New Delhi, Oct 7 (KNN) Industry body ASSOCHAM has reiterated for allowing foreign domestic investment (FDI) in retail industry and modernisation of wet market through public-private partnership (PPP) with adequate safeguard so that these new corporations do not become monopolistic and charge high price.

Allowing of 100 per cent FDI in retail would have led to the creation of such farm infrastructure so that FDI in general could supplement domestic efforts significantly, it said.

The chamber secretary general DS Rawat said the better performance of FDI in retail industry it is recommended that there should be modernisation of wet markets through public-private partnerships.

Along with this, facilitating cash-and-carry outlets, like metro, for sale to unorganized retail and procurement from farmers, encouraging co-operatives and associations of unorganized retailers for direct procurement from suppliers and farmers, he said.

He also added that ensuring better credit availability to unorganized retailers from banks and micro-credit institutions through innovative banking solutions and also facilitating the formation of farmers' co-operatives to directly sell to organized retailers, encouraging formulation of "private codes of conduct" by organized retail for dealing with small suppliers.
ASSOCHAM pointed out that FDI would not only prove to be fruitful for the economy as a whole but will also integrate our retail with the global retail market.

It is important to allow the entry of FDI into this sector in a properly regulated fashion. We must guard against the risk of these new corporations becoming monopolistic and charging high price. FDI in retail may also help bring in technical knowhow to set up efficient supply chains which could act as models of development.

In a true potential scenario, opening up of FDI can increase organized retail market size to USD 260 billion by 2020. FDI in multi-brand retail will give a boost to the organized retail sector, which positively impacts several stakeholders, including producers, workers, employees, consumers, the government, and, hence, the overall economy, it said.

The chamber also stated that FDI in retail will also bring the investment and expertise necessary to modernize and develop the farm and manufacturing sector.

Analysts estimate that the retail market in India, currently worth USD 500 billion (organized and unorganized market) will grow to USD 1.3 trillion by 2020. Organized retail is expected to reach 20-25 per cent of total retail by 2020 (from a current 5-6 per cent).  The prospect of higher growth in the food and grocery category is particularly attractive because over fifty percent of India’s workforce is employed in the farm sector. Therefore, advocates see a significant role for FDI for the economic development of the country as a whole, it said.

With allowing of FDI in retail it will immensely help in building the social infrastructure in the urban and the rural areas of the country like building of schools, empowering rural women of the society which would contribute towards the upliftment and the development of the rural people especially. Both multi brand and single brand stores in India will have to source nearly a third of their goods from small and medium sized Indian suppliers, added the chamber. (KNN Bureau)