'Retail FDI will not help in reducing prices, improving infrastructure'

Foreign direct investment (FDI) in multi-brand retail will not help farmers in getting good prices for produce, creating infrastructure and reducing inflation, experts have said.

New Delhi: Foreign direct investment (FDI) in multi-brand retail will not help farmers in getting good prices for produce, creating infrastructure and reducing inflation, experts have said.

Confederation of All India Traders (CAIT) Secretary General Praveen Khandelwal said that instead of depending on foreign investment to improve back-end infrastructure like cold-storages, the government should focus on strengthening domestic retail sector.

"It is a dream that foreign retailers like Walmart will come here to construct cold-storages and other back-end infrastructure. FDI will not help in reducing food prices too. In fact they go for predatory pricing and it will severely impact small traders," Khandelwal said.

He said that to bridge price difference between farm gate and consumers, the government should fix price bracket.

Expressing similar views, India FDI Watch Director Dharmendra Kumar said global foreign retailers will kill mom & pop stores in the country, which would lead to unemployment.

On the matter that FDI in the sector will help farmers in getting good prices as global players will go for contract farming, Kumar said as per a study over 50 percent of Punjab farmers have refused to enter contract farming.

"Though there are case studies which show success in contract farming, but more number of cases are there where the concept has failed," Kumar added.

He said the government should focus on developing modern infrastructure to reduce wastage of farm produce and farmer cooperatives need to be set up to address farmers grievances.

He also emphasised that the Agricultural Produce Market Committees (APMC) Act should not be abolished as it would provide healthy competition.

Bharat Krishak Samaj Chairman Ajay Jakhar too advocated for continuation of the act.

Opposing FDI in multi-brand retail, BJP National Secretary P Muralidhar Rao said: "I am unable to understand which foreign company is going to open cold storage if you do not have proper roads and adequate supply of power. FDI in retail is a serious political issue as it is related to large population of India".

Centre for Policy Alternatives Chairman Mohan Guruswamy said no empirical evidences are present to support the argument that entry of foreign players in the sector will increase farmers bargaining capacity and reduce wastage.

"If the foreign retailers will come to, it will have collateral damage. All this is rubbish that FDI in the sector will reduce wastage," Guruswamy said.

Citing studies, he said that despite presence of global retailers, regions like Europe were not able to reduce their agricultural wastages.

The Cabinet had decided on November 24, 2011 to allow 51 percent FDI in multi-brand retail, but the same could not be implemented in the face of strong opposition from UPA allies including Trinamool Congress, and several state governments.

However, Ficci Additional Director Nirupama Soundararajan said, "By allowing foreign retailers, you will give an option to a farmer to sell his produce. They will gain along with consumers. Traditional retailers will coexist with big stores. FDI will not lead to closure of mom & pop stores."

She said that the decision would help in increasing farmers bargaining power for prices.

"Traditional retailers, middleman or intermediaries are not going to disappear because of this," she added.

Sharing similar views, Rajinder Kumar Sharma, Chairman, Agriculture Produce Marketing Committee, Azadpur, Delhi said that farmers will get good price for their produce.

Technopak Advisors Chairman Arvind Singhal said there is an urgent need of reforms in the agriculture sector in order to help small and marginal farmers in the country.

Singhal said to deal with predatory pricing, Competition Commission of India is there to deal with such matters.

He said that the size of merchandise retail consumption in India has touched USD 470 billion in 2011 from USD 120 billion. Organised retail size has increased only to USD 25 billion last year from USD 2.4 billion in 2001.

Economic think-tank ICRIER Professor Arpita Mukherjee said global retail players will invest huge amount and help in creating jobs in the country.

"Foreign retailers will provide farmers better technology and market and best thing is that they will provide options to both farmers and consumers," Mukherjee said.


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