The Hindu Business Line : FDI in retail sector may take more time — `Concerns of Left parties to be addressed first'

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FDI in retail sector may take more time — `Concerns of Left parties to be addressed first'

Alok Mukherjee

New Delhi , Nov. 4

THE proposed opening up of the retail trade sector to foreign direct investment (FDI) is likely to be delayed till at least early next year.

Senior Ministers in the Manmohan Singh Government told Business Line that the concerns of the Left parties on this issue would be addressed once the exact formulation is worked out and the final policy would be announced after that.

"FDI in retail will come, but not now,'' the Ministers said.

In fact, the Commerce Ministry, the nodal Ministry for the policy, has not yet worked out its formulation and is likely to take it up only after the World Trade Organisation (WTO) Ministerial meeting in Hong Kong next month.

"FDI in retail does not mean just setting up big shops. It has many different connotations. With nearly 25 million people coming into the middle class category in recent years, there is a need to cater to their demands,'' the Ministers said, clarifying that the neighbourhood general merchandise shops or the existing retail trade would not be adversely affected.

"We are acutely conscious of job losses. We also have to face elections. We cannot have policies which impoverish people.''

The Ministers explained that modern retail trade involved sophisticated technological inputs for inventory management, supply chain logistics, cold storages, refrigerated transportation and other modern gadgets and an entrepreneur would make these investments only if he is assured of volumes.

"We are looking at that aspect of retail trade. We are not looking to replace the vegetable seller who carts his stuff from house to house, as some of the Left parties apprehend. Consequently, we are looking at formulations on how to introduce technology and investment into retail trade to cater to the needs of the growing middle class,'' the Ministers said, conceding that as yet no decisions had been taken.

"In fact, we have invited the Left parties to help formulate the policy paper,'' they added.

The view within the Government is that FDI in retail trade would have to be allowed in the near future in order to cater to the needs of the sophisticated customer.

Besides, the employment potential, especially for low-end skilled workers, would be substantial once retail chains with big volumes step into the market.

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