Indian Retail Industry opposes India government proposal of retail regulatory authority

The Indian retail industry Friday came out in strong opposition to the government’s move to set up a regulatory authority for the retail industry, arguing that there are few takers in the industry for such a move. The Indian Ministry of Consumer Affairs and Food had Thursday met Industry players over the same, with the players voicing their concerns against the proposal. Retail Industry players instead proposed that the setting up of an agency to facilitate retail trading and a further commission to study the challenges of the retail sector in the country.


The Department of Industrial Policy and Promotion (DIPP) had previously issued a discussion paper over the opening up of multi brand retail to foreign direct investors. The meeting, attended by an under Secretary to the Ministry of Consumer Affairs and Food, was attended by representatives from ICRIER, FICCI, CII, and the Confederation of All India Traders amongst other stakeholders in the industry.


The main issue of contention at the meeting was over mechanisms on reducing the difference between farm-gate and consumer prices. Analysts hold that, should India allow foreign direct investment (FDI) in multi brand retail, the move will probably reduce the prices of food products by cutting down on wastage and direct sourcing from farmers.


The Consumer Affairs Ministry had consulted the DIPP on the challenges appertaining to traditional retail and the possible solutions to such issues, with the government further expecting to seek nationwide views over the same. Multi-brand retail has been the topic of discussion between foreign retail companies such as Wal-Mart and the Indian government; with the government showing signs it is willing to allow foreign companies or investors in food grain retail, in a bid to reduce PDS leakages.


Wal-Mart India President, Raj Jain, reiterated his delight at the government’s recent positive moves via a discussion paper that seeks allowing FDI in multi brand retail, adding that the move would attractive major global retail conglomerates to the country. He noted that, whereas the company would be delighted if the government allows 100% FDI in retail in one go; it would still be beneficial to the country if it decides to take a gradual, phased approach, noting that it would as well bring in more foreign investments into India.


Jain said Wal-Mart’s investments in the country would vary with the government’s decision, that is, if the FDI discussion paper allows it investments in cities with over 10 lakh population, Wal-Mart will have 40 cities to invest in, but if allowed investments in cities with more than one lakh population, that would open up about 600 cities for the American retail giant.


10 July 2010.