November 26, 2011 admin

Government defends FDI in retail

New Delhi, November 25 (Bharat sandesh) -While industry bodies and organised domestic retail companies today welcomed the government decision to allow 51 per cent foreign direct investment in multi-brand retail (100 per cent in single brand) as a ‘game changer’, the BJP, the Left, JD(U) and even UPA constituent Trinamool Congress vehemently voiced their opposition in Parliament and outside.

The most dramatic statement came from BJP’s Uma Bharti, who announced that she would personally torch Walmart retail stores, as and when they open, and would prefer to be imprisoned. “Why do you want to bring this US ailment to India?” asked another BJP leader Murli Manohar Joshi.

The decision, however, received strong endorsement during the day from Chandigarh. The Governor of the Reserve Bank of India, D Subbarao, called it a bold decision and said that it would not only help growth but also bring down prices.

NDA constituent Akali Dal also came out in support with party president and Punjab Deputy Chief Minister Sukhbir Singh Badal writing to Commerce Minister Anand Sharma and endorsing the initiative. The decision, he wrote, would benefit the farmers immensely.

Sharma himself defended the decision saying that it would create 10 million jobs in three years and would help farmers get better prices for their produce. He added that it would help create over 4 million jobs with the setting up of back end infrastructure and 5-6 million jobs more in logistics.

The decision doesn’t need Parliament’s approval and a notification is likely to be issued by next week. The government has pointed out that India is the second largest producer of fruits and vegetables in the world but around 40-50 per cent of the produce is lost annually due to absence of cold storages and back-end infrastructure. It also said that in foodgrains, farmers are getting only one third of the prices paid by the end consumers while in fruits and vegetables, the number is only 12-15%.

A government note says that though India is the second largest producer of fruits and vegetables (about 200 million MT), it has a limited integrated cold-chain infrastructure, with only 5386 stand-alone cold storages, having a total capacity of only 23.6 million MT, 80% of which is used only for storing potatoes.

The FDI policy has set riders that include a minimum investment of $ 100 million, 50% investment to be in rural and back end infrastructure, 30% of the sourcing to be made from small and medium enterprises. The policy will be rolled out only in cities with population above 10 lakh, which means 53 cities in all. This would imply that kirana stores in small towns won’t be affected.

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