Fdi in retail farmers' perspective

FDI IN MULTI-BRAND RETAIL:

FARMER’S PERSPECTIVE

Abhishek Chaudhari, PPRC


How we proceed?

• FDI policy decision• Background • Rationale • Benefits to Farmers• Contentious Issues• Conclusion


Cabinet’s Decision

The Government has decided to allow Foreign Direct Investment (FDI) up to 51% in multi brand retail.

This means that global retailers can come to India with a local partner and set up stores in the country.

Riders• Minimum investment $ 100 million - 50% of which will be in backend

infrastructure. ( in/near , immense value )• 30% sourcing will be done from Indian small industry. ( what )• Population of more than 10 lakh. • Government will have the first right to the procurement of agricultural

products.


Background of Retail Sector in India• Contributes 14% to the national GDP.

• Second largest employer after agriculture.• 8 % of the total workforce.

• Unorganized retail employs 4.4 crore people. ( 2.6 cr in urban areas)

• The Indian retail industry was, and continues to be, highly fragmented.

• 2001 estimate - there were 11 outlets for every 1,000 people

• Retailing is by far the easiest business to enter, with low capital and infrastructure needs, and as such, performs a vital function in the economy as a social security net for the unemployed.

Retail

Organized5% share

Unorganized95% share


Rationales Lack of investment in the logistics of retail chain

creating inefficiencies in the food supply chain.

Indian Farmer realizes only 1/3rd of the total price paid by the final consumer as against 2/3rd with higher degree of retail

35-40% of Fruits and Vegetables and nearly 10% of Food grains in India are wasted, estimated to be over Rs. 1 trillion per annum.

Complex chain of procurement involving several middlemen and APMC Act.


Benefits to Farmers.. 50% foreign investment in rural areas. Farm produce reaching directly to store

Reducing wastage & Removing Middleman

High remuneration.

Source -IRIS

Contd…


Benefits to Farmers.. Shift from low value-added food grains to high

value-added horticulture, fishery, dairy. A Farmer connected to booming urban

economies and modern trade is a richer farmer. India’s villages need to be better linked to the

rising economic fortunes of the city.


Contentious Issues... Constitutional Framework

Agriculture, Retail: State Subjects

Legal Framework APMC Act – Fresh Agriculture Produce Contract Farming

Big and small farmer divide. Pressure tactics can be used. US example is cited

Blue box subsidies – $85bn

Cropping patterns – No concrete studies


Conclusion Farmers should have right to decide their

price.

FDI in retail is not about Walmart.

Its about Rural Welfare.

Connects Farmers to the economic operations of modern times.


Thank You

Fdi in retail farmers' perspective

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