Commerce and industry minister Anand Sharma has said he would consult state chief ministers for building political consensus for allowing 51% foreign ownership in multi-brand supermarkets. Sharma, who is on a trip to Ghana to promote ?Brand India?, said he would hold consultations with leaders including West Bengal chief minister Mamata Banerjee, an ally of the ruling UPA coalition, who is opposed to foreign direct investment (FDI) in multi-brand retail stores.
Sharma said opening up the multi-brand retail sector to more foreign ownership was a national imperative to attract investments and modern technology. He, however, declined to give a time frame for the opening up the sector to foreign investment. The existing restriction protects local mom and pop shops from competition from global retail giants like Walmart and Stockmann. Sharma said there is a consensus among a large number of states for allowing foreign investment in the sector . ?I would be holding further consultation with chief ministers of other states in the coming days to evolve a stronger consensus,? he added.
The minister said farmers and consumers are badly affected in the absence of adequate processing facilities and infrastructure leading to massive post-harvest losses. ?It is a national imperative to ensure that farmers get remunerative prices for whatever is procured in the fields….We have to attract investments in cold chain infrastructure,?? he added.
Sharma also said that the government is looking ?very? closely at the concerns and demands of global retailers like Ikea on the issue of mandatory local sourcing requirement from small and medium industries. Swedish furniture retailer Ikea, which last month announced a 1.5 billion euro investment in India to open 25 stores, would like to have 10 years to meet the local-sourcing norm. The rule that requires foreign investors to locally source 30% of the raw materials of products they want to sell in India is silent on the time frame for fulfilling this requirement.
?There are some genuine concerns which investors have expressed. We are looking very closely at them,? he added. Sharma added that since IKEA is already sourcing products worth R700 crore from India, clarity on the issue needs to be made considering that it would be difficult for high-precision product manufacturers like watch makers to comply with the mandatory sourcing norm. The government, however will not dilute the 30% mandatory sourcing clause for multi-brand retail trading.
Ikea in its proposal has also asked the government to let it continue sourcing from small units even after the vendors have crossed the mandatory $1million investment limit. The local sourcing norm insists that the suppliers have to be Indian small industrial houses.
