1.

FDI in retail sector to create 10 million jobs in 10

years: Report
NEW DELHI: Foreign direct investment in the retail sector is likely to create as many as 10 million jobs in a span of 10 years, making it the largest sector in organised employment, says a report. According to Indian Staffing Federation (ISF), an apex body of the flexi staffing industry in India, FDI in retail can create around 4 million direct jobs and almost 5 to 6 million indirect jobs including contractual employment within a span of 10 years. ISF welcomed the government's move to allow entry of Foreign Direct Investment (FDI) in the retail sector and said that this will give a boost to organised retail and will have a positive impact on employment generation. In a big ticket reform measure, the Cabinet and CCEA on last Friday, cleared FDI in multi-brand retailing and aviation as well as disinvestment in four PSUs. "It is expected that the impact of the FDI in retail will have a much wider impact on organized employment than what happened in IT 12 years back as it shall open doors for less skilled and less educated people as well. The impact shall be far and wide and all across country," ISF said. Logistics and supply chain companies are also expected to grow as they will be the link between small manufacturers, producers and farmers and the organized retail chains, and thereby help them get higher returns for their supplies. This close integration with the organized retail chains will also help small-time producers in gaining access to the latest technologies, systems and processes, hence, enabling them to maximize their profits. After the opening up of the retail sector the only challenge there will be is to create enough skilled workers to cater to the demand that shall follow, ISF said.

2. PM against curbs on FDI in pharma

NEW DELHI: Prime Minister Manmohan Singh may just have signalled his willingness to keep the doors open for large pharma players to run their business in India. Sources told TOI that at last Friday's Cabinet meeting, when FDI in retail and aviation were cleared, a minister raised the issue of pharmaceuticals, suggesting that there was need to ward off attempts to impose restrictions on foreign capital flowing into the sector. Singh is learnt to have responded by saying that the sector will be kept open, a move that may go against the high-pitched demand from the commerce and industry ministry to check investment beyond 49% in local pharma firms. Finance minister P Chidambaram

and commerce and industry minister Anand Sharma are expected to meet the PM soon to formulate a strategy to ensure that overseas players remain interested in India without compromising on the availability and price of critical medicines. Contrary to its mandate of boosting foreign investment flows, Sharma's ministry has been seeking regulated entry of overseas players into the sector if they were buying into an existing player a regime being pushed by local manufacturers in the wake of a series of foreign acquisitions involving Indian companies such as Ranbaxy, Piramal Healthcare and Shantha Biotech. In case they were setting up a new venture, then the exiting policy of 100% FDI would continue. The acquisitions will come with riders such as allocating a certain proportion of funds for research and development and keeping the product portfolio intact. The domestic industry and the commerce and industry ministry fear that the entry of foreign players into the Indian market may adversely impact the availability of generic medicines as the overseas companies would push patented medicines that are high cost. While the PM had decided to go with commerce and industry ministry's demand for scrutiny by the Competition Commission of India, the plan did not materialize as the fair play watchdog does not have the legal mandate to vet FDI related proposals, especially when then do not meet the M&A threshold specified by it. Consequently, the Foreign Investment Promotion Board continues to manage the task although nearly two dozen proposals were held up due to inter-ministerial wrangling, especially commerce and industry ministry's reluctance to give a green signal. While most of the proposals have now been cleared, the government is of the view that it is critical that pharma FDI proposals do not face similar hurdles in the future and the policy uncertainty is cleared.

3. Big retail daddies shy of taking india plunge

LONDON: The government may have spread the red carpet out for overseas retailers last week, but the political heat its reforms burst has generated means that footfalls on this carpet will be few for now. And those who plan to tread it will only do so gingerly. After last November's experience when the government was forced to freeze its decision to allow foreign firms into the retail sector, global retailers are choosing to adopt a "wait and watch" attitude to decision permitting foreign retailers to invest in India's supermarkets sector. At the global retail industry's annual schmoozefest -- World Retail Congress - taking place in London, the Indian participation is strong, but the outside interest in the country is, as Arvind Singhal of Technopak put it, good but not good enough. As one London-based private equity andreal estate consultant says: "All my clients ask about India . But they don't seem quite ready to put their money in it."

