Walmart, Brazil firm show India appetite

By: | Published: August 18, 2016 6:19 AM

US retail giant Walmart and one of the world’s largest food companies based out of Brazil are interested in setting up stores in India following the government’s decision to allow 100% foreign direct investment...

wall mart, sean clarkeWalmart is interested in setting up its own retail stores, but the Brazilian company may go for a local partner. (Reuters)

US retail giant Walmart and one of the world’s largest food companies based out of Brazil are interested in setting up stores in India following the government’s decision to allow 100% foreign direct investment in the marketing of locally-produced food items, food processing secretary Avinash Srivastava said on Wednesday.

Walmart is interested in setting up its own retail stores, but the Brazilian company may go for a local partner, he said. Though Srivastava refused to name the Brazilian company, his statement came amid speculations BRF Brasil may tie up with the Kishore Biyani-led Future Group.

However, the companies are yet to apply to the government for permission to set up their stores here. While Walmart is the world’s largest retailer, BRF is a global leader in exporting animal protein and on producing food items that are supplied to over 150 countries. BRF has more than 105,000 employees across 35 industrial units in Brazil, 16 abroad and 40 distribution centres.

Speaking on the occasion to highlight the achievements of the food processing sector under the Centre’s “Make in India” programme, department of industrial policy and promotion (DIPP) secretary Ramesh Abhishek said the sector has received FDI of $1.04 billion between April 2014 and March 2016. This has driven up the overall FDI in the sector to $6.82 billion between April 2000 and March 2016, accounting for 2.36% of the total FDI received by the country across sectors during the period.

At least 14 foreign firms have invested above $15 million each (in the range of $16.16-200 million) over the last two years, Abhishek said. Similarly, at least four domestic companies, including Patanjali Ayurved, are investing. He added that this was not an exhaustive list.

Top investor Linde Group has invested $200 million in the seafood segment in Andhra Pradesh, while US food major Mondelez International has set up a manufacturing plant with an investment of $190 million, with a capacity of 250,000 tonnes in that state again. Mars International (India), one of the largest chocolate makers, has spent $114.63 million in its Pune plant.

Among domestic companies, Patanjali is planning to invest Rs 500 crore in a food processing unit in Madhya Pradesh for which the state government has cleared 400 acres of land. Balaji Wafers, a snacks manufacturer, if investing Rs 414 crore in a manufacturing plant.

Gr4

In June, the DIPP notified that 100% FDI will be permitted in trading — including through e-commerce — of food products produced or manufactured in India, subject to the approval of the Foreign Investment Promotion Board (FIPB). The decision to allow it was part of the government’s announcement in the 2016-17 Budget. “This will benefit farmers, give impetus to food processing industry and create vast employment opportunities,” finance minister Arun Jaitley had said in his Budget speech.

However, critics had pointed out that opening up only the marketing of food products fully was unlikely to attract much foreign investments as no supermarket can attract massive footfalls and be profitable with just food items on its shelves.

The decision is important as food and farm items worth Rs 92,000 crore go waste annually in India due to a low level of processing and inadequate infrastructure for scientific storage. India is the world’s largest producer of milk and the second-largest grower of rice, wheat, fruit and vegetables, but the processing level of such items currently stands at just 10%. Srivastava said with the setting up of additional cold chains, with a storage capacity of 3.2 million tonnes, the government expects to reduce farm wastage by 10% a year.

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