FDI in Multi Brand Retail Sector - Discussion

[nrj]

Proposals to permit FDI in multi-brand retail trading in all products, in a calibrated manner, subject to the following conditions:


1. FDI in multi-brand retail may be permitted to the extent of 51 per cent with government approval.


2. Minimum amount to be brought in as FDI by a foreign investor would be around $100 million.


3. At least 30 per cent of the procurement of manufactured processed products shall be sourced from small industries, in the country, that have total investment in plant and machinery not exceeding $100 million.


4. The government will have the first right to procurement of agriculture products.


5. Fresh agricultural products, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meal products may be unbranded.

6. At least 50 per cent of the total FDI brought in shall be invested in back-end infrastructure. Back-end infrastructure will entail capital expenditure on all activities, excluding that on front-end units.


For instance, back-end infrastructure will include investment made towards processing, manufacturing, distribution, design improvement, quality control, packaging, logistics, storage, warehouse, agriculture market produce, infrastructure, etc.


7. This valuation refers to the value at the time of installation without providing for depreciation.


8. Further, if at any point in time, this valuation is exceeded the industry shall not qualify as a small industry for this purpose.


9. Expenditure on land cost and rental, if any, will not be counted for purposes of back-end infrastructure.


10. Self-certification will be done by the company to ensure compliance of all the conditions.


11. Retail sales locations may be set up only in cities with a population of more than 10 lakh (1 million) as per 2011 Census and may also cover an area of 10 km around municipal urban agglomeration limits of such cities.


12. Retail locations will be restricted to areas as per the master zonal plans of the cities concerned and provisions will be made for requisite facilities such as transport connectivity and parking.

Govt to allow 51% FDI in multi-brand retail: Cabinet note - Rediff.com Business



A 120 page note is circulated today within all union ministry. Detailed draft will be finalized soon. Consultations from coalition partners are expected.

---

i am sure, i won't be able to get my hands on the full draft. i am eager to see the draft in full detail as well.

this is a doom for indian industries.

Same doom happened in '90s then.

 

[SpArK]

There is going to be a storm of America retailers in India and I doubt India will be prepared or the govt has any idea what a can of worms they are opening.

There cant be a storm. It depends on demand. The onus is now on local ones like birla, reliance,big basaar and tata's to compete with them.

The competition is between the big retailers presently and the new Indo-foreign ones. not with smaller ones.

The benifits ofcourse goess to farmers and consumers. The middle men gonna suffer due to this.

 

[Param]

Chinese producers and manufacturers will be so happy. Bonanza for Wal-mart.

 

[LETHALFORCE]

There cant be a storm. It depends on demand. The onus is now on local ones like birla, reliance,big basaar and tata's to compete with them.

The competition is between the big retailers presently and the new Indo-foreign ones. not with smaller ones.

The benifits ofcourse goess to farmers and consumers. The middle men gonna suffer due to this.

The demand is there, the Indian public always wants foreign goods over domestic goods. And the power of brand names will be in play people example blackberry,iphone,nokia etc...

 

[SpArK]

The demand is there, the Indian public always wants foreign goods over domestic goods. And the power of brand names will be in play people example blackberry,iphone,nokia etc...

Already we are purchasing foreign goods made in India in retail consumer electronics sector. It has in fact helped our economy as factories are set up here.

Food sector will see the produce procured locally from farmers as its the only way of providing it cheap and of good quality.

So what exactly is this foreign goods?:shocked:

 

[nrj]

I think Mittals still have tie-ups with Walmart.

This move will also help farmers to expand their yield via contract farming.

 

[LETHALFORCE]

Already we are purchasing foreign goods made in India in retail consumer electronics sector. It has in fact helped our economy as factories are set up here.

Food sector will see the produce procured locally from farmers as its the only way of providing it cheap and of good quality.

So what exactly is this foreign goods?:shocked:

Good Question another good question why did India play spoil sport at Doha when they were going to do this??

 

[LETHALFORCE]

Already we are purchasing foreign goods made in India in retail consumer electronics sector. It has in fact helped our economy as factories are set up here.

Food sector will see the produce procured locally from farmers as its the only way of providing it cheap and of good quality.

So what exactly is this foreign goods?:shocked:

foreign goods will be Foreign companies will by raw material from Indian farmers and manufacture and sell the finished goods in India.

 

[nrj]

Good Question another good question why did India play spoil sport at Doha when they were going to do this??

