APMC & FDI in Retail

Foreign Direct Investment In Multi-Brand Retail Trade Bill Put On Hold (Part-I)

The winter session of Parliament was supposed to pass many an important Bills but instead it was caught in the way-to-familiar log-jam over the FDI in Multi-Brand Retail Trade Bill. Many industrialists and pro-economic reform experts and believe that it was the case of missed opportunities. Whilst according to its detractors, this bill was brought in great haste, without taking necessary precautions to minimize the threats of loss of employment in the present retail set-up.

APMC & FDI in Retail
APMC and FDI in Retail

Let us look at the way the FDI in Multi-Brand Retail Trade Bill has progressed out since 1997:

January 1997 100% FDI allowed in Cash-&-Carry Wholesale Store, with case-by-case clearance by the government.
August 2001 Ahead of preparation of the 10th Five Year Plan, N.K. Singh Committee on FDI was set up to look into the matter.
August 2002 N.K. Singh Committee recommended that the ban on FDI in retail should stay.
December 2002 10th Five Year Plan Document dropped proposals to recommend FDI in retail after the recommendations.
October 2003 Metro AG becomes the first foreign company to set up Cash-&-Carry Wholesale Store in Bangalore.
January 2006 FDI allowed in Single-Brand-Retail. Besides, stringent conditions for setting up of Cash-&-Carry Wholesale Store were eased.
August 2007 Walmart along with its Indian partner Bharti Enterprise set up wholesale Joint Venture business.
August 2008 Tesco entered into an exclusive franchise agreement with Trent, the retail arm of the Tata group
May 2009 Bharti-Walmart opened its first Cash-&-Carry Wholesale store in Amritsar.
July 2010 Discussion paper on FDI in Multi-brand Retail trading was published.
December 2010 Carrefour opened its Cash-&-Carry Wholesale Store in Delhi.

What do supporters of FDI in Multi-Brand Retail Trade Bill say?

According to them India needs good amount of capital infusion to keep on growing economically at healthy rate. FDI in Multi-Brand Retail Trade Bill was supposed to be path-breaking bill that promised to bring in good amount of capital inflow in our country.

When pro-economic liberalization economists and even some top industrialists start clamouring and demanding from the Union Government to put economic reforms back on track to arrest the economic slowdown, perhaps it is time to take a serious note of their view-points.

In 1991, the economic reforms were initiated by then Finance Minister Dr. Manmohan Singh towards greater economic liberalization and globalization of Indian Economy. At that time, our Indian Economy had a saving-model, wherein Savings used to provide capital to fuel our Investments. But in 2011, our country’s economy has moved away from the Saving model of the past; now not only to maintain our position as one of fastest growing economy of the world but to increase our economic growth rate, we do need infusion of Foreign-Capital to fund Investments. There is no doubt about that.

What do detractors of FDI in Multi-Brand Retail Trade Bill say?

These detractors say that the Indian Retail Sector is worth about U.S. Dollar ($) 400 billion, consisting of 1.2 shops which employ 4.4 crore. On the other hand retail giant Walmart turnover in U.S.A. is also around US Dollar 400 billion but it employs only 21 lakh people. So even in the developed countries, these foreign retail giants have not been able to generate employment as it has been promised.

Besides, quoting UNCTAD survey report, these critics say that only high level of subsidies (over $ 100 billion) in United States of America (U.S.A.) are sustaining their agriculture sector. In Europe, very large numbers of farmers are moving away from agriculture. Then how can they generate employment in India or help the Indian farmers?

The timing of decision is also being questioned, when U.S. and European economies are experiencing slowdown and thereby these foreign retail giants are finding it difficult to sell their products in their own countries. Therefore the large consumer market of India is too lucrative for them to be ignored for much longer.

And the debate rages on the move to allow FDI in retail trade in India.

What is the present scenario in Agriculture Produces’ Retail Business?

Let us first take the look into the retailing of Agriculture Produces in our Jharkhand state. For instance, in Ranchi to procure vegetables for selling in Ranchi or in Kolkotta or any other place; the middlemen visit neighbouring vegetable producing areas like – Kanke, Ratu, Bero, Brambe, Mandar, Chanho, Ormanjhi, Silli, etc. These middlemen (in many places they are called Aarath-khor or Aartiya or Dalaal) purchase vegetables (perishable items) at lower prices from the farmers, using all kinds of tactics including strong-arms tactics. Then they bring vegetables to Ranchi (its Daily Market) and sell these vegetables at much higher prices to the vegetable sellers, who again add their profit-margin to fix the minimum or floor prices that shall be charged from the final consumers. It is apparent that the biggest beneficiary in this whole transaction, these middlemen corner major portions of the profits.

Team Focus

Team Focus

We are bunch of commoners and our bloggers' e-magazine focuses on the AlterNative Voices from Jharkhand, India.
Team Focus
Team Focus

Written by

We are bunch of commoners and our bloggers' e-magazine focuses on the AlterNative Voices from Jharkhand, India.

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