Major issues on FDI in Multi-brand retail 1) Cabinet decision – Distinct Indian Model with Safeguards for domestic stakeholders : FDI up to 51% only through government approval mode. Minimum investment of US $ 100 million of which at least 50% to be invested in backend infrastructure, which would include capital expenditure on the entire spectrum of related activities including cold chain infrastructure, food processing, refrigerated transportation, logistics. Retail sales outlets may be set up only in cities with a population of more than 10 lakh as per 2011 Census and may also cover an area of 10 kms around the municipal/urban agglomeration limits of such cities; In States/ Union Territories not having cities with population of more than 10 lakh as per 2011 Census, retail sales outlets may be set up in the cities of their choice, preferably the largest city Mandatory sourcing of a minimum of 30% from Indian small industries with a total investment in plant and machinery not exceeding US $ 1 million. Government to have first right of procurement of agricultural produce to ensure food security for the poor. Fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, can be unbranded to help local farmers, fishermen and horticulturists. The above policy is an enabling policy only and the State Governments/Union Territories would be free to take their own decisions in regard to implementation of the policy. Therefore, retail sales outlets may be set up in those States/Union Territories which
have agreed, or agree in future, to allow FDI in MBRT under this policy. 2) Context India is the second largest producer of fruits and vegetables in the world with an annual production of 240 million tonnes, yet the post-harvest losses are unacceptably high, hovering in the range of 35-40%. There are huge weaknesses in the entire food value chain infrastructure in absence of adequate cold chain facilities, storages and transportation facilities. As a result what can be marketed and sold perishes. Filling the infrastructure gap requires massive private sector investments. The Government has been grappling with the challenge of high food inflation which is now a cause of serious concern. The farmers are not getting remunerative prices for their produce as middlemen dominate the agriculture Mandis while the consumer ends up paying more than 5 times the price secured by the farmers. DIPP released a discussion paper on “Foreign Direct Investment in Multi-Brand Retail Trading”, on July 6, 2010. In response to the discussion paper, comments from 175 respondents and nine Ministries/ Departments of the Government of India were received. Keeping in view the diversity of responses and respondents, a Committee, chaired by the Department of Consumer Affairs and including representatives from the Department of Agriculture & Cooperation, Department of Commerce, Department of Economic Affairs, Ministry of Micro, Small & Medium Enterprises and this Department was constituted, to examine the responses and provide necessary inputs for policy action. Committee of Secretaries on July 22, 2011 gave detailed recommendations on the policy and Union Cabinet finally approved the policy on 24 November 2011. However, implementation of the proposal had been deferred, for evolving a broader consensus on the subject on 7.12.2011. In pursuance of the aforestated decision of the Cabinet, discussions have been held with State Governments, representatives of consumer associations/organizations, micro & small industry associations, farmers’ associations and representatives of food processing industry and industry associations. The Chief Ministers of Delhi, Assam, Maharashtra, Andhra
Pradesh, Rajasthan, Uttarakhand, Haryana and Governments of the State of Manipur and the Union Territory of Daman & Diu and Dadra and Nagar Haveli, have expressed support for the policy in writing. The Chief Minister of...
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