Protests on FDI misconceived, unfortunate: Parekh, Ganguly | business | Hindustan Times
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Protests on FDI misconceived, unfortunate: Parekh, Ganguly

As the government and opposition parties are at logger heads over the implementation of the foreign direct investment (FDI) policy in retail, which in turn has resulted in the ninth day of Parliament adjournment, a statement by two eminent members of the civil society -- Ashok Ganguly, a member of Rajya Sabha and Deepak Parekh, chairman of Housing Development Finance Corporation has shed some light on what they feel are 'false dangers' that have been revolving around the issue of FDI in retail.

business Updated: Dec 04, 2011 22:34 IST

As the government and opposition parties are at logger heads over the implementation of the foreign direct investment (FDI) policy in retail, which in turn has resulted in the ninth day of Parliament adjournment, a statement by two eminent members of the civil society -- Ashok Ganguly, member of Rajya Sabha and Deepak Parekh, chairman of Housing Development Finance Corporation has shed some light on what they feel are 'false dangers' that have been revolving around the issue of FDI in retail.

In the statement, Ganguly and Parekh state that the move to introduce FDI policy is not a new one. In fact, the "idea has been toyed for over 14 years" and that "detailed discussions with various stakeholders have been held, experts consulted and studies commissioned based on international experiences of organised retailing."

They state that the "protests on FDI in retail are misconceived and unfortunate, but hope to salvage this situation should not be lost."

The statement also states that the modernisation of retail trade is an essential part of India’s growth story.

Ganguly and Parekh have cited examples of experiences of countries such as China, Indonesia and several others and states that modern retail trade and traditional "traders can, and do, prosper side by side, raising employment along the supply chain, improving farm incomes, reducing spoilage and delivering affordable products to consumers."

They state that the opposition of investment in modern retail for "the sake of it is only defending vested interests to the detriment of the vast majority.

The duo urges the farmers, the consumers and the common people to raise their voices against "this false drama of apprehension against investment and modernising trade in agriculture and consumer goods. They state that the false alarm of FDI is continuing to be used after so many years, as a bogey in modern times against foreigners and foreign investment and feel that it is "completely deluded to argue that kirana shops will be wiped out with the onslaught of FDI in retail."

Finally, the statement states that it is important to articulate the economics of FDI in retail and believes that is "illusory to believe that the market will be flooded with FDI. The statement goes on to explain the workings of a retail business mechanism and states that "retailing is not an easy business and that the margins are thin, large parcels of real estate are not easily available and the supply chain logistics ranging from warehousing, cold storage to transportation pose a major challenge." The statement goes on to say that "the central government’s role in retail FDI is minimal and that greater onus lies with the state governments as a maze of laws ranging from Shops and Establishments Act to the APMC Act, amongst several others falls within the state’s domain." It states that "progressive states that wish to attract FDI in retail will encourage investments and vice versa. Either way, the fruits of organised retailing will not happen overnight, but will take several years."

In conclusion, the statement urges the "saner sections of Corporate India to come out and strongly support progressive measures and reforms with the same spirit and gusto with which we take the liberties to criticise policies or issues we do not appreciate."