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Will retail FDI win the popular vote?
Mon, 10 Dec Pre-Open

The retail FDI battle was won in the Lok Sabha with the UPA government winning the motion with 253 votes to the Opposition's 218. Now since the final steps are being taken to usher foreign supermarkets in the country, age old labour laws need to be reworked. New laws need to be introduced to make way for 24x7x365 business model, small shopkeepers need to be protected and a reckless sprawling of malls in urban areas needs to be avoided. Farmers also need protection and the Consumer Affairs ministry wants to allow farmers to directly sell their produce to retailers, and adopt a uniform countrywide licensing regime to accelerate retail growth.

To set up these changes, the government plans to set up a committee of central ministers of agriculture, commerce, corporate affairs, environment, finance, food, labour, railways, urban development and infrastructure ministries, etc. Since retail in FDI would affect all these areas in some way or another, a collaborative effort needs to take place. Another panel of secretaries, representatives from IIMs, industry bodies, consumer activists and trade associations will also study the retail sector. Small traders and local shopkeepers need to be also taken on board and reassured.

So far the government has tried to safeguard the interests of small shop-owners and manufacturers. Its notification on FDI in retail ensures 30% outsourcing from local small and medium industries. However there are still some gaps to be filled. The government should modernise the APMC Act to create a direct linkage of farmers with retailers. Plus, there is currently no cap on the number of stores a foreign retailer can set up within the country. Nor is there any specification on the size of the store. In absence of any official guidelines on the same, it can really interfere with the operations of small 'kirana' stores. The panel is, however, looking to put some safeguards in place. Well, while FDI in multi-brand retail has been approved by a parliamentary vote, whether it will get the popular vote of the public is another question altogether.

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