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Retail Policy To Create 10 mn Jobs: Anand Sharma
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The government on Thursday approved 51 per cent foreign direct investment in the supermarket sector, paving the entry of firms such as Wal-Mart, Tesco and Carrefour into one of the world's largest untapped markets.
Further, foreign supermarkets setting up shop in India will have to source 30 per cent of their goods from smaller, local industries, while also needing to make a minimum investment of $100 million in the country, Industry Secretary P.K. Chaudhary said on Friday.
The policy will take big strides in beefing up food supply chains and the riders will not prevent investors from coming into the market, Chaudhary told Reuters in an interview.
Under fire for a slow pace of reform, Prime Minister Manmohan Singh's embattled government appears to be slowly shaking off a string of corruption scandals to focus on policy changes long desired by investors.
Shares in Indian retailers jumped on Friday after the government opened up the $450 billion supermarket sector to global giants.
"I don't think the conditions are strict," the official said.
Under the policy the government will have the first right to procure farm products in its new policy allowing foreign supermarkets in India, the trade minister said.
He also said fresh agricultural produce may be sold unbranded in foreign supermarket policy. "FDI policy has been evolved after consulting all stakeholders", he added.
Government decision to allow FDI in retail saw uproar in both Houses of Parliament, with ruling UPA ally Trinamool Congress leading the charge and the entire opposition joining them.
Trinamool Congress members rushed near the Well of the Lok Sabha demanding cancellation of the decision of the Union Cabinet to allow 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail.
Members of CPI(M), CPI and BJP were seen in the aisles raising slogans against the government's decision and trying to unfurl banners demanding roll-back of the Cabinet decision taken last night.
Trinamool Congress insisted it was not breaking the norms of the ruling alliance by opposing government move.
"It is a coalition government and not the rule of a single party. We are opposing this decision but not breaking any norms of alliance. We have a right to protest such decisions," Minister of State for Health Sudip Bandopadhyay told reporters after leading a protest inside Parliament on the issue.
Maintaining that the party would oppose the move "when it comes to Parliament", he said Railway Minister Dinesh Trivedi "has already registered his dissent in the Cabinet meeting yesterday". The Union Cabinet yesterday decided to allow 51 per cent FDI in the retail sector.
Bandopadhyay, who was re-elected Leader of the party in Lok Sabha, said the move would adversely affect a cross-section of people like shopkeepers, farmers and transporters.
"Initially, the big bosses (multi-brand retailers) will buy goods and keep them in the godowns. After 3-4 years, they will dictate terms on our prices when they have sufficient stocks. They will also sell cheap India goods outside India," Bandopadhyay said.
Opening Doors To Big Retail
Pushing a major reform, the government on Thursday allowed 51 per cent foreign investment in the multi-brand retail, paving way for global chains like WalMart, Carrefour and Tesco to open mega stores in 53 major cities.
India will open the country's retail industry to foreign supermarkets, Food Minister K.V. Thomas told reporters on Thursday, a much delayed reform expected to help unclog supply bottlenecks and ease inflation over time.
The Cabinet also decided to raise the cap on foreign investment in single-brand retailing to 100 per cent from 51 per cent, Thomas added.
The decision was cheered by global retail giants such as Wal-Mart that have long been eyeing India's lucrative retail sector worth an estimated $450 billion a year.
The decision, a game-changer for the estimated $590 billion (Rs 29.50 lakh crore) retail market, was taken at the meeting of the Cabinet presided over by Prime Minister Manmohan Singh.
Efforts to liberalise the sector, perceived as politically risky ahead of elections next year in India's largest state, Uttar Pradesh, have been hampered by the government's political opponents and sections of the ruling coalition itself.
Multinationals such as Wal-Mart Stores Inc have eyed India for years as the last frontier in mass retailing -- a market estimated at $450 billion a year, but still dominated by traditional family-run and corner stores.
Allowing foreign retailers to take stakes of up to 51 per cent in supermarkets would attract much-needed capital from abroad and ultimately help unclog supply bottlenecks that have kept inflation stubbornly close to a double-digit clip.
One of the fears expressed was that foreign companies will start by selling cheap to attract people and then, within a year and half, increase prices. "This will hurt the poor and all the small traders. This has to be properly discussed more openly," another said.