Allow FDI in multi-brand retail after 5 years: Report

NEW DELHI: Before allowing FDI in multi- brand retail, the government should give five year's time to the players in the unorganised sector to develop a strategy to compete with foreign firms, a report said.

"...a breathing space of five years till 2015 should be given to the unorganised retail sector so as to enable this crucial sector to re-orient its strategy and be competent to face competition from foreign investment," the report of Birla Institute of Management Technology (BIMTECH) said.

The industry department has taken a tentative step towards opening the multi-brand retail sector by kick starting a debate on the issue.

Besides, major retail players like Carrefour and Walmart several Indian chambers and organisations, including BIMTECH have responded to the Department of Industrial Policy and Promotion's (DIPP) discussion paper.

While the BIMTECH report suggests that FDI in front-end retail should be allowed after 2015, foreign investments could be allowed immediately in the retail infrastructure (back-end) to improve the supply chain.

"If the government allows FDI in back-end retail right now that will strengthen the supply chain by the time multi-brand retail becomes opens, say after five years," BIMTECH's Director H Chaturvedi said.

Due to lack of proper food processing and storage facilities, annual wastage of fruits, vegetables and other agri-products is estimated at Rs one lakh crore.

The BIMTECH report also recommended that the government should set up a separate fund for educating retailers in the unorganised sector about customers service and products display.

While multi-brand retail is forbidden for FDI, the government allows 51 per cent foreign investment in single brand retail and 100 per cent in wholesale trade.