Speaking on the sidelines of the Congress, Lucy Neville Rolfe, board member of Tesco, Britain's biggest retailer, was clear: "We're glad about the progress that has been made in India... But there are conditions. We have to study the impact of the conditions." The consensus response to the reforms: given what happened last year, investors want to be assured this time the decision will stick. As the international business director of a major European food retailer said: "The fact that reforms were withdrawn last year, Parliament sessions are aborted regularly, no policy gets through, constant changes in policy ... It does not make for confidence for a global manager." Not everyone is aware of the intricacies of policy-making in India , and the big question being asked is: will this have to go through parliament? It does not, but the fear is that in that case, it's a non-starter . Pankaj Ghemawat, management guru and a professor at IESE business school inBarcelona , is of the view that companies like Walmart, which changed its global model to partner with Bharti in India, is better placed to take advantage of the changes than anyone doing a cold start. "The domestic political environment may have changed, but global investors aren't aware of that - after last November there's still some scepticism. The jury is still out on whether these reforms are really about Manmohan Singh finally putting his foot on the pedal, or are these just some more political we 'have to do something' imperatives ," he said. At the World Retail Congress a variety of questions seemed to bob up. How do we tackle the state-wise division? Is India getting federalised like the European Union? What will that mean for my business plan? A senior official of a major retailer noted that while it was all very fine for big ticket names such as Walmart and Tesco because they already have local partners, for others finding an Indian partner with the financial clout to handle the 49%, sourcing conditions and navigating the federal environment was not going to be easy. "There are still so many questions. The conditions have to be studied, we have to understand the state-wise conditions , and I'd say this is a good beginning , but there's still a long way to go," he said. As Bijou Kurien, president of Reliance Retail said: "We're getting a lot of questions. But it will take time for anything to happen on the ground. Everyone is being cautiously optimistic." Sanjay Kapoor of Genesis, who handles a string of luxury franchises including Burberry, is of the view that at his end of the market, it's business as usual. His partners aren't either over, or under excited by the changes. So will last week's announcement jump start a flush of FDI in retail in the short term? The answer from London is a categorical no, unless, as one analyst put it, Indian retailers were able to hardsell the India story to potential partners. At the top, the view is much more long term and sanguine. The World Retail Congress' global survey of retailers found that despite indications of a slowdown in China and India, retailers globally believe they remain the best growth markets. For now, the wait is for more clarity and certainty before India figures prominently in the megabucks investment category.

4. FDI in multi-brand retail comes into effect, India

Inc euphoric
NEW DELHI: Showing resolve for reforms, the government on Thursday notified its decision to allow global retail giants likeWal-Mart to open stores in India, on a day several political parties called Bharat bandh to protest against the policy. With this notification, multinational retailers can invest up to 51 per cent to open stores in 10 states and UTs which, till date, have agreed to implement the decision. "51 per cent FDI in multi-brand retailing, in all products, will be permitted ... " a notification by the department of industrial policy and promotion (DIPP) said. It said the decision will take immediate effect. The DIPP also operationalised September 14 Cabinet decisions to relax the sourcing norms for foreign retailers investing beyond 51 per cent in single-brand retail and allow 49 per cent FDI by foreign airlies in the domestic carriers. Besides, the decisions on permitting 49 per cent FDI in power exchanges and increase in foreign equity cap from 49 per cent to 74 per cent in the service providers like DTH in broadcasting sector have also been notified. In the most controversial area of FDI in multi-brand, the DIPP said the state governments and UTs would be free to take their own decisions. "Therefore, retail sales outlets may be set up in those States\UTs which have agreed, or agree in future, to allow FDI in MBRT (multi-brand retail trading) under this policy". Minimum amount to be brought in by the foreign investor would be USD 100 million and outlets may be set up only in cities with a population of more than 10 lakh. At least 50 per cent of FDI should be invested in 'back-end infrastructure' within three years of the first tranche. To protest against the government's decision, NDA, Left and SP called Bharat Bandh. The parties were also protesting against the diesel price hike and cap on subsidised LPG. India Inc euphoric Hailing the Centre's decision to implement FDI in multi-brand retail, the industry today said this will give a strong message to investors that the government means business and stands firm on its initiatives. Industry body Assocham complimented the government on its firm decision on economic reforms.

