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Retail FDI a win-win for farmers, claims govt

Multinationals will create 4 million rural jobs; farmers will get fair price for produce.

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Parsa Venkateshwar Rao Jr

Updated: Nov 26, 2011, 01:11 AM IST

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Defending the government’s decision to open up multi-brand retail sector to foreign direct investment, Union minister for industry and commerce Anand Sharma on Friday said the move would immensely benefit farmers and consumers, and it would not adversely affect the kirana shop owners.

“This will bring enormous amounts of FDI into the country for building the infrastructure,” he said and rejected allegations that the decision was taken under pressure from American lobbies. Sharma admitted that there was no unanimity in the matter, saying that even in the cabinet there were differences and that there was nothing unusual about it.

He was briefing media on Thursday afternoon after placing a statement about the decision on the table of the Lok Sabha after Trinamool members barged into the Well of the House protesting the decision.

He said the entry of multi-nationals in the retail sector with back-end supply chains and forward-end operations will create about four million jobs in the rural sector which would help women and youth in villages, and it would create five million to six million jobs in the towns.

He explained that India is the second largest producer of food grains in the world with an output of 230-240 million tonnes, and about 192-195 million tonnes of fruits and vegetable. He pointed out that post-harvest losses of vegetables and fruits is as high as 40-50 per cent. This was essentially due to limited cold storage capacity.

He also pointed out the anomaly that arises out of the existing system. A World Bank study has shown that the price a farmer realises for vegetable and fruits is 12 per cent to 15 per cent of what is paid by the consumer.

Sharma further cited that middle income economies and emerging markets such as China, Indonesia, Malaysia, Thailand, South Africa, Argentina, Brazil and Chile had a policy of 100 per cent FDI in retail and there was no disastrous impact. He said that China opened its retail sector to FDI in 1992, and that in Indonesia 10 years after allowing 100 per cent FDI, 90 per cent of the retail sector is controlled by the small shopkeepers.

He made it out that the decision was made in reponse to demand of many states, Indian industry and commerce chambers and farmers and that policy has evolved in a transparent, democratic manner. 

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