Harsimrat pitches for 100% FDI in food products retailing

Ministry of Food Processing Industries has urged Prime Minister Narendra Modi to consider 100 per cent foreign direct investment (FDI) in multi-brand retail of food products, saying it would benefit farmers as well as common man.

In a letter to the Prime Minister, Union Food Processing Industries Minister Harsimrat Kaur Badal suggested for a "relook" at the country's FDI policy in multi-brand retail in food processing.

"The letter has been forwarded to the Department of Industrial Policy and Promotion (DIPP), which is looking at the issue," sources said.

India permits 51 per cent FDI in the multi-brand retail sector. The BJP-led NDA government is opposed to allowing FDI in multi-brand retailing, but it has not yet scrapped the policy approved by the previous UPA regime.

The "politically sensitive" multi-brand retail segment in India employees millions and is dominated by mom-and-pop stores. Badal said permitting 100 per cent FDI in multi-brand retail of food products produced and manufactured in India would give the much needed fillip to the sector.

It would also help in development of infrastructure such as cold chains that are critical for the food processing sector. The move would benefit farmers with increased price realisation, reduction in wastages, job creation, besides acting as an incentive for global players in the sector to start operations in India, she wrote.

The government is taking several steps to attract foreign investments in the country. It has relaxed norms in over a dozen sectors including defence, construction and single brand retailing. 

So far, the government has cleared UK-based Tesco's proposal in multi-brand retail sector. During April-September, FDI in the country has increased by 13 per cent year-on-year to $16.63 billion. Meanwhile, farmer groups and agriculture experts has asked the government to provide loans of up to Rs 5 lakh to all farmers at 4 per cent interest and sought higher support price, increased coverage of crop insurance and consistent export policy.

During pre-Budget consultations, fertiliser industry body FAI sought introduction of direct transfer of urea subsidy to farmers and higher budget allocation for next three years to clear arrears of Rs 50,000 crore. At the meeting held here with Finance Minister Arun Jaitley, experts recommended exemption of income tax on profit made by farmer producers organisations and agri-cooperatives, creation of buffer stock of milk powder and outright ban or increase in import duty of butter oil and imposition of safeguard duty on import of rubber. According to the participants, the Finance Minister said the government attaches highest importance to the farm sector which is facing troubles.

Briefing the media after 2-hour long meeting, Consortium of Indian Farmers Association (CIFA) Secretary General B D Rami Reddy said: “At present, farmers’ situation is very bad. Government is only talking but not taking adequate action.” CIFA has demanded that all farmers and tenant farmers should be provided crop loan at 4 per cent interest rate up to Rs 5 lakh.

According to farmer body Bharat Krishak Samaj (BKS) Chairman Ajay Vir Jakhar the government should “double the number of farmers receiving loans up to Rs 2 lakh and for that charge only 1 per cent interest. Link Aadhar to such loan accounts to avoid duplication.” He suggested the government should do away with interest subvention scheme on crop loan and take corrective measures to provide institutional credit to small farmers.