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Saturday, March 02, 2013 Gaurav Choudhury, Hindustan Times July 10, 2012 Email to Author First Published: 22:03 IST(10/7/2012) Last Updated: 22:43 IST(10/7/2012)
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In November last year, the government had decided to open up the retail sector to foreign investors through FDI. The Union Cabinet had decided to allow FDI in multi-brand retail with a ceiling of 51% and 100% FDI in single brand retail. The decision on FDI in multi-brand retail, however, was suspended following a strong political opposition. What does it mean? It means that global retailers such as Walmart, Carrefour, Tesco and others cant set up mega deep-discount stores in India through joint ventures with Indian firms where the foreign partner can hold up to 51% equity. Why is there so much of opposition about FDI in multi-brand retail? Opposition parties and small traders are worried that large deep-discount stores of multinational corporations will drive street vendors and neighbourhood mom-and-pop grocery stores out of business endangering their livelihood. How will the farmers benefit from the organised retail? In the present dispensation, there is a complex chain of procurement involving several middlemen. FDI in retail will create the enabling environment for procurement, at least of fruits and vegetables directly from farmers offering them higher income. At present, the price that a farmer gets for a kilo of onions is about half of what it is sold to final consumers. What about small and medium enterprises? The government has made it clear that foreign retailers will have to source 30% of their manufactured items from Indian small and medium retailers. By engaging local producers, organised retail provides them with an access to a much broader consumer set. For instance, a leading retailer operating in India has engaged a local pickle manufacturer in Amritsar and invested to upgrade its equipment. As a result, this manufacturer is now present across markets that were traditionally beyond his reach. What about consumers? The choice basket for Indian consumers will only get better, bigger, wider and cheaper. Organised retail provides higher quality of goods on account of the predefined and stringent standards adopted by the retailers. And of course, the price will be cheaper. Studies have shown that consumers, on an average, will save at least 10% on daily use goods. http://www.hindustantimes.com/StoryPage/Print/886566.aspx Copyright 2013 HT Media Limited. All Rights Reserved.
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