India not to rush into allowing FDI in retail: Official

Published: Sunday, January 30, 2011, 18:00 [IST]
 

Prakash Chawla

Davos, Jan 30 (PTI) In a clear message to global retailgiants like Walmart, Tesco and Carrfoure, the Indiangovernment today said it will not rush into allowing FDI intopolitically sensitive multi-brand retail sector.

"Until a decision is formally taken to allow foreigndirect investment (FDI) in front-end multi-brand, the bigchains can come to India and build up infrastructure andintegrate (with) the (small) retailers," DIPP Secretary R PSingh told PTI at the annual WEF meeting here.

The Department of Industrial Policy and Promotion (DIPP),an arm of the Industry Ministry, responsible for FDI relatedmatters.

Yesterday, India''s Commerce and Industry Minister AnandSharma had asked the global retail chains like Wal-Mart andTesco to invest in the back-end infrastructure.

"Multi brand can only come when the back-endinfrastructure is created, that is where the farmer will getthe remunerative prices at the door step," Sharma has said.

Pointing out that the FDI in multibrand retail alonecannot solve India''s supply chain problem, Singh said, "Weneed end-to-end solutions starting with procurement at farmgate to final consumer. We need to carry crops from peakseason to off season both through cold chains as well as foodprocessing."

On India''s concerns on opening the sector for big foreignplayers, the secretary said the sector, which is primarilydominated by small retailers in India, is the largestemployment provider in the unorganised segment afteragriculture.

The sector employing over about 33 million people isdominated by mom-and-pop stores.

"(The) right model for India, therefore, will have to bebig chain taking care of a whole infrastructure fromprocurement to processing as well as transport logistics," headded.

In July last year, the Indian government had floated adiscussion paper on liberalising the politically-sensitivemulti-brand retail.

The minister has also said that investors need to deviseIndia-specific model and replicate.

While FDI in multi-brand retail is prohibited in India,FDI upto 51 per cent is permitted in single brand retail.

Pointing that India was losing agri products, fruits andvegetables to the tune of Rs 1 lakh crore annually, thediscussion paper had said that establishment of cold chainsand back-end infrastructure could cut down the losses by morethan half.

As per the Indian Planning Commission, infrastructure forthe farm sector such as cold chain would need an investment ofRs 64,312 crore.


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