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War of words in Himachal over foreign equity in retail

india Updated: Dec 15, 2012 14:07 IST
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Days after parliament paved the way for foreign equity in multi-brand retail in the country, a war of words has erupted between two main political parties in Himachal Pradesh, the country's major fruit and vegetable basket - but only to draw political mileage.

The opposition Congress is claiming that it would permit foreign direct investment (FDI) in retail if it comes to power in the state. Assembly elections were held in the state Nov 4 and the results will be out Dec 20 after the two-phased elections in Gujarat are over.

However, the ruling Bharatiya Janata Party (BJP) has made it clear that it would never permit FDI in retail as long as it remains in power. The onus for permitting FDI in retail lies with the states.

"Chief minister Prem Kumar Dhumal is just misleading the public on the FDI issue," Congress general secretary Kuldeep Rathore told reporters in Shimla Thursday.

The fact of the matter is no city in the state has a population of one million to qualify for the entry of foreign retail chains.

"But Dhumal is just trying to get political mileage out of it even after there was a rejection of his party's politics in both houses (of parliament)," he said.

Soon after parliament's approval, Dhumal wrote to union commerce minister Anand Sharma, saying: "We are committed to protecting the interests of petty traders and entrepreneurs by not allowing FDI in retail in the state."

Expressing surprise over Sharma's statement in the Lok Sabha that BJP-ruled Gujarat and Himachal Pradesh and Akali Dal-ruled Punjab never opposed FDI in retail, Dhumal said: "Sharma has never communicated with us in this regard."

"On one hand Dhumal is opposing the entry of foreign equity in retail, on the other he's exploring opportunities to have tie-ups with other fruit-growing countries like New Zealand to set up cold chain facilities," an observer said.

A business delegation headed by New Zealand's primary industries minister David Carter called on Dhumal here Nov 26.

After meeting the delegation, Dhumal said the state was keen to get technical know-how in creating irrigation and cold chain facilities in the fruit-growing areas.

Fruit processing was another industry where New Zealand could lend its support.

"Our opposition to FDI is that it will negatively impact the economy and many small traders will be put out of business," Dhumal told IANS.

One thing is abudantly clear: the state desperately needs cold chains and other infrastructure to ensure its produce doesn't go waste.

Himachal Pradesh, which has 90% of its population in rural areas, produced l.03 million tonnes of fruits last year, of which 892,000 tonnes were in apples alone.

It also produced a record 1.35 million tonnes of vegetables, valued at $400 million.

Stakeholders see a major jump in produce-value, once cold chains are established.

According to Prakash Thakur, director of the Agricultural and Processed Food Products Export Development Authority (APEDA), an institution set up by the central commerce ministry, the state needs some $10 billion for integrated storage and marketing infrastructure.

"Where will this money come from? Both the state and the central governments lack funds. Foreign investment is the only option," Thakur said.