"This will give a strong message to investors inside as well as outside the country that the government means business," Assocham secretary general D S Rawat said. The politicians must distinguish between politics and economics in the interest of the country. Though not much investments will be flowing from investors immediately but the message it carried is huge, he added. The government today notified FDI in multi-brand retail operationalizing the Cabinet decision. The Department of Industrial Policy and Promotion also operationalized September 14 Cabinet decisions to relax the sourcing norms for foreign retailers investing beyond 51 per cent in single-brand retail and allow 49 per cent FDI by foreign airlines in the domestic carriers. Besides, the decisions on permitting 49 per cent FDI in power exchanges and increase in foreign equity cap from 49 per cent to 74 per cent in the service providers like DTH in broadcasting sector have also been notified. The development comes on a day when a nation-wide bandh was called by BJP, Left parties and UPA's outside supporter SP to protest diesel price hike and FDI in multibrand retail evoked mixed response with life and trade being disrupted in some states. CII said it is important to stay on track on reforms. "The entire decision on multi-brand retail will go a long-way in capital infusion in the country and also leads to strengthening of linkages including benefits to farmers," CII director general Chandrajit Banerjee said. This is an important reform for India for both growth and development, he added.

5. Sensex up 149 points in early trade as govt notify

FDI in retail
MUMBAI: The BSE benchmark sensex today recovered by almost 149 points in early trade on buying by funds and retail investors after the government notified its decision to allow FDI in the multi-brand retail sector. The 30-share barometer, which had lost nearly 193 points in the past two sessions, recovered by 148.57 points, or 0.81 per cent, to 18,497.82 points with all the sectoral indices led by capital goods and realty, were trading in positive zone with gains up to 1.32%. The wide-based National Stock Exchange index Nifty, regained psychological the 5,600level, by rising 47.95 points, or 0.86%, to trade at 5,602.20.

Brokers said emergence of buying by funds as well as retail investors after the government yesterday went ahead implementing its decisions to allow FDI in multibrand retail and liberalise foreign investment in aviation and broadcasting sectors, buoyed the trading sentiment. Further, a firm trend in the Asian region, too, supported the recovery here, they said. In the Asian region, Japan's Nikkei was up by 0.61%, while Hong Kong's Hang Seng gained 0.52% in early trade today. The US Dow Jones Industrial Average ended 0.14% higher in yesterday's trade.

6. FDI in retail: Housing developers hail the move,

call for realty reforms

MUMBAI: Hailing the UPA government's decision to allow FDI in retail as the right move, thehousing developer community on Thursday called for accelerating the economic reforms process by covering the realty sector too. "India is the world's second largest retail market and the re-launch of the reforms process with the FDI in the sector will definitely help revive the sluggish economy and generate employment," said Paras Gundecha, president of Maharashtra Chamber of Housing Industry and Confederation of Real Estate Developers' Associations of India (MCHI-CREDAI). He said the retail sector has established itself as the sunrise industry and with the FDI it will get a tremendous boost leading to establishment of new chains providing newer outlets for farmers, traders and the industry as a whole. "We appeal to all sections to support this policy decision and help revive the economy without any more loss of time," he said. Gundecha, however, stressed that while allowing FDI in multi-brand retail, the government should adopt a balanced approach on it and protect the interests of small retailers who are self-employed. Stating that rapid urbanization is the reality of the day, Gundecha said the real estate industry looks forward to tapping the vast opportunities in housing, retail and office segments. "This is where the realty reforms come into picture as the retail chains will need huge complexes. For long, the growth of real estate industry has been thwarted by limitations of land availability, delays in approvals, expensive and almost prohibitive funding and ever increasing rise in costs inputs like cement, steel, sand and even labour," he said. Gundecha offered to open the process of dialogue with the government and its various agencies to work on realty reforms.