I think this was expedited due to various economic burdens. Why would they want to miss international good-will when this was scheduled to happen?

My guess is congress was not prepared for this. Its a marginal risk looking at UP elections. I will not be shocked to see stupid politics played over this. New retail shops attacked & burned in protests.

People want lower prices, more jobs but not ready to open market. How long can we deny liberalization? Indian public voted UPA once again in 2009 looking at their willingness to draw next reforms. However they did fooled around for almost half of the term before taking the mandated steps.

 

[SpArK]

Good Question another good question why did India play spoil sport at Doha when they were going to do this??

Maybe we were confident at that time we can do without FDI at that time. Seriously i dont know.

Anyway its good to see that the bottom level farmers will be benefited largely by these new ones as the race for cheaper and better quality will give a farmer good remuneration and India being a HUGE farming community will see revival of the sector.


The cutting down of the middle men is the best part.
Usually when a local farmer grows something it is sold to his local market at a price and from the local market it is collected by agents from farther places sold to wholesalers there and then to retailers and when it finally reaches the consumer the price is up and all people in the ladder gets money and the risk is fully for farmer. Now with guaranteed money and orders from the retailer directly gets him better price and the consumer gets it at cheaper price.

 

[SHASH2K2]

Something is better than nothing! As inflation is the top priority, they have done this.

So stop whining!!!

as you order master . any thing else you would like me to do today ?

 

[LETHALFORCE]

I think this was expedited due to various economic burdens. Why would they want to miss international good-will when this was scheduled to happen?

My guess is congress was not prepared for this. Its a marginal risk looking at UP elections. I will not be shocked to see stupid politics played over this. New retail shops attacked & burned in protests.

People want lower prices, more jobs but not ready to open market. How long can we deny liberalization? Indian public voted UPA once again in 2009 looking at their willingness to draw next reforms. However they did screw around for almost half of the term before taking the mandated steps.

This is a sign that Indian govt does not know how open the markets at Doha they could have agreed to the same thing and demanded better terms.

 

[SpArK]

foreign goods will be Foreign companies will by raw material from Indian farmers and manufacture and sell the finished goods in India.

That is foreign goods. :shocked:

I am sorry i dont quite get what u are saying , blame it on the drinks.

 

[LETHALFORCE]

Maybe we were confident at that time we can do without FDI at that time. Seriously i dont know.

Anyway its good to see that the bottom level farmers will be benefited largely by these new ones as the race for cheaper and better quality will give a farmer good remuneration and India being a HUGE farming community will see revival of the sector.


The cutting down of the middle men is the best part.
Usually when a local farmer grows something it is sold to his local market at a price and from the local market it is collected by agents from farther places sold to wholesalers there and then to retailers and when it finally reaches the consumer the price is up and all people in the ladder gets money and the risk is fully for farmer. Now with guaranteed money and orders from the retailer directly gets him better price and the consumer gets it at cheaper price.

cutting the middle man is not a good thing you are setting up a 2 class trade system Rich and poor.

 

[Param]

foreign goods will be Foreign companies will by raw material from Indian farmers and manufacture and sell the finished goods in India.

Do you mean like what the East India Company did?:shocked:

 

[nrj]

I did mention in other thread that Govt is paying in peanuts to farmers when it comes to cotton & other products. Farmers should benefit. Keeping the protected approach is killing farmers. Earlier was a perfected mechanism to transfer agri wealth to traditional wholesellers & industrywallas.

 

[LETHALFORCE]

That is foreign goods. :shocked:

I am sorry i dont quite get what u are saying , blame it on the drinks.

yes this will be foreign goods as it will have a foreign brand name similar to nokia phones manufactured in india.

 

[LETHALFORCE]

Do you mean like what the East India Company did?

Similar to that but in that it was not trade but outright robbery and slave system

 

[Ray]

Cabinet has approved.

Will it require the Parliament to pass a Bill?

Mamata Bannerjee has said that she is against it.

 

[SHASH2K2]

I don't know why are you relating divestment with FDI limits? Priorities will differ from person to person, industry to industry.

I don't give a damn about whichever govt it is. Its their equations of expenditure to worry about.

More competition will bring down end consumer costs.

I guess this entire move was about economy and and its betterment . Presuming I am correct then all I am saying that there were many more important moved that would have helped economy . I am sure you must have heard voices of various businessmen unhappy with government policies and delays in implementation . And now all of sudden this move that will help western companies more than it will help Indian businessmen .