BackHarsimrat Kaur wants multi-brand retail in food and agro processing
Food processing minister says multi-brand retail will reduce wastage and bring down inflation
Premium
Mumbai: Food processing minister Harsimrat Kaur said on Tuesday that she had written to the prime minister to allow multi-brand retail in the food and agro processing sector.
“Multi brand retail in food and agro processing will help farmers and consumers. It will reduce wastage and bring down inflation," she said at the Make in India event in Mumbai.
“It will create jobs, so I don’t understand who will not benefit from the opening up of multi-brand," the minister said.
Kaur pointed out that Wal-Mart Stores Inc.’s big box stores in Punjab that it had opened previously in partnership with Bharti Enterprises hadn’t harmed small traders or kirana stores in the state.
Kaur wants foreign direct investment (FDI) to be allowed in food and agro processing ventures that will source, process and manufacture 100% in India. A previous policy had specified 15% local sourcing for the sector.
Also, she is not open to fully opening up multi-brand retail, and wants FDI to be restricted to food and agro processing retail ventures. This, according to experts, may not be feasible and attractive for companies looking at investing in India’s retail sector.
Multi-brand retailers like Wal-Mart and Tesco Plc. sell everything from apparel, to personal care products and food.
“If multi-brand is allowed just for one segment they will have to go back to the drawing board to see if they can operate only their food business here and also then 100% sourcing will be an impediment as multinationals have global sourcing and supply chains and not everything is available in India," said Abhishek Malhotra, partner-consumer and retail, AT Kearney, a management consultancy firm.
Currently companies like PepsiCo Inc. import oranges into India to make their orange based drinks. However, the maker of Pepsi and Tropicana juices has five fruits locally sourced from the country which include banana, guava, pomegranate, sweet lime and mango.
It is now looking at enhancing the quality and agricultural produce of citrus fruits like oranges in the country by working with farmers. This is similar to what it had done in the past with potatoes.
“Across the range 95% of what we sell here is locally sourced," said D. Shivkumar, chief executive officer, PepsiCo India Holdings Pvt. Ltd.
In September 2012, the then government allowed 100% FDI in single brand retail with a caveat of 30% to be locally sourced, opening the doors for retailers like Ikea and H&M.
In multi-brand retail companies can invest 100% in the back-end and upto 51% in supermarkets with some riders. Whether to allow multi-brand retail was left to the discretion of state governments.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
