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

Time and again, it has been brought to the various Government’s attention that monopoly of APMC should be closely looked into and necessary amendments should be brought in the APMC Acts to break its stranglehold.

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

The Agriculture Produce Market Committees (APMC) is being run by State Governments and they use this committee to procure and regulate the marketing of farm produce. Although some states have modified or scrapped APMC Acts, but many states including Jharkhand still cling on to it. These states do not allow retailers to buy directly from farmers. Even the organized retailers who want to procure Agriculture Produce from the farmers cannot directly purchase from the farmers because of these APMC Acts.

Walmart - The sign of FDI in Retail in India
Walmart – The sign of FDI in Retail in India

The APMC Acts works in favour of the these middlemen, giving them monopolistic powers; as the Farmers and other retail Buyers (or Sellers) are disallowed to either sell or buy the Agriculture Produce freely. Consequently many of these APMC have become the hub of the corruption and inefficiency, going a long way to add to the inflationary pressure on the agriculture produce across India. These outdated APMC Acts in the state denies both farmers and buyers the freedom to buy and sell at the prevalent market rate, thereby give monopolistic powers to the close-knitted group of middlemen. Thus farmers get too low a price for their agriculture produce, the consumers are charged fairly high price for the same and the middlemen makes good profit.

In simple words, these middlemen squeeze the farmers by buying cheaper from them and then add their own arbitrary sweet margin to charge much higher prices to the consumers. Needless to say, many of these middlemen add to the inflationary pressure to these perishable items. Also in the recent past many such middlemen have been accused of artificially creating shortage of items like onions, tomatoes, pulses, etc.

Given such a scenario, it is imperative that Marketing, Distribution and Logistic issues in the Agriculture Produce Sector should be looked into.

But replacing few giants (APMC) replaced by another group of giants (big organized retailers) is not going to solve the problem. Unless honest efforts are made to safeguard the interests of both the Farmers and the Consumers by putting in necessary checks and balances in the proposed FDI in Multi-Brand Retail Trade Bill.

We believe the Western Model of the Agriculture Produce Retailing cannot be transplanted without making some fundamental changes in the Act.

What does FDI in Multi-Brand Retail Trade Bill promises?

India is world’s second largest producer of fruits and vegetable, but every year our country lose more than 25% of our produce because of lack of infrastructural facilities like cold storage. For last decade we have seen Government trying to get huge investments in food-processing industry, to improve all the aspects of supply chain for the perishable food items. But Government’s efforts have so far fallen way short of their targets and expectations. With the coming of these retails giants, we should see investments in the supply chain of perishable food items, including in the food-processing industry; this would be good news for both farmers and consumers. Not to forget the generation of employment across the whole new integrated and technologically advanced supply chain.

What is our take on FDI in Multi-Brand Retail Trade Bill?

In 2011, we now live in highly interdependent and interconnected economic world, in this context the loud voices calling for FDI needs to be put under the microscope. Especially, when Western Economies are reeling under the economic slowdown; the large Indian Consumer market being offered to the Western Retail Giants like Walmarts, Tesco, Carrefour, et al in a platter is certainly a god-send opportunity for them. Undoubtedly, allowing Western Retail Giants to operate in India, it would go a long way in improving both top-line and the bottom-line of such retail giants, who have been hit by the economic slowdown in their home economies. Thus many of these Western Retails Giants are finding it tough to sell their retail-products in their own backyards.

This definitely calls for some-hard bargain on part of Indian Government to ensure that all four, viz., Indian Agriculture Sectors, Indian Manufacturing Sectors, Indian Small Retailers and finally the Indian Consumers are set to gain from the opening of doors to these retail giants with very deep-pockets.

Proper and stringent provisions, conditions, agreements, checks and balances need to be placed that in this proposed FDI in Multi-Brand Retail Trade Bill to ensure that the commercial interests of Indian Agriculture Sectors, Indian Manufacturing Sectors must be protected at all cost at all the time. Not to forget the interests of small-retailers, the small corner shop and the mom-or-pop shop too need to be looked into. One of proposal could be to ask these big retailers to open their shop on the out skirts of the city, as anyway they need very large retail space to display and sell their products. Or else, few giant Exploiters (very-few-big-buyers) are likely to replace the good number of small Exploiters (middle-men or artiyas) spread across country and continue exploiting the scores of Indian Farmers and Indian Small Manufacturing Sectors in years to come by pressurizing them to sell their products at cheaper price.

It certainly calls for tight rope walk, but Union Government must look into these issues closely, as the hasty and hush-hush manner to introduce the FDI in Multi-Brand Bill is not going to work, as last month the government was forced to back-track on the same.

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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