7. FDI in multi-brand retail bound to affect small

traders, C Rangarajan says

NEW DELHI: Amidst concerns of the opposition parties over the adverse impact of foreign direct investment into multi-brand retail, chairman of the Prime Minister's economic advisory council(PMEAC) Dr C Rangarajan said it would affect the small traders, who need to become part of the modern retail change story. Addressing an international seminar on 'Organized Retailing vis-a-vis Farm Economy of India' in Hyderabad on Friday, he, however, said the fear that FDI in multi-brand retail "could result in large scale replacement of small retailers is misplaced." According to him, "The existence of large retail chains even in advanced countries has not wiped out the small shopkeepers or what are called 'Mop and Pop' stores. They retain a personal touch which is absent in large retail outlets. Also, their proximity to where people live is a great advantage." Rangarajan viewed that an overwhelming percentage of food and grocery being sold in India was through traditional retail outlets such as kirana stores, street hawkers and wet market stall operators. "Once the share of overall modern retail in food reaches about 25-30%, it is bound to affect the kirana traders first and then the small and marginal traders." To address the adverse affects, he advised the small traders to take part in the modern retail change story and get assimilated into organized retail, upgrade through infusion of capital and better training and organize themselves under their banner through franchises. Rangarajan, who has been for years advocating FDI into retail sector, said the aim of the modern organized retail was to offer better prices to both consumers and producers and reduce the gap between the two. Saying that modern retailers were able to offer better prices to consumers and producers owing to economies of scale in procurement, handling and logistics, he has advised the farmers to form into groups for better bargaining with the modern retailers. "Direct marketing of produce to modern organized retail networks also helps the farmer in getting a better price than through mandis. Regular supply agreements with groups of farmers and modern retail outlets will help farmers have an assured minimum income besides cutting down on wastage, transportation costs and providing fresh supply of food items to consumers," the PMEAC chairman said. Citing high vegetable prices in 2010-11 that shot up by 60-70% owing to deficiencies in the current archaic marketing arrangements, he said FDI flows into backend infrastructure such as cold storages and warehouses could help softening of prices and thereby help contain inflation.

Rangarajan said the Agriculture Produce Marketing Committee (APMC) Act was amended aimed at providing more competitive choices to the farmers and to encourage private investment. Now "there is a strong case for removing perishables from the purview of APMC regulations as the nature of the commodity requires speedy transaction in order to minimize wastage." Clarity on quantity of foreign investments into multi-brand retail sector is expected in a few months, he said, expressing inability to hazard a guess on how much it could address the current account deficit, which stood at 4.2% of the gross domestic product ( GDP) last year. "The total capital flows that are required to cover the current account deficit are around $70 billion and therefore one form of capital inflow cannot really make a big dent on financing the current account deficit," he said.

8. Overseas retailers can't log into e-commerce

NEW DELHI: Foreign retailers will not be permitted to engage in e-commerce activities, a move which comes as a huge relief for the country's fledgling domestic e-commerce industry. The government on Thursday notified rules, which would help implement the decision to allow foreign retailers in the multi-brand retail sector. The rules make it clear that retail trading, in any form, will not be permissible by means of e-commerce for companies with FDI, engaged either in multi-brand or single-brand retail activity. The commerce and industry ministry said on Friday that the FDI policy does not permit FDI in business-to-consumer (B2C) e-commerce. "E-commerce activities refer to the activity through the e-commerce platform. Such companies would engage only in business-to-business (B2B) e-commerce and not in retail trading, inter-alia implying that existing restrictions on FDI in domestic trading would be applicable to e-commerce as well," the ministry said in a statement, while elaborating on the policy guidelines. The ministry also made it clear that investments received under the FDI scheme need to be compliant with FDI policy. The ministry was reacting to queries whether e-commerce companies, which have received foreign capital through the private equity route, could get foreign capital in future. The government statement makes it clear that companies such as Wal-Mart and others, which enter multi-brand or single brand retail sector, will not be able to do business using the online platform. The government in its circular on April 10, 2012, permitted FDI up to 100% in e-commerce activities, subject to certain conditions. While formally spelling out the rules, the government has left it to individual states to implement the policy on allowing foreign retailers in the multi-brand retail sector. It has allowed 51% foreign investment in multi-brand retail and 100% in the single-brand format, subject to some rules which have been notified.

http://timesofindia.indiatimes.com/business/india-business/Overseas-retailers-cant-log-into-ecommerce/articleshow/16499383.cms

9. FDI in retail full of holes: BJP

NEW DELHI: After demanding rollback of the FDI in multi-brand retail announcement, the BJP on Saturday said the measure may not see the light of day as it is "full of holes" and multinationals may not find the offer attractive enough to invest in India. Former finance minister and BJP leader Yashwant Sinha lashed out at Prime MinisterManmohan Singh for his statement yesterday in which he had justified the notification of FDI in multi-brand retail and the hike in diesel prices. "When the NDA was in power, Priyaranjan Dasmunshi (Congress) had raised the FDI in multi-brand issue in Parliament and said it will be an anti-national step. Arun Shourie had then assured the House that no such step is being taken... What was anti-national in 2002 has become patriotic today," he said. Finding faults with the FDI in multi-brand policy, Sinha said, "The implementation of this earth-shaking reform is to be decided by the states... We are going to have elections in Rajasthan and Delhi. An efficient company like Walmart has said it will take 18 months to come to India. What if the government changes?" He maintained that though there may be certain "best practices" of the multinationals in processing, cold chains, transportation and the like which can be emulated, there is no technology that is available only with them and not with India. "So for this FDI is not required," Sinha said. "This FDI in multi-brand retail is so full of holes, so full of problems that I cannot say any company will come to India," Sinha said.

