Business | Retail

FDI in retail decision should be reversed

Official favoured FDI in sectors such as aviation and arms manufacturing but opposed it in multi brand retail and pharma

  • IANS
  • Published: 13:46 November 26, 2012
  • Gulf News

New Delhi: Chairman of parliament’s standing committee on commerce Shanta Kumar has said the government should reverse its decision to allow foreign direct investment (FDI) in multi brand retail since it will endanger the livelihood of millions of people.

Shanta Kumar, vice president of the Bharatiya Janata Party (BJP), told IANS in an interview that FDI in retail should be considered in high technology sectors where the country lacked expertise.

“FDI is needed for the country’s growth but it should be allowed keeping in mind the country’s interests. It should be allowed in sectors we want and not in those the MNCs (multinational companies) want,” Shanta Kumar, who heads the department related parliamentary standing committee on commerce, said.

He favoured FDI in sectors such as aviation and arms manufacturing but opposed it in multi brand retail and pharma.

Questioning the decision to allow FDI in retail, he said it was made against the assurance given by the government in parliament that there would be consensus on the issue with stakeholders, including state governments and parties.

“The government should reverse the decision. They had promised to evolve consensus with chief ministers and political parties but it was not done. What is the hurry?” Shanta Kumar told IANS.

The government took a decision in September to allow up to 51 per cent FDI in multi brand retail.

Shanta Kumar said India did not have a robust manufacturing industry like China and could not hope to benefit from FDI in multi brand retail.

Rejecting the argument that FDI in retail was necessary to improve back end storage infrastructure and reduce wastage of fruits and vegetables, he said India’s private sector should be encouraged to develop warehousing.

“The argument is that fruits and vegetables worth about Rs.40,000 crore are wasted due to inadequate storage from farm to consumer. The private sector in the country has made many strides. Why can’t we do it ourselves?” Shanta Kumar said.

He said the retail sector in India was the largest employer in the country after agriculture and provided livelihood to millions of people.

“Future of people in small trade will be in jeopardy,” he said.

Shanta Kumar, a former Himachal Pradesh chief minister, who is now a parliament member from the state, said the standing committee report on foreign and domestic investment in retail sector in 2009 had “unanimously” opposed entry of domestic corporate heavyweights and foreign retailers in grocery, fruits and vegetables and suggested restrictions on them for opening large malls to sell other consumer products.

The report said unorganised retail in the country provided employment to more than 40 million people, accounting for 8 per cent of total employment.

It also said the existing model of retailing was most appropriate in terms of economic viability for a populous country such as India which has sizeable sections coping with poverty.

The report said unorganised retail was a self-organised industry with low capital input and high level of decentralisation and added that small retailer would not be able to find gainful employment elsewhere since he was mostly mostly illiterate or semiliterate.

Shanta Kumar said the government should agree to the opposition’s demand for discussion on its decision of allowing FDI in multi brand retail under voting rules.

“The government should accept the demand. Why does it not agree?” Shanta Kumar said.

He said if the winter session was washed out, it will be “very unfortunate”.

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