Planning commission deputy chairperson Montek Singh Ahluwalia on Friday slammed critics of foreign direct investment (FDI) in retail, terming their opposition "politically motivated" and dismissing fears that large multinational retailers would drive small traders out of business as incorrect and "uninformed."
"The argument that farmers will be cheated (by foreign players) has no basis," Ahluwalia said on the sidelines of the Hindustan Times Leadership Summit here.
"FDI in retail will not create any import bias in purchases and procurements by retail companies," Ahluwalia said. "In fact, with increased foreign investment there will be rapid modernisation of the entire supply chain."
The union cabinet's decision last week to allow upto 51% FDI in multi-brand retail triggered howls of protest from the government's political rivals and even key allies who fear that the livelihood of millions of small retailers and street vendors are at risk.
Ahulwalia dismissed such arguments. "This is uninformed rubbish. Modern retailers have been in China for 20 years but has there been predatory pricing?" he asked.
Predatory pricing refers to selling a product or service at much below its market price to drive out competitors and gain monopoly control. This allows arbitrary price hikes at a later stage.
Ahluwalia said a large portion of perishable food products goes waste for want of proper storage facilities and a weak supply chain linking farms to consumers.
"Relaxed FDI norms will bring in the much needed capital that will help create efficiency in the supply chain thereby reducing wastage in perishable products such as fruits and vegetables," he said.