10. FDI in retail will throw up lending opportunities:

Ratnakar Bank MD
Kolhapur-headquartered 69-year old Ratnakar Bank is undergoing a metamorphosis. Under new management led by Vishwavir Ahuja, who was with Bank of America for 28-years the bank has raised over Rs 720 crore capital from private equity investors and is expanding across the country. In an interview to ToI, Mr Ahuja speaks on how the transformation is progressing. How is the expansion strategy progressing? Have changes in regulations such as new priority sector norms hit your growth plans? We have to reach critical mass in terms of presence, footprint and scale and till then there is no bank to talk about. For any bank which is going to have some credible

presence, a product offering and profitability, needs to have a scale. So reaching some level of 200 to 250 branches is an absolute necessity. If we want to be an independent entity in the long-term we have to reach the scale. We are touching 120 branches and we are on track to cross 150 by the end of March 2013. Obviously we are not positioning our self to compete with the big boys. From a segment and geographic point of view we will focus on the small and medium enterprises in the tier II and tier III cities. We have to find a slightly different niche. The second area is agri and financial inclusion which we see as an opportunity. I believe that the new priority sector, which focuses on direct lending, guidelines, would be tougher for bigger banks who are lending to larger players. I believe that regulation will get tougher and the windows which are open will gradually shut, and we will all have get our business models right. Do the recent policy announcements allowing FDI in multi-brand provide a boost to your strategy? How does retail figure in your strategy? As we move up the value chain in terms of size, profile, and competitiveness we don't necessarily want to target the large corporation in the country as we won't be competitive compared to the bigger domestic or foreign banks. But the large corporate ecosystem, which includes their suppliers and distributors, is a great opportunity for us. The risk in this segment is somewhat mitigated because in the middle there is a very credible large intuition or corporation with strong credit profile. Finally the game is a longer-term opportunity in retail but not in the shorter term. In the medium to longer term it will be retail which will require the infrastructure, the branches, the technology, the branding, the people, the products, the collection network and risk management. All these takes a minimum six to ten year time frame for any retail endeavour to become successful and profitable. But as we are growing until we reach the threshold there is no point in saying this is an active part of strategy from a revenue contribution or composition point of view. So there are no plans to offer the complete suite of banking services to corporates such as investment banking, treasury and so on.. Not at all. It is high cost-low return, and not in keeping with our size and profile, at the same time we have to be mindful that our cost structure has to be kept very competitive. We manage our financial and operating metrics very tightly. Other lenders say that the SME segment poses a higher credit risk in a downturn? We are obviously operating in a slightly higher risk segment and it therefore requires a closer access and proximity with people who run the business and requires tighter control over the risk management. You have to be really close to the customer if you want to do SME. This is where banks tend to go wrong as the intensity and frequency of customer connect drops down and risks don't get controlled sufficiently. This is a

business where we have to be really close to the customer at all times. You need a strong risk management coupled with customer relationship management. AS things stand our gross NPA is less than one percent. We might see some deterioration because of overall economic environment impacting credit quality across the board, but if the occasional credit does slip my worst case is the 1.25% mark. How have you managed the challenge of bridging the cultural divide as you modernise the bank? That's where the most radical transformation has been required in the institution. We have faced the same issues that other old private sectors have but we have dealt with them quite differently. The traditional footprint has been around Kolhapur in Western / Southern Maharashtra and Northern Karnataka. For the first 18 months we really focused on securing everybody and assuring full job security. The second decision was that the first stage of investment would happen in and around Kolhapur itself where we have a 65-year old presence and brand equity. We created much greater opportunity there itself, providing higher quality job and better job content with thousands of man hours of training which included every thing. We started a Ratna School of Banking in Kolhapur by leasing space from one of our business associates in education, and we run training programmes around the year. People have been allowed to choose their own career pace, those who want to grow faster we are promoting them faster than the IBA scales allow them. We have told everybody that ultimately we will build a meritorious organisation, but even in the short-term we will provide the opportunity for those who want to grow faster. This has created a very positive culture in terms of integration and all round participation in the Bank's growth.

