Allow 100% FDI in retail through public private partnership, industry body tells govt
The government should allow Foreign Direct Investment (FDI) in multi-brand retail through Public-Private Partnership (PPP) while providing level-playing field for domestic retailers, the Associated Chamber of Commerce and Industry (ASSOCHAM) said. “It is important to allow the entry of FDI into this sector in a properly regulated fashion. We must guard against the risk of these new corporations becoming monopolistic and charging high price. FDI in retail may also help bring in technical knowhow to set up efficient supply chains which could act as models of development,” the industry body said in a study. Highlighting the positive impact of opening 100% FDI in retail, the ASSOCHAM said that the move will lead to the creation of a good farm infrastructure and add around 10 million jobs. Foreign funding, it said, will facilitate ways for co-operatives and associations of unorganized retailers for direct procurement from suppliers and farmers and ensure better credit availability to unorganized retailers. It will also encourage formulation of ‘private codes of conduct’ through organized retail for dealing with small suppliers, which can further be incorporated into enforceable legislation, the study said. The ASSOCHAM estimates that opening up of FDI can increase organised retail market size to $260 billion by 2020. “The retail market in India, currently worth $500 billion (both organized and unorganized market) will grow to $1.3 trillion by 2020, with the organized market (from a current 5-6%) alone estimated to reach 20-25% of total retail market by 2020,” the ASSOCHAM said citing analysts. The study also suggests that the entry of foreign players must be gradual and with social safeguards, so that the farmers, consumers and small retailers are resilient to any potential adverse situation. “The government should try to ensure that foreign and domestic players are at equal footing, so that domestic players (especially traditional retailers) are not at back foot,” it said. Opening of retail industry to global competition to spur a retail rush to India will not only transform the retailing landscape, but will also build the nation’s ailing infrastructure, the report added.
October 08, 2015 | 2:24pm IST.
to success.