FDI in retail to create 10 m jobs: Sharma

Big bang: Consumers, farmers and SMEs to benefit from the move

“The step which we have taken is an investment in the present and the future of this country,” Sharma told reporters here. “It will be a fillip to job creation in the manufacturing sector,” he said.

Foreign companies investing more than 51 per cent in single-brand retail stores must source at least a third of their products from small domestic industries or village craftsmen, a government release said quoting the Commerce Minister said.

He also said under the new FDI policy stores will have to sell fresh agricultural produce as unbranded products. “FDI policy has been evolved after consulting all stakeholders,” he added.

Political backdrop

The boldest reform measure taken by the government of the day was opposed by UPA’s largest ally Trinamool Congress besides opposition BJP and Left parties. On Friday too, the members of Parliament forced the adjournment of both Houses on the issue of allowing foreign retailers in the country. The government has argued that attracting foreign investment in retail infrastructure will tame inflation and reduce waste in a country where close to 50 per cent of fruits and vegetables perish before reaching consumers.

Inefficient supply chain

Lack of investment in the logistics of retail chain has created inefficiencies in the food supply chain. Though India is the second largest producer of fruits and vegetables (about 200 mt), it has a very limited integrated cold-chain infrastructure, with only 5386 stand-alone cold storages, having a total capacity of 23.6 million mt, 80 per cent of this  is used only for potatoes.

Opening of foreign retail is also expected to give better procurement prices to farmers. At present, there is a complex chain of procurement involving several middlemen.

“FDI in retail will create the enabling environment and it is expected that progressive states will undertake gradual reform of APMC Act which will ensure direct procurement, at least of horticultural produce from farmers to enable them secure remunerative price,” Sharma said.

Large investments in the retail sector will also see gainful employment opportunities in agro-processing, sorting, marketing, logistic management and the front-end retail business, the Commerce Minister said.