The Retailers Association of India (RAI) will write to the government asking it to allow foreign direct investment (FDI) in non-food retail. According to the body, the move poses no concerns as it does with the food retail. FDI in non-food retail would mean the entry of large lifestyle and fashion brands into the country. The body will write to the government by August-end.
Currently, 100% FDI is permitted in wholesale cash-and-carry business subject to certain end-sale limitations and restrictions. At present, FDI in retail trading is prohibited although an exception for FDI up to 51%, with government approval, is permitted in single-brand retail. But no FDI is permitted in multi-brand retail on the argument that it would adversely impact the large unorganised retail sector, and mom-and-pop stores will not be able to stand up to the challenges that FDI in this sector may pose.
RAI chief executive officer K Rajagopalan said, ?We will soon be presenting the paper to the government suggesting the pros of allowing FDI in non-food retail and also asking them to speed up the process.? He believes that to understand the nuances involved in allowing 100% FDI for food retail might take a lot of time, non-food retail should see a fast pace discussion. The body comprises some of the key retailers. The governing board includes Kishore Biyani of Pantaloons Retail, BS Nagesh of Shoppers’ Stop, Noel Tata, MD of Tata International, Vinay Nadkarni of Globus Stores, Sumantra Banerjee of RPG Retail, Vikram Bakshi of McDonalds India (North & East) among others.
Despite opposition to the Centre’s proposal to open foreign direct investment (FDI) in multi-brand retail, Rajagopalan feels that the move would boost efficiency and result in huge job opportunities in the country. According to him, the traditional players in the market who are part of the ?unorganised sector? will not lose their business with the entry of foreign players. Rather there would arise a need to tie up with these local players. Moreover, he also reckons that there is a need to differentiate food and non-food retail.
Rajagopalan said in India nearly 35% of the production goes waste due to inadequate food processing facilities which leads to supply chain wastage. These foreign players would also ensure investments in such segments leading to improvements in infrastructure and job creation.