News: Indian retail FDI - Plan panel calls for consensus

(PTI 22/06/2006) New Delhi - The Planning Commission has underlined the need to evolve a consensus on allowing foreign direct investment (FDI) in the organised retail sector.

In the draft approach paper to the 11th Five-Year Plan, the commission stated it must be recognised that modern and organised retailing brings many advantages to producers and also to urban consumers while also providing employment of a higher quality.

Foreign direct investment (FDI) in retailing has been allowed to a limited extent and foreign investors are interested in playing a larger role in it and also hyper markets and multi-brand retail stores.

However, this was an area where there were divergent views and so there was a need to evolve consensus for the balance of advantages and disadvantages that existed with modern retailing with FDI in most other developing countries, including China, the Plan panel said.

Organised retailing in agricultural produce can set up supply chains, give better prices to farmers for their produce and facilitate agro-processing industries.

Modern retailing can bring in new technology and reduce consumer prices, thus stimulating demand and thereby providing more employment in production.

Retail trade and services provide employment to hawkers and street-vendors and is a source of livelihood to almost anyone. At present, retailing in India is estimated to be worth around Rs 9,00,000 crore.

Out of this organised retailing a mere 3 per cent was in the form of shopping malls, supermarkets, hypermarkets, discount stores, specialty stores, convenience stores, department stores and e-tailing, the commission observed in the paper.