Minister for Food Processing Subodh Kant Sahai today said that Department of Industrial Policy and Promotion (DIPP) has been asked to undertake an in-depth study on the impact of foreign direct investment (FDI) in food retail. The report is expected by March next year.
Sounding optimistic, the minister said, “India may open up its US$330 billion retail market on being convinced that kirana stores will not be affected by big retailers.” Sahai was inaugurating a two-day conference on supply chain organised by Federation of Indian Chambers of Commerce and Industry (FICCI) and attended by representatives of top retailers including those from Wal-Mart, Metro, Pantaloon, Bharti Retail and Reliance Retail.
In a clear signal to states like Uttar Pradesh, Kerala, West Bengal and Orissa to refrain from too strongly opposing organised retailers in the agriculture sector, Sahai said, “Organised retail could play a key role in changing the agriculture scenario of the country. About 55 per cent of the total spending in the country is for food, and this is very high compared to other countries.”
He said FDI inflow in food processing is becoming stronger, and a recent KPMG report said that there have been as many as 11 deals – worth 106.4 million euros – this year, against 4.2 million euros in 2006.
Stating that while only one per cent of food retail in India is through organised retail, Sahai added, “Organised retail can ensure fast movement of agri produce after the harvest, reducing losses.” The minister said the organised sector will help farmers to cater for sustainable demand and get remunerative prices, and, overall, make more rational decisions.
“Organised retail could promote the food processing industry by offering new products. Consumers will be able to get products from a much more hygienic and safe environment, besides getting a variety of quality products,” Sahai said.
He said development of organised retailing is expected to reduce wastages, enhance farmers’ income, increase employment through food trade, and boost rural prosperity.
As part of his ministry’s effort to boost the food processing sector, Sahai said a scheme was being evolved for a “mechanism to bring together farmers, processors and retailers, and link agricultural production to the market. This would ensure maximisation of value addition. The mega food park is designed to link the farmer with the retail markets, with minimising of intermediaries.” He said 30 mega food parks were proposed to be established throughout the country.
The minister informed that during the 11th Plan, the ministry would launch a revamped, comprehensive cold chain infrastructure scheme for creating integrated cold chain infrastructure at different levels – farm-level primary processing centre-cum-cold chain, collection/aggregation centres, and strategic distribution centres.
Elaborating on the scheme, Sahai said since deterioration of produce sets in within a few hours of harvesting, farm-level cooling and primary processing was critical to empower the farmers. Such infrastructure at the farm gate would help the farmers preserve and add value to the produce, leading to better realisations.
– Sri Krishna