Commerce Minister Backs FDI In Multi Brand Retail (02-Sep-2010)
Two months after the department of industrial policy and promotion (DIPP) made public a discussion paper on the issue of allowing foreign direct investment (FDI) into Indian multi-brand retail space, Union Commerce and Industry Minister Anand Sharma made a strong case for such a move saying the entry of global retail giants would help create millions of jobs and not weaken the unorganised sector as feared.
Dismissing the apprehensions that FDI in the sector would lead to job losses and sound the death knell for small time retail businesses, Sharma said 'it (FDI in multi-brand) will generate millions of jobs from sorting to processing to packaging to marketing…I do not see a situation where the unorganised retail sector will be weakened because they are also moving, modernising and competing.'
The DIPP has also received tonnes of comments which reveal an interesting mixed bag of opinion on the matter. Most of the stake holders have answered the question of allowing FDI into multi-brand retail affirmatively. But, various respondents have shown a very different approach on how the issue should be handled. While most of the Indian retailers want a calibrated opening, most of the MNC retailers including Wal-mart say even 100% FDI would not create any troubles.
However, despite the ongoing debates, opening up multi-brand retail to foreign investment remain a socially and politically sensitive issue in the country which is dominated by mom-and-pop stores. Most of these store owners feel they would lose business to retail giants. At present, the government allows FDI of 51% in single brand retail and 100% in wholesale cash and carry, but none in multi-brand.
The government (some sections of it at least) feel that by opening the doors for the multinational players, a substantial amount of investment in the backend infrastructure like cold storage chains etc can be ensured. This will not only help improve the efficiency of supply chains, but also help the farmer community by providing them more opportunities.
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