Trade bodies disappointed over government's retreat on FDI in retail

Virtually all major industry bodies have expressed regret over the government pulling back on its decision to allow foreign investment in multi-brand retail.

Instead of putting the FDI in multi-brand retail issue on freeze, the government should educate every stakeholder on the pros and cons of this move to clear any misapprehensions and bring everyone on board, T T Ashok, chairman of the Confederation of Indian Industry (CII) for the southern region, said today.

Expressing concern over the ''slow pace of the reform process'', he said the country needs huge investments in infrastructure during the 12th Five-Year Plan, which would need a lot of FDI.

He echoed the general view that domestic retailers would not be eliminated or negatively impacted if retail trade is opened up to foreign direct investment. In fact, it would only drive inclusion in all its facets – social, economic and financial, he said.

Quoting a CII study conducted by the Boston Consulting Group, he said farmers in India today receive 25-30 per cent of the end consumer price, while in more developed markets this is ratio is 50-70 per cent. A significant portion of this mark-up is due to a large number of intermediaries.

Organised retail has the potential to drive efficiencies in the supply chain by increasing price realisation for farmers by 10-30 per cent through sourcing directly or closer to the farm; by reducing handling and wastage by 25-50 per cent through consolidation as well as investments in back-end technology; and upgrading farmers' capabilities by providing know-how and capital, Ashok elaborated.