Retail firm Wal-Mart Stores Inc. has shown interest in opening retail food chains in India after the government allowed 100% foreign direct investment (FDI) in the sector, food processing industries secretary Avinash Srivastava said on Wednesday.
The government in June notified 100% FDI under the so-called approval route for trading, including through e-commerce, for food products manufactured or produced in India which it had proposed in this year’s budget in February.
Srivastava said he hopes this will give a big boost to the food processing sector, farmers’ incomes and to the employment generation in the country.
“Walmart has already shown a lot of interest. They are already here in India. They will come of their own and add to the growth story of the country,” he added.
Krish Iyer, president and chief executive officer of Walmart India, said the company is evaluating the model as per the guidelines announced by the government. “As we have said earlier, the decision by the government to allow 100% FDI under government approval route, including through e-commerce in trading of food products manufactured and/or produced in India, is very progressive and far reaching. This step will help in reducing wastage, farm diversification and encourage industry to produce locally within the country. This move will benefit farmers, give impetus to the food processing industry and create vast employment opportunities in the country,” he said.
Walmart has a presence in the cash-and-carry wholesale format in the country.
However, an industry representative requesting anonymity said industry bodies had urged the Department of Industrial Policy and Promotion (DIPP) to allow some non-food items along with food items to be sold in such stores which the department has not accepted so far.
“Food retailing is a low-margin business. So the current government policy makes such businesses less viable,” he added.
Srivastava said a leading Brazilian poultry company had expressed keen interest in joining hands with Kishore Biyani’s Future Group to sell its products in the country.
“A Brazilian company claiming to be the world’s leading exporter in the poultry sector met us yesterday. They want to tie up with Biyani’s Future Group to use their retail outlets,” he added.
When contacted, Biyani said talks are on with many companies. “I don’t want to comment on specifics,” he added.
Srivastava said DIPP secretary Ramesh Abhishek and food processing minister Harsimrat Kaur Badal recently met with the ambassadors of important countries to convey the message to their food processing companies about the attractiveness of the sector in India.
Abhishek said his department is holding meetings with various departments on the progress of ‘Make In India’ initiatives for the last three months.
Fifty-one cold chain projects have been completed and six mega food parks operationalized since June 2014, Abhishek said. Each mega food park is expected to create direct and indirect employment for 5,000-6,000 people and benefit 25,000-30,000 farmers, he said.
The food processing industry contributes around 9% of India’s manufacturing GDP. Evaluated at $39.71 billion in 2013, the food industry is expected to post a compounded annual growth rate of 11% to reach $65.4 billion by 2018, according to a report released jointly by the commerce and industry ministry and ministry of food processing. Between April 2014 and March 2016, the sector attracted $1.04 billion of FDI. Both ministries claimed 3.2 million tonnes capacity of cold storage has been created with an expenditure of Rs.9,000 crore in the last two years which is expected to reduce wastage of food by 10% annually, or Rs.9,200 crore, every year.