Economist for opening up FDI for retail

Published: Friday, March 31, 2006, 20:34 [IST]
 

Hyderabad, Mar 31 (UNI) Making it clear that globalisation had come to stay, International Food Policy Research Institute Asia Director Ashok Gulati tonight called for removing restrictions on scale in retailing.

''As Indian agriculture moves into this new phase of development, it is essential that changes in the policy environment keeps pace with the structural changes in the economy and do not impede the process of development,'' he said, delivering a lecture at the premier Centre for Economic and Social Studies here.

Mr Dixit has done extensive research on trade liberalisation and its impact on producers and consumers.

Speaking on ''Fragmenting bottom and consolidating top: India's changing food system and implications for small holders'', Dr Gulati, the Prime Minister's Economic Advisory Council member pointed out that ''FDI can be stopped for sometime but not for all times.

Conditions such as compulsory local procurement clause can be introduced while expanding FDI in retail sector'', he said.

Referring to the allowing of FDI in single brand retail, Dr Gulati, a NABARD Chair Professor at the prestigious Institute of Economic Growth, New Delhi, said it was necessary to remove restrictions on scale in retailing''.

Retailing in India at present by and large was unorganised, highly fragmented, predominantly small and mostly family-owned.

It had been estimated that there were 11.16 million retail outlets in the country in 2001, of which 33 per cent deal in food items.

The organised retailing accounted for less than 2 per cent of the food retailing industry and of this, the share of supermarkets was approximately two per cent of the total food retail, he said, adding that this was likely to grow by 15 to 20 per cent in the next five years.

Recalling that an inefficient supply chain had led to the failure of the Nanz supermarket promoted by the Escorts group, he pointed out that corporate houses had started taking the plunge with the Pantaloon group operating 37 food supermarkets across the country.

''A significant big player to jump the fray is the Reliance Industries, which has announced plans to invest USD 3.4 billion to open 1575 stores'', he said.

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