11.

Bharti Walmart not to wait for all states to allow retail FDI

HYDERABAD: Bharti Walmart will not wait till all states in India allow FDI in multibrand retail to roll out its plans and may start opening its outlets from states like Maharashtra and Andhra Pradesh, a top official of the retail giant said here on Wednesday. Bharti Walmart managing director and CEO Raj Jain said the company will be able to come out with specific plans with regard to retail business only after 45 days as it is currently studying the government notification. The company is a 50:50 joint venture between Bharti Group and US-based Walmart for wholesale cash and carry. "I think there are enough states and big states like Maharashtra and Andhra Pradesh which have expressed their willingness to allow FDI. "I think those states are big enough to start our plans (for retail)," Jain told a press conference.

Recently, the government had allowed 51 per cent FDI in multi-brand retail but left it to the states to permit opening of foreign funded stores. Such stores would be allowed to be opened only in cities with a population of over one million. A foreign retailer would need to invest a minimum of USD 100 million, of which 50 per cent must be on back-end infrastructure within a period of three years of the commencement of the overall investment. "It is only nine days since the FDA is opened in eight states. It is too early for us to share any clarity or details on our retail plans. We are studying the policy. It will take 45 days to come out with plans, Jain said in reply to a question. Earlier, Jain inaugurated Bharti Walmart's first 'Best Price' modern wholesale cash and carry store in Hyderabad. This is the 18th store in the country and third in Andhra Pradesh. "We are ready to open another five to six (wholesale) store in this year and every year we will open about 10 Best Price stores with each outlet of about Rs 35 crore investment. "We are going to open two stores in AP in the next six months," Jain said. Bharti Walmart is a major supplier to Bharti Retail, which runs over 205 retail stores in different formats under the 'Easyday' brand. Commenting on the government decision to allow FDI in retail, he said it is a calibrated cautious approach even as there has been concerns from political parties and others on the policy.

12.

FDI in multi-brand retail will benefit farmers: Bhupinder Singh Hooda

GURGAON: Haryana chief minister Bhupinder Singh Hooda on Tuesday said he was in favour of FDI in multi-brand retail from the very beginning. "FDI in retail will help farmers. They will get right prices of their produce because companies will purchase directly from them," Hooda told reporters here after the inauguration of Rapid Metro's trial run. Consumers would also get quality products at comparatively cheaper rates, he said. "India is second largest producer of vegetables and fruits in the world. During exports, about 30 to 40 per cent fruits and vegetables perish. Once FDI enters in retail, number of cold chains will increase and this will help in avoiding wastage," he

said. Moreover, the role of middlemen would be over and thus farmers would get right price of their produce.

13. Indias FDI retail saga: From Wal-Mart to Agarwal-Mart?

WASHINGTON: "I actually did vote for the $ 87 billion (war funding) before I voted against it," was a line that destroyed John Kerry's presidential campaign in 2004. He could never live down the flip-flopper reputation after opponents simplified his statement to "I was for the Iraq War before I was against it." Subtle nuances and elegant explanations, not to speak of a possible change of heart after things went south, were lost in the verbal melee in an atmosphere where you were either "for it or against it." Something similar is happening in the debate in India about foreign direct investment in the retail sector, in which the American superstore Wal-Mart has become the figurehead. You are either for FDI or against FDI; Wal-Mart is all good or pure evil. Look, look ... says one distinguished opposition leader now in his twilight years, even Americans (or New Yorkers) are against it. Of course, some Americans are against Wal-Mart; many are for it. Many Americans are also pro-outsourcing. And anti-globalization. And pro-China. And, anti-China. It's never black and white. In fact, as the popular Facebook-era metaphor goes: It's complicated. As someone who divides his time between US and India, here's my $0.02, or Rs 1.06 at the current exchange rate, about the FDI/Wal-Mart debate: I am against Wal-Mart in America, and for Wal-Mart in India. How's that for a $2 Made-in-India flip-flop or "double standard" as a colleague put it? I am also mostly vegetarian in the US, but have no problems eating non-vegetarian in India. And there's a connection between the two. The simple explanation for all this is the US and India are at different stages of market economics, especially in the in production, distribution and marketing of food produce. The US has made some awful mistakes in embracing its current food cycle, the same way it has erred espousing a mindless automobile revolution. So while adopting the "good" that FDI retail/Wal-Mart can offer, there is no compelling reason for India to follow the US model to the T; it need not make the same mistakes. Call it retail revolution with Indian characteristics, if that is possible. Let's break it down with examples by first looking at the "good" that the proposed retail revolution can bring into India, some of which has been articulated by ardent votaries of FDI. First off, it will improve supply chain logistics, including cold storage, and broadly bring India further in tune with 21st century western style market economy. It will save the 30 per cent wastage of perishables that we have been moaning about for 30 years. Of

