The latest news on FDI in retailing is that the Department of Industrial Policy and Promotion (DIPP) is drafting the finer details of the FDI policy and to this end it is holding talks with the various stakeholders of the industry. The DIPP aims to hold talks with traders and small retailers who are said to have fears about foreign multi-brand retailers becoming a threat to their very livelihood if allowed to invest in India. The effort is to allay their fears. The policy is not only being taken forward but also being explained in detail to the stakeholders. The food processing industry secretary recently said in the media that his department has been communicating with farmers and traders the significance of strengthening back-end operations to save agricultural produce wastage. The policy includes the condition of an intending foreign multi-brand retailer to invest a minimum of 50% in back-end infrastructure while entering the Indian shores. When storage and supply chain become efficient in India, the farmers will be better off as they will not have the fear of wastage or the fear of exploitation by middlemen. When there is a hubbub about the whole issue of FDI in multi-brand retailing in India, in the farming and trading circles especially, there may be no room for any clear thinking to emerge. Thoughts are clouded with many political forces shouting slogans and expressing their opinions without letting any stakeholder think about situations of reality in the future. It is a step in the right direction for the government departments to try and communicate with the relevant stakeholders at large to put forth the just arguments.
The DIPP has also put up a Discussion Paper inviting views on FDI in multi-brand retailing. The objective of the paper is to generate informed discussion on the subject among the public and the stakeholders so that such views and opinions can help our Government take the appropriate decisions. The paper highlights current problems and issues and discusses them in the light of the various studies/reports made by credible entities like ICRIER, FICCI, etc. and their recommendations thereof, on the issue. The paper also very aptly cites the Economic Survey 2008-09, which recommended FDI in multi-format retail, starting with food retailing. The discussion paper outlines the experience of FDI in retailing in economies similar to India – China, Thailand, Russia, Chile and Indonesia and how the value chain strengthened all the stakeholders including farmers, traders and small retailers. DIPP’s discussion paper poses in conclusion a list of questions for resolution in an attempt to find the right solutions soon! A good effort indeed and one can access this discussion paper on DIPP’s website.
The effort is to make an inclusive decision soon without giving way to political pressures! Someone recently commented about the opposition to FDI in retailing being very political, drawing a reference to the political opposition staged against IBM, Coca Cola, Kentucky Fried Chicken, etc. in yesteryears!
-Dr. Gibson G. Vedamani
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