Retail needs FDI

Apr 07 2014, 23:04 IST
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SummaryIndia is the largest producer of fruits, vegetables, milk and poultry products...

India is the largest producer of fruits, vegetables, milk and poultry products, but one-third of the produce goes waste because of lack of modern supply chain. Currently, modern retail accounts for just 8% of the total retail market in the country, but has potential to grow to 24% by 2023, provided policies are in place and investments, especially foreign direct investments, pick up. While India’s food processing industry is the12th largest foreign exchange earner in the world, it accounts for only 2.5% of the total FDI inflows, or just $5.4 billion from April 2000 to January 2014.

One of the major bottlenecks in the development of modern retail is that the food supply chain faces a quasi-federal governance structure with states playing a key role in the regulations, product sourcing, taxes and interstate mobility of agriculture products. Non-transparent and ambiguous FDI policy in multi-brand retail, delay in implementing GST, and restriction on packaging and labelling have stymied the sector.

Thus, development of modern retail should have been the top priority for the new government as it can drastically cut wastage, create more jobs and boost exports. Pity the BJP has categorically ruled it out.

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