Expect big investments, large scale job creation with FDI in retail: Anand Sharma
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So
far, retail companies have invested under a different policy framework.
Now we have opened front-end operations which was not there before.
Foreign retailers like Walmart
will be allowed to invest in existing ventures of their Indian partners
as long as they stay within the parameters of the FDI regime, says
commerce & industry minister Anand Sharma
in an interview with Amiti Sen. Existing investments in back-end cash
& carry, however, will not be counted towards the minimum $100
million investment obligations in front-end retail, he clarifies,
explaining the nitti-gritties of the policy a day before BJP tried to
upset the applecart by warning that it could reverse the FDI decision if
it comes to power. Excerpts:
Now that you have finally managed to push the reforms, what next?
India has put in place a policy regime and the decisions have resonated globally. It has been after fairly elaborate consultations with stakeholders in an inclusive and democratic manner that we put together an enabling policy framework. The policy is India-specific, with a distinct Indian flavour that factors in India's needs, complexities, socio-economic realities and the diversity of the country. We have priorities. Investment in the back-end will lead to creation of infrastructure like cold-storage. Farmers will get better price realisation. Millions of jobs will be created. The small sector also stands to benefit as 30% sourcing has to be done from SMEs. This will lead to value addition.
Since foreign investors have been waiting to invest in multi-brand retail for long, will there be a mechanism to fast track clearances?
Investors had to wait as the policy regime was not there so far. It got trapped in partisan politics. Thankfully, it has now been liberated from it.
Now do you expect FDI in retail to flow in?
Yes. Now applications will start coming in. We have clearly mentioned in the press note the names of states that want FDI. They have endorsed it in writing. More states will be added once they apply. And approvals will certainly be expeditious. So far, because we allowed FDI in multi-brand only in back-end, the investments have not been much. All big retailers like Walmart, Carrefour, Tesco and Metro have together invested less than $500 million in all these years as front-end was not allowed. Now we expect big investments to come in.
Why is West Bengal chief minister Mamata Banerjee saying that she was not consulted and had not given her consent to FDI in multi-brand retail?
To say that she was not asked is not being truthful. I talked to her personally. Last year she said that it should be specifically put in the policy that the states who do not want FDI in multi-brand retail will not have to go for it. We did so. We recognise the right of states who do not want to implement the policy. At the same time we also have to respect the right of states who want it. Mamata said that her party manifesto does not allow it, but it is not correct.
Will the foreign companies that have already invested in back-end as part of their cash & carry operations in India be allowed to factor in the investments to meet the requirement of minimum $100 million investment in a front-end venture with 50% in back-end operations?
Let us not mix the two. So far, retail companies have invested under a different policy framework. Now we have opened front-end operations which was not there before. Under the new policy, investment has to be $100 million, which is the minimum benchmark, of which $ 50 million has to be in the back-end. All this has to be fresh as we never had a policy allowing FDI in multi-brand. Similar logic applies in single-brand. Now the investment limit has been increased from 51% to 100% with new conditionalities imposed. Those who have to go for 100% will have to go by those conditions.
Now that you have finally managed to push the reforms, what next?
India has put in place a policy regime and the decisions have resonated globally. It has been after fairly elaborate consultations with stakeholders in an inclusive and democratic manner that we put together an enabling policy framework. The policy is India-specific, with a distinct Indian flavour that factors in India's needs, complexities, socio-economic realities and the diversity of the country. We have priorities. Investment in the back-end will lead to creation of infrastructure like cold-storage. Farmers will get better price realisation. Millions of jobs will be created. The small sector also stands to benefit as 30% sourcing has to be done from SMEs. This will lead to value addition.
Since foreign investors have been waiting to invest in multi-brand retail for long, will there be a mechanism to fast track clearances?
Investors had to wait as the policy regime was not there so far. It got trapped in partisan politics. Thankfully, it has now been liberated from it.
Now do you expect FDI in retail to flow in?
Yes. Now applications will start coming in. We have clearly mentioned in the press note the names of states that want FDI. They have endorsed it in writing. More states will be added once they apply. And approvals will certainly be expeditious. So far, because we allowed FDI in multi-brand only in back-end, the investments have not been much. All big retailers like Walmart, Carrefour, Tesco and Metro have together invested less than $500 million in all these years as front-end was not allowed. Now we expect big investments to come in.
Why is West Bengal chief minister Mamata Banerjee saying that she was not consulted and had not given her consent to FDI in multi-brand retail?
To say that she was not asked is not being truthful. I talked to her personally. Last year she said that it should be specifically put in the policy that the states who do not want FDI in multi-brand retail will not have to go for it. We did so. We recognise the right of states who do not want to implement the policy. At the same time we also have to respect the right of states who want it. Mamata said that her party manifesto does not allow it, but it is not correct.
Will the foreign companies that have already invested in back-end as part of their cash & carry operations in India be allowed to factor in the investments to meet the requirement of minimum $100 million investment in a front-end venture with 50% in back-end operations?
