1. Big Make in India push: Modi may allow Wal-mart, Carrefour to set up stores if they agree to stock local products

Big Make in India push: Modi may allow Wal-mart, Carrefour to set up stores if they agree to stock local products

Prime Minister Narendra Modi’s government is considering easing rules for foreign retailers if they agree to sell more locally produced goods, according to an official with knowledge of the matter.

By: | Published: March 17, 2017 3:44 PM
Prime Minister Narendra Modi’s government is considering easing rules for foreign retailers if they agree to sell more locally produced goods, according to an official with knowledge of the matter. (Reuters)

Prime Minister Narendra Modi’s government is considering easing rules for foreign retailers if they agree to sell more locally produced goods, according to an official with knowledge of the matter. Global companies with a permit to sell local food items — Amazon.com Inc. is reported to have applied for a license — may also be allowed to market made-in-India non-food products such as toothpaste and towels worth about 25 percent of total sales, the official said, asking not to be identified citing rules on speaking to the media. India may also allow more foreign direct investment in multibrand retail if companies such as Wal-mart Stores Inc. and Carrefour SA agree to stock only local products.

While India already offers 100 percent foreign ownership in food and 51 percent in multibrand retail, there are few takers due to strict rules including those that require companies to put half their investment into warehouses and other back-end infrastructure. Retail is a sensitive subject in India, and tough opposition to slash rules comes from within Modi’s Bharatiya Janata Party because its traditional support base has been small traders.

This month’s broad, decisive win in state polls can embolden Modi to overlook some of this opposition as he struggles to create jobs before national elections in 2019. While India is dotted with mom-and-pop stores that employ local residents, these jobs aren’t well paying and don’t offer the insurance and leave benefits that typically accompany a formal employment contract.

Make-in-India

The proposals can also help Modi’s flagship Make-in-India campaign to boost local manufacturing. While India attracted $324 billion foreign direct investment from 2000 through the end of 2016, the biggest share of $58 billion has gone to services and only about $14 billion has come into trading.

About 44 percent of India’s $620 billion retail market comprises food and grocery items, said Arvind Singhal, chairman at consultancy firm Technopak Advisors Pvt. While the sector has been growing by 12 percent each year, foreign companies are staying away because the government’s policies are too restrictive or confusing, he said.

India’s department of industrial policy and promotion is considering allowing 100 percent foreign direct investment in products which carry the Made-in-India label, the official said.

An external company handling media relations for Amazon didn’t immediately comment on a report that Amazon has sought a food retail license. JP Mattu, spokeswoman of the commerce and industry ministry, didn’t answer calls to her mobile phone on Friday.

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  1. J
    JAK
    Mar 17, 2017 at 3:24 pm
    Politician, everywhere, never fail to amaze. George Orwell's Animal farm shows how things get convoluted. First all animals are equal. Then, all animals are equal but some animals are more equal than others etc etc. No FDI in retail. No FDI in retail unless they also sell local wares. Hmmmm....
    Reply
    1. N
      Narendra M
      Mar 17, 2017 at 11:45 am
      1. If NDA government really succeeds in persuading retailers like Wal-mart and Carrefour to stock Indian products in their outlets in India, it will be a big achievement. Will that happen is a big question. 2. Some incidental observations on the related issue. (a) I believe after Mr. Donald Trump has become American president there is a serious debate as regards adverse impact of imports of Chinese goods by retailers like Wal-mart and Carrefour. (b) China uses all kinds of tricks to restrict imports of foreign goods and gets away with such restrictions. Is it not true that China is the biggest beneficiary of free trade? During the last two decades its companies have made huge profits by selling goods everywhere. (c) India too has been very liberal in allowing imports of all kinds of Chinese consumer goods but at the same time India has helplessly watched how its own products are not allowed to be sold in China.
      Reply
      1. புதுவை அன்பு
        Mar 17, 2017 at 12:13 pm
        good move.... congratulations....
        Reply

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