In an unusual defence of the decision of the Union Cabinet to permit FDI into multi-brand retail in the country, commerce minister said it will create 10 million new jobs including 6 million in the logistics sector alone, not touching the details of its possible replacement of many small traders on the street and road-side small shops.
Ironically, the move came exactly a year after US President Barack Obama’s visit to India in which the main demand for removal of FDI caps on the entry of multinationals into multi-branded retail sector. India with its 1.2 billion population is a vast source of retail industry in the world and provides an ample scope for Walmarts and Tescos.
Addressing a media conference at Chennai on Satruday, the minister was sure that the Indian model is quite distinct and different and has been drafted in such a way that it is sensitive to the interests of farmers, youth as well as consumers. The FDI route will allow only 53 cities for the retail major to open shops under the policy.
The policy has been prepared after 18 – 20 months of extensive consultations with all the states and stakeholders like farmers unions, consumers and retailers associations. The Minister said in spite of India being the second largest producer of fruits and vegetables, most of the production perishes for lack of proper storage facilities or cold chain. The farmer still gets an unremunerative price which is many times lower than the market price at which the produce is sold to the consumer. The policy envisages to bring down post-harvest losses and aims to create better rural infrastructure like cold storages. But the minister is silent on subsidies that the government provides to the farmers and transporters alike to stem inflation.
But Anand Sharma said that this is only an enabling policy wherein the decision to implement rests with the respective States. So far states like Punjab, Haryana, Maharashtra and Rajasthan have welcomed the policy and the minister hoped that other states would follow suit, after appreciating the benefits that would accrue.
He also made it clear that the retail sales locations could be set up only in cities with a population of more than 10 lakh. Only 53 cities out of 8,000 towns and cities in the country qualify for this, and for the rest of the country the current policy continues to apply.
In respect of proposals involving FDI more than 51%, 30% of the sourcing would have to be done from village and cottage industries as well as small and medium enterprises, the minister clarified. This condition would ensure that the SME sector is benefited. Allaying apprehensions about the future of small traders, Sharma said the small retailer will not only coexist with the big business, but also grow by 13% as a result of the new policy.
Next one decade will tell us where we go from now, the European way to bankruptcy or the US way to indebtedness.