|Report on FDI in Retail Sector: India|
|(Dr. Arpita Mukherjee, Ms. Nitisha Patel)|
July 14, 2005
|First Photo: Dr. Arpita Mukherjee, Senior Fellow, ICRIER and Dr. Arvind Virmani, Director & Chief Executive, ICRIER addressing the Media on the launch of the ICRIER-Department of Consumer Affairs Report on “FDI in Retail Sector: India”
Second Photo:Media at the launch of the ICRIER-Department of Consumer Affairs Report on “FDI in Retail Sector: India”
ICRIER organised a press briefing on the release of the ICRIER & Department of Consumer Affairs, (Ministry of Consumer Affairs, Food and Public Distribution, Government of India) Report on “FDI in Retail Sector: India” on July 14, 2005 in ICRIER Conference hall. The briefing was addressed by Dr. Arvind Virmani, Director & CE, ICRIER and Dr. Arpita Mukherjee, Senior Fellow ICRIER and the author of the report. Dr. Mukherjee made a presentation on the report to the media present. The first academic research in the area, the report takes into account the views of stakeholders and evaluates its likely impact on them, with the objective of enabling the Government to take important policy decisions. The preliminary findings of the report were presented before the government and other stakeholders at a seminar organized by ICRIER in New Delhi on November 22, 2004.
The report recommends that FDI should be allowed in retailing since it would speed up the growth of organised formats. The study found that organised retailing has significant backward linkages by setting up of supply chains, investment in food processing industry and manufacturing units, increased productivity of agriculture, growth of interlinked sectors such as tourism and IT. Consumers have also gained from organised retailing since it leads to lower prices, improves the quality of products and widens the choice of products available to consumers. The slow growth of organised retailing is infact slowing down the process of development of upstream sectors such as food processing industry, textile manufacturing, etc. However, it suggests that the strategy of opening up should be backed by appropriate reform measures. It also suggests quality standards for local production and imports should be enforced.
The report suggests that the opening up of the FDI regime should be gradual over a 3 to 5 year timeframe – to give the domestic industry enough time to adjust to the changes. In the initial stage FDI up to 49 per cent should be allowed which can be raised to 100 per cent in 3 to 5 years (depending on the growth of the sector). FDI cap below 49 per cent (i.e., 26 per cent) would not bring in the desired foreign investment collaboration.
For a copy of the report, please contact: Sanu Kapila, Academic Foundation at