The debate boils down to big malls versus small shops, and not FDI versus small kirana stores, says Minister.

Our Bureau

New Delhi, Nov. 18

UNFAZED by the Left parties' stated opposition to foreign direct investment in the retail segment, the Union Commerce & Industry Minister, Mr Kamal Nath, put up a spirited defence in favour of weighing several options for FDI in the retail sector as long as the resultant strategy to be adopted does not displace existing employment for the large number of small shops in the country.

Addressing the Economic Editors Conference here, Mr Nath said the whole debate on FDI in retail boiled down to big versus small, and not FDI versus small kirana stores, as the big domestic industries in the country were putting up super malls across the country. The retail trade was growing at a robust pace of 22 per cent per annum with a large number of middle-class consumers coming to these malls.

Stating that the interests of the small grocery owners must be safeguarded not by the "colour of money" alone, the Minister said if this argument was to be accepted, the small-time shop owners would also be hurt by the emerging super marts being put up by the large domestic retail houses. In this regard, he underlined the urgent need to step up investment in food processing and foster backward linkages, including marketing, particularly when 40 per cent of the fruit and vegetable produced in the country rotted every year for lack of modern preservation technology, including cold chains. That is why the Government was looking into different models of FDI in retail and was open to one that would not displace existing employment in this sector. The Minister conceded that there were problems in free movement of agricultural products within the country and this should be addressed before any FDI model for retail trade was put in place.

On the ongoing trade talks under the Doha Round, Mr Nath stated that the Government could not compromise the interests of Indian farmers and there would not be any trade-off in agriculture for gaining ground in other areas of negotiations.

On export performance, he hoped the country's merchandise exports would touch the $100-billion milestone during this fiscal.

(This article was published in the Business Line print edition dated November 19, 2005)
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