Centre mulls retail reforms
The government has come out with a discussion paper on opening the mutli-brand retail to foreign direct investment.
Favouring opening up of the multi-brand retail to foreign investment, the discussion paper said that there was a lack of investment in the logistics of the retail chain sector d
ue to the current norms. It said that due to meagre number of cold storages, post-harvest losses of farm produce in India are to the tune of Rs 100,000 crore.
“Though FDI is permitted in cold chains, in the absence of FDI in multi-brand retailing, inflow to the sector has not been significant,” said the discussion paper. It also said that opening of the sector would not only help farmers earn more but also keep the price-line under check.
It said due to intermediaries, Indian farmers realise only one-third of the total price paid by the final consumer, as against two- thirds by farmers in nations with a higher share of organised retail.
The discussion paper said that in spite of heavy subsidies, overall food based inflation has been a matter of great concern.
“The absence of a farm-to-fork retail supply system has led to the ultimate customers paying a premium for shortages and a charge for wastages,” it added.
FDI in multi-brand retail has been a sensitive issue avoided by the previous governments as it is perceived to be a political hot potato.
It is seen as having an adverse impact on unorganised small and mostly family managed retailers and vegetable and fruit vendors.
The concern is that foreign retailers will have an unfair advantage over the small retailers, ultimately resulting in their large scale decimation.
Industry has welcomed the government’s move.
“It can create a symbiotic relationship between the small retailer and the larger retail chains,” said Mr Rajan Bharti Mittal, president, Ficci and Bharti’s wholesale and retail business.
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