UPSC IAS Interview 2017-18

FDI in Multi Brand Retail

(Multi brand at one one shop like big bazar)

By Dhiraj Singh, Director (M&C), P.I.B

The Government has decided to allow Foreign Direct Investment  (FDI) upto 51% in multi brand retail. This means that global retailers can come to India with a local partner and set up stores in the country.  Till now FDI was not allowed in multi brand retail.  However, there were big multi brand retail outlets owned by Indian entities.
This decision is an enabling policy that will open up new windows of opportunity to modernize the retail sector particularly for agricultural products and the small-scale sector.

The benefits would be for all:

The farmer will get a better price for their produce as middlemen will be removed   and retailers will buy directly from farmers.  Farmers’ losses from wastages specially  in vegetables and fruits will come down.

 The small scale sector will find new buyers and cheap and better quality source for their products.

 Consumers will get better prices and greater variety from these stores.  The entry of global players will encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to the consumers as also better remuneration to the producers from whom they source their products.

This is also one of the most effective ways to tackle rise in food prices and inflation due to availability of food items on lower prices.

Today India is one of the largest producers of fruits and vegetables in the world. However 30-40% of food and vegetable products go waste due to lack of storage and cold chain facilities. This decision will bring in funds for investment to improve supply chain infrastructure such as cold storage, transportation and procurement along with bringing in investment for growth of the economy.

 This will bring huge employment opportunities in agro-processing, sorting, marketing and the frontend retail business.  As per some estimates upto 10 million jobs will be created in coming years.  

Government has provided safeguards to protect national interest such as:
· Minimum investment by the global retailer will be $ 100 million and 50% of which will be in backend infrastructure that will control wastage and help local farmers. Backend infrastructure will be in or near villages and will be of immense value for rural economy.
· It has been made mandatory that 30% sourcing will be done from Indian small industry. This will promote local manufacturing, as Indian small industries will feel encouraged to expand capacities in manufacturing thereby creating more employment and also strengthening the manufacturing base of the country.
 ·These stores can be set up only in cities with the population of more than 10 lakh.   This provision along with the requirement of master/zonal plans will make sure that small retailers are not affected.  Moreover small retailers can benefit from sourcing their products from deep discount wholesale cash-and-carry big retailers.  This will improve quality of their product and reduce their cost.
 · In order to ensure supply to ration shops (PDS) government will have the first right to the procurement of agricultural products.  This is important from food security point of view also.  Some people fear that big retailers will destroy small traders by keeping low prices initially (predatory pricing).  However, Competition Commission of India will not allow this to happen.  

As the policy will be implemented in only 53 cities (with population over 10 lakh) which will make it difficult for big retailers to crush competition.  In many developing countries like China, Thailand, Indonesia, Brazil, Argentina, and Singapore, where 100% FDI is allowed, small retailers are successfully co-existing with big retailers.

Indian labour will continue to be protected by Indian labour law. It is an enabling policy framework.  States are free to adopt it or leave it. Those states that do not want to have FDI in retail are free not to allow them. This is done to maintain the freedom of states in federal structure. FDI policy does not override the existing laws governing, trade and commerce in the country.  The State Government laws and regulations in this regard would apply as much to the foreign players as to the establishment of any domestic businesses in the retail sector.

Peace Process in North East

A tripartite Memorandum of Settlement (MoS) was signed on 25.11.2011 between the Central Government, Government of Assam and United People’s Democratic Solidarity (UPDS) in the presence of Union Home Minister Shri P. Chidambaram and Assam Chief Minister Shri Tarun Gogoi. The Union Home Minister said that this MoS provide for enhanced autonomy for Karbi Anglong Autonomous Council in Assam and also a special package for speedier socio-economic and educational development of the area. He further stated that Government has always shown its willingness to enter into dialogue with any group, that is willing to abjure the path of violence and place its demand within the framework of the Constitution of India.

The Home Minister Shri P. Chidambaram further said that in the past violence marked the agitation of the UPDS that was intended to attract the attention of the Government towards the backwardness of the Karbi Anglong District. After realizing futility of the violence, in August 2002, UPDS came forward and expressed its willingness to give up violence and seek solution of its problems peacefully within the framework of the Indian Constitution.

In November 2009, in order to speed up the peace process, Government appointed Shri P.C. Haldar as Interlocutor/Government of India’s Representative to negotiate with the UPDS for addressing their grievances. After several rounds of discussion, negotiating team comprising the Representatives of Government of Assam, Ministry of Home Affairs and UPDS finalized tripartite agreement which has been signed. 

MoS provides for :- ·
Setting up of a Committee under Assam Legislative Assembly as envisaged under Article 371B of the Constitution of India.
Renaming of existing Council as Karbi Anglong Autonomous Territorial Council (KAATC).
Increased seats in the Council upto 50 members (of which 6 will be nominated by the Governor) as against the existing 30 seats out of which 4 were to be nominated by the Governor. However, the proposed increase in seats shall be applicable for election to the Council due in 2016-17 or mid-term poll, if any, announced, whichever is earlier;
Setting up of Village Councils for deepening democratic process at the grass root level.
Transfer of additional subjects by the State of Assam to the Council along with legislative and executive powers.
Setting up of State Finance Commission (SFC) and consideration of higher fund allocation to the council to undertake viable activities;
Strict adherence to established norms of financial management, proper audit of the accounts, etc.
Additional measures for socio-economic, education, health, and cultural development;
Special economic package of Rs.350 crore (Rs.70 crore per annum) over and above the Plan Fund over the next 5 years to KAATC for identified projects;
Improvement of road connectivity, water supply and supply of power in Karbi Anglong District under existing schemes;
Providing one-time grant for capacity building in KAATC for preparation of DPR etc;
Rehabilitation of UPDS cadres; Withdrawal of cases relating to heinous crimes shall be reviewed case by case according to existing policy for withdrawal of such cases.
Action will be taken to implement the MoS and implementation of MoS will be reviewed periodically.

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