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    Expect big investments, large scale job creation with FDI in retail: Anand Sharma


    "Foreign retailers will be allowed to invest in existing ventures of their Indian partners as long as they stay within the parameters of the FDI regime," says Anand Sharma.

    So far, retail companies have invested under a different policy framework. Now we have opened front-end operations which was not there before.
    Foreign retailers like Walmart will be allowed to invest in existing ventures of their Indian partners as long as they stay within the parameters of the FDI regime, says commerce & industry minister Anand Sharma in an interview with Amiti Sen. Existing investments in back-end cash & carry, however, will not be counted towards the minimum $100 million investment obligations in front-end retail, he clarifies, explaining the nitti-gritties of the policy a day before BJP tried to upset the applecart by warning that it could reverse the FDI decision if it comes to power. Excerpts:

    Now that you have finally managed to push the reforms, what next?

    India has put in place a policy regime and the decisions have resonated globally. It has been after fairly elaborate consultations with stakeholders in an inclusive and democratic manner that we put together an enabling policy framework. The policy is India-specific, with a distinct Indian flavour that factors in India’s needs, complexities, socio-economic realities and the diversity of the country. We have priorities. Investment in the back-end will lead to creation of infrastructure like cold-storage. Farmers will get better price realisation. Millions of jobs will be created. The small sector also stands to benefit as 30% sourcing has to be done from SMEs. This will lead to value addition.

    Since foreign investors have been waiting to invest in multi-brand retail for long, will there be a mechanism to fast track clearances?

    Investors had to wait as the policy regime was not there so far. It got trapped in partisan politics. Thankfully, it has now been liberated from it.

    Now do you expect FDI in retail to flow in?

    Yes. Now applications will start coming in. We have clearly mentioned in the press note the names of states that want FDI. They have endorsed it in writing. More states will be added once they apply. And approvals will certainly be expeditious. So far, because we allowed FDI in multi-brand only in back-end, the investments have not been much. All big retailers like Walmart, Carrefour, Tesco and Metro have together invested less than $500 million in all these years as front-end was not allowed. Now we expect big investments to come in.

    Why is West Bengal chief minister Mamata Banerjee saying that she was not consulted and had not given her consent to FDI in multi-brand retail?

    To say that she was not asked is not being truthful. I talked to her personally. Last year she said that it should be specifically put in the policy that the states who do not want FDI in multi-brand retail will not have to go for it. We did so. We recognise the right of states who do not want to implement the policy. At the same time we also have to respect the right of states who want it. Mamata said that her party manifesto does not allow it, but it is not correct.

    Will the foreign companies that have already invested in back-end as part of their cash & carry operations in India be allowed to factor in the investments to meet the requirement of minimum $100 million investment in a front-end venture with 50% in back-end operations?

    Let us not mix the two. So far, retail companies have invested under a different policy framework. Now we have opened front-end operations which was not there before. Under the new policy, investment has to be $100 million, which is the minimum benchmark, of which $ 50 million has to be in the back-end. All this has to be fresh as we never had a policy allowing FDI in multi-brand. Similar logic applies in single-brand. Now the investment limit has been increased from 51% to 100% with new conditionalities imposed. Those who have to go for 100% will have to go by those conditions.

    And will a foreign retailer, say Walmart, be allowed to invest in an existing Indian venture like Bharti’s Easy Day?

    It depends on the kind of entity that the foreign company is trying to set up. It is a private decision. Each application will be examined on the merit of it. As long as it falls within the parameters of existing laws and the FDI policy, it should be allowed.

    Have foreign retailers already started talking to you about making investments in multi-brand?

    Why should they be talking to me? We (the government) have given them a policy. Now they have to follow a given process.

    What about IKEA? Will their application be cleared early now?

    IKEA is already sourcing a lot from India. Now it will happen much more. Now they have to also set up their manufacturing facilities in the country. It is not that they will be selling only in India. This is what should be repeatedly made clear. What they sell in India, they sell in India. The rest they will be selling globally. Look at their scale of operations. That is what will bring in jobs and growth in the country.

    Once retail FDI starts coming in, do you expect protests and disruptions?

    That also happened when organised retail was introduced. Today, I think if we put all the large retailers together, they have 4%-5% of the market share. If we count the numbers, there are not less than 4000 stores in India including Reliance, Birla and Biyani. Now if you look at this, more than 40% of these stores are in those states including Bengal who are opposing. What we have done is we have only permitted FDI to come in organised retail. That is it. So, does colour of the money make all the difference? That dollar should not come in or euro should not come in or pound sterling should not come in. The approach is purely cynical and partisan. What we have done is in the national interest.

    Can we expect more guidelines?

    Guidelines have already been notified. All that was required has been done.

    In civil aviation, there was some confusion about the FDI and the FII element...

    It is combined. It could be anything as long as it is within the 49% limit.

    What about increasing FDI limit in insurance? Is government working on it?

    I am sure finance ministry is working on it. Certain decisions require legislative changes. For that Parliament has to function. I am sure that wisdom will dawn on those who have stalled Parliament.

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    9 Comments on this Story

    Pooja2990 days ago
    Talking with respect to Indian Agri-food sector, 100% FDI in retail with all it's clauses will benefit entire supply chain. Why are everyone talking only about a few million entrepreneurs( who will not even loose their share in a country like ours, where every players, big & small has a customer) and forgetting the 70million (60%)farming community. Any amount of Govt. support, PPP etc is not being sufficient. Indian Agriculture requires good decent infrastructure facilities, and despite all the support from Govt. to Agri sector it's GDP is reducing every year. Also, the few million entrepreneurs who are being talking about are adding to unorganized business. Either these million people who are being supported pay proper taxes and pay the farmers well or let big MNC's do it. Because, a good system will benefit every Indian Citizen. We will be able to reduce 30-40% of wastage, reduce the prices of the end product because of economies of scale and proper handling and efficient supply chain.
    There will be technology transfer & improvements, human resource development specially with this section of people. Discipline is something we as Indian's lack. I'm sure FDI in retail with it's present clauses will benefit the Afri-food sector in a big way, without disturbing smaller players/entrepreneurs.
    Ramesh0372990 days ago
    Anand Sharma, with all due respect, is a big blah, blah man. First he should remove all hitches to get the investors in and not count the chickens before the eggs are laid.
    A. S. Mathew2991 days ago
    Mr. Sharma: You are just making an false prediction without knowing anything about Wal-Mart history of destroying jobs in the U.S. For every job they create by getting employees from the local destroyed business, two people will be jobless in the marketing sector alone. Then in the manufacturing sector through the export jobs, the amount would be far greater. You may be bringing millions of shoppers from foreign countries to shop at Wal-Marts in India.
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