The government has started the process to formulate the policy on FDI (foreign direct investment) in retail food business and is faced with a suggestion to allow allied products and equipment such as kitchenware to be sold in these outlets. A move that is being looked at as a precursor to introduction of FDI in retail in the country in a big way.
In this regard, the ministry of food processing industries (MoFPI) has already started getting a lot of queries, according to Union minister for food processing industries Harsimrat Kaur Badal. And according to MoFPI officials if the FDI operations or outlets were allowed to deal with or sell products other than food, they did not have any objection.
A senior official from MoFPI points out, “Already there is 51% FDI allowed in multibrand retail business, so if the store is allowed to sell other products, there shouldn’t be any harm.” However the move may face stiff challenge given the political sensitivity of the issue and opposition from traders bodies.
Though it may not go down well with the trading community, the move has been made following fears that food retail business may not attract the necessary funds required for backend infrastructure, which the country needs badly.
In fact, Union finance minister Arun Jaitley, in presenting the Union Budget for this year, had proposed allowing 100% FDI in marketing and processing of food products after his food processing counterpart Badal pushed for opening doors for FDI in food retail in pursuit of creation of backend infrastructure that would help curb food wastage in the country.
Further, the issue related to FDI has been a tug of war between the two main leading political parties as when the previous UPA government tried to allow 100% FDI in multibrand retail, BJP led NDA opposed it. Now, sitting in the opposition UPA is opposing the move.
However, MoFPI officials pointed out that DIPP (department of industrial policy & promotion) was working on policy formulations and a detailed report would be presented before the Union cabinet shortly.
Meanwhile, the industry is optimistic about the decision on FDI in food retail. Sagar Kurade, president, AIFPA, states, “As of now, the policy is not finalised and we would rather await the final policy to comment but FDI in food retail is a good thing and we expect that it would help in generating employment, backend infrastructure amongst other.”
