The food processing ministry has decided to soon invite big foreign retailers, including Walmart and Tesco, to seek their views on the government’s decision to allow 100% foreign direct investment (FDI) in the marketing of food products and encourage them to boost investments in the country, according to food processing minister Harsimrat Kaur Badal.
The government has permitted 100% FDI in the marketing of food products through the FIPB (Foreign Investment Promotion Board) route on condition that they have to be manufactured in India and that the entire raw materials for the making of such products must be sourced locally, Badal said.
Currently, under the norms for multi-brand retailing in other products, the FDI is allowed up to 51% and at least 30% of the inputs have to be sourced locally from small and medium enterprises.
Badal expects the move to help double the level of processing of food items to 20% over the next few years.
“The move to allow 100% FDI has been taken for mainly four reasons: to maximise returns for farmers by making available more buyers for their produce at their door steps; to cut down on the wastage of perishables through higher level of processing and boost infrastructure; to promote Make In India by encouraging domestic manufacturing through sophisticated technology; and to foster competition among retailers so that consumers also get a good deal at the end of the day,” Badal said.
The decision is important as food and farm items worth R92,000 crore go waste annually in India due to a low level of processing and inadequate infrastructure for scientific storage, Badal said.
Apart from encouraging contract farming, the decision will help improve infrastructure in the entire farm and processed food sector. “We will be using videshi funds to create swadeshi infrastructure,” Badal said.
DIPP seeks comments on FDI in food processing
The Department of Industrial Policy and Promotion (DIPP) has sought comments from the ministries of finance, food processing and agriculture on the 100% FDI in processed food products so that a note containing detailed guidelines can be formulated, a senior govenrment official told FE.