Let us not mix the two. So far, retail companies have invested under a different policy framework. Now we have opened front-end operations which was not there before. Under the new policy, investment has to be $100 million, which is the minimum benchmark, of which $ 50 million has to be in the back-end. All this has to be fresh as we never had a policy allowing FDI in multi-brand. Similar logic applies in single-brand. Now the investment limit has been increased from 51% to 100% with new conditionalities imposed. Those who have to go for 100% will have to go by those conditions.
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Readers' opinions (4)
Kambhampati (Bangalore)
27 Sep, 2012 11:28 AM
Anand Sharma-Can you explain how new jobs will be created? Do not fool the public with your unmatured brain. The need of the hour is to save the water resources,farmers and govt. hospitals (which have poor infrastructure as only poor people visit them). People of India need food not malls/luxories. Do you know that still only 38.95% of Indians are educated!!! Shame on you and Govt. Well, I donot forget govt. is nothing but people.. So its shame on every one...
27 Sep, 2012 11:28 AM
Anand Sharma-Can you explain how new jobs will be created? Do not fool the public with your unmatured brain. The need of the hour is to save the water resources,farmers and govt. hospitals (which have poor infrastructure as only poor people visit them). People of India need food not malls/luxories. Do you know that still only 38.95% of Indians are educated!!! Shame on you and Govt. Well, I donot forget govt. is nothing but people.. So its shame on every one...
Ramesh037 (New Bombay)
27 Sep, 2012 11:01 AM
A few words for Mr. Anand Sharma: End these crazy demands. Open the markets and that without a local partner. In has been many times over that local partners are down the line no good. On the contrary, the hamper each and every plan the company has. Go and study what Ludwig Erhard did for Germany after the war. He opened the markets and not introduce foolish policies like you and the Govt. is propogating. Sad to say, but you politicians are the ones who are hampering the progress and opportunities for this country.
27 Sep, 2012 11:01 AM
A few words for Mr. Anand Sharma: End these crazy demands. Open the markets and that without a local partner. In has been many times over that local partners are down the line no good. On the contrary, the hamper each and every plan the company has. Go and study what Ludwig Erhard did for Germany after the war. He opened the markets and not introduce foolish policies like you and the Govt. is propogating. Sad to say, but you politicians are the ones who are hampering the progress and opportunities for this country.
Rajeev (Bulandshahr)
27 Sep, 2012 07:14 AM
Only business which is doing well is due to small ventures by individual Indian, with high entrepreneur skills. We see private Hospitals, schools, colleges, Malls coming up, but road next to is holed and no power supply. It is difficult to make Hospitals, schools, colleges, Malls and easy to make roads. But it does not happen because Govt is sleeping and common man is striving hard. Govt killed Big industry because of high rate of interest and land acquisition bill. In case an industry has draw funds from public at 15% from public as common man gets 9.5% in FD only. Which industry today can produce at rate of 20% profit on capital to pay back. To pay farmers 5 times the market price for land acquisitions. N.Mumbai farmers are demanding 20 crore per acre for airport acquisition and 40% of developed land. Only those con industry will flourish which are stealing India. I give example Reliance Power Installed Generators with installation on loan from Bank of China at low rate of interest on guaranty that they will buy generators from Chinese manufacturers. They made agreement with National grid to sell power. The money going out India to Chinese Banks and reliance pockets. Tata made their assembly plant recently in Indonesia. All countries even African countries like Ghana Nigeria will grow except India. Well Govt seized all development because of policies, now hell bent to kill small businesses by FDI inretails. Jai Ho Sonia Jai Ho Manmohan. You people will finish Indian race.
27 Sep, 2012 07:14 AM
Only business which is doing well is due to small ventures by individual Indian, with high entrepreneur skills. We see private Hospitals, schools, colleges, Malls coming up, but road next to is holed and no power supply. It is difficult to make Hospitals, schools, colleges, Malls and easy to make roads. But it does not happen because Govt is sleeping and common man is striving hard. Govt killed Big industry because of high rate of interest and land acquisition bill. In case an industry has draw funds from public at 15% from public as common man gets 9.5% in FD only. Which industry today can produce at rate of 20% profit on capital to pay back. To pay farmers 5 times the market price for land acquisitions. N.Mumbai farmers are demanding 20 crore per acre for airport acquisition and 40% of developed land. Only those con industry will flourish which are stealing India. I give example Reliance Power Installed Generators with installation on loan from Bank of China at low rate of interest on guaranty that they will buy generators from Chinese manufacturers. They made agreement with National grid to sell power. The money going out India to Chinese Banks and reliance pockets. Tata made their assembly plant recently in Indonesia. All countries even African countries like Ghana Nigeria will grow except India. Well Govt seized all development because of policies, now hell bent to kill small businesses by FDI inretails. Jai Ho Sonia Jai Ho Manmohan. You people will finish Indian race.
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