The deputy chairman of Planning Commission said there would be only little impact on kirana stores due to multi-brand retail stores.
The planning commission today said it favours over 50% foreign direct investment (FDI) in multi-brand retail in the country, while allaying fears that it would impact the small Kirana stores adversely.
"I have no problem with that," deputy chairman of planning commission Montek Singh Ahluwalia told reporters here when asked if he favoured over 50% FDI in multi-brand retail.
He said that the retail sector should not be treated specially and shielded from FDI.
"If you can have foreign investments in hotels, hospitals, in automobile industry. Why cannot it be in retail and why it should not be?," he said.
On concerns over organised retail, killing mom-and-pop stores, he said: "This fear that the Kirana stores would be affected by this (FDI in multi-brand retail) is completely wrong. You know large scale multi-brand retail is very difficult to do in India because land in easily available here."
Citing an example of China, he said, "They are already there in China. Are they not aware about any impact on Kirana stores there?"
Ahluwalia said the ground realities in India were different from the ones in western countries like the US.
"Unlike in the US, if you set up store in Gurgaon, people would not rush from here [Delhi] to shop there. The high rentals would also be a problem for them," Ahluwalia said.
"If the economy grows at 9% and gets double in seven years, the retail business would also be doubled. So the existing Kirana stores would be there and little multi-brand stores can come up in metros," he added.
Asked about the basis on which the panel firmed up its opinion in favour of allowing FDI in multi-brand retail, he said, "The country is not opposed to (FDI in) multi-brand retail format and there is a lot of investment required for forward and backward linkage.
"Thus we have written in favour of this to the department of industrial policy and promotion."
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