A report regarding the FDI policy for retail and it’s effects on the Micro, Small and Medium Enterprises (MSMEs) in the country, titled ‘FDI in multi-brand retail on MSMEs’, has been tabled in the Indian Parliament, reports the Economic Times quoting PTI.
The Parliamentary Committee on Industry is of the opinion that the FDI for retail may not have beneficial impact on the MSME sector. It is of the view that not enough safeguards have been provided to insulate the MSME sector from sudden changes in trade policy.
The entry of global retail chains would lead to elimination of farmers and small markets (called mandis in India), which would enable foreign retail giants to manipulate prices, forcing farmers to sell their produce at lower prices or prices dictated by multi-brand retailers, according to the report of the standing committee.
The committee, headed by Tiruchi Siva, said the MSME Ministry should commission a survey to assess the benefits and losses of previous FDI policies on the sector.
The committee feels that FDI in retail may not benefit the retail sector unless designing, packaging, bar coding, skill development are improved upon and integrated into supply chain, the report states.
The implementation of policy provision should be closely monitored through an institutional mechanism in the initial years, and not left to self-certification.
In September 2012, Government of India approved up to 51 percent FDI in multi-brand retailing.