bringing agriculture and food processing ministries under a single system.
“The thinking of the 1960s is not quite relevant today,” she said. “Indian farmers are still aeons behind the developed world in terms of technology and marketing support. It is about time to move fully integrated system of food management and production backed by satellite-aided technology and forward-integration with the retail market.”