course there is always the question about whether it is better to eat fresh produce never mind the wastage, or whether to can the waste and eat preserved food. We'll come to that later the simple answer could be it is better to eat something than nothing at all ... Initially at least, the so-called FDI revolution in retail will provide better prices and returns to farmers through better yields, productivity, and distribution. It could also offer more choice, better quality, greater uniformity, improved display and packaging. All this is not a given and will not necessarily improve your health or quality of life. In fact, it could be the other way around. Here's how it has panned out in America. The corporatization of the food chain has its upside and downside. Farmers are coaxed or forced to improve yields, attain the kind of quality and uniformity that corporate interests demand, and as a result may get more remunerative prices, at least in the beginning. But it also edges out the small and marginal farmer, vastly reduce farm labor (with increased mechanization), and result in mediocre but commercially viable produce. In fact, this prospect brings home the very malaise that more "advanced" western societies are starting to realize and wanting to avoid or reverse. This is where you want to continue buying from the neighbourhood push-card vendor in India who's bringing in fresh produce to your doorstep from a local grower rather than the retail chain with its stock of mass produce whose provenance and vintage is unknown. This is where more and more westerners, at least those who can afford it, are switching to shopping at farmers market with local produce even though it is much more expensive than supermarkets. So why is it produce cheaper (or will eventually become cheaper) in the supermarkets, you ask? Because, the economies of scale make big chain produce much cheaper. They also have deeper pockets to suffer initial losses and eliminate competition, as Wal-Mart has demonstrated in many countries. What modern retail in the west has done is introduced food produce not just on an industrial scale but on an industrial quality too. And this is where my "prefer vegetarian in US but okay with non-veg in India" choice kicks in. That massive ten-pound pack of chicken breast at dirt cheap price ... we really have no idea of its origins or vintage. Wait ... we do have a rough idea. It was raised in a massive chicken farm owned by a corporate monopoly in methods and circumstances that will make you puke. Chicken (or cattle) that are cooped up in the dark, medicated, and force-fed continuously so that they attain maximum weight in the minimum time with minimum movement and metabolism. That's how corporates maximize profit. In India, you still have to the option of seeking out the healthier free-range or home-grown chicken, fresh locally grown- or sourced vegetables and fruits. You could be saying goodbye to all that (or at least end up paying much much more) with the FDI fiesta. On a recent trip to the great American outback, your correspondent saw visual evidence of what this corporatization and industrialization of food production widely seen as inevitable once the retail FDI gates are open can do to the landscape and population. Thousands upon thousands of acres of farmland, typically owned or leased by corporates

or large farming interests, grew bounteous harvests of corn (even in a drought year). This was not the corn, the "bhutta" from the push cart vendor that you eat with relish. It is mostly genetically modified, tasteless, industrial-grade rubbish that is aimed at maximizing yield. When it is not used as animal feed, it is turned into corn syrup which is used sweeten almost everything you see in the supermarket, including that sugary soft drinks you guzzle. The result is all too visible in much of the US, nowhere more than the heartland of the country, where people come in large, economy size, with consequent health issues (obesity linked diabetes and heart disease). Much of this comes from eating cheap, lowquality, industrial grade food from mass-produced breads and meat. There are few places in the world is where food available as cheaply (relative to income) as America. Till a couple of decades ago, Americans spent up to 15 per cent of their income on food; it is now below ten per cent and still dropping. It is now an accepted fact that the poorer the state in America, the more obese people are, because they are eating cheap, massproduced food of the kind offered by fast-food chains. That dreadful burger and pizza and cola that you are wolfing down from the retail assembly line ... it's the cheapest and the worst kind of food you could be eating. So here's the equation. If you allow the kind of retail revolution that has overtaken America, you could end up consuming cheap, low grade, mass-produced, industrial quality produce. Of course, it is easy to sniff down at all this from the high vantage point of those who have money in the pocket and the luxury of choice. But what about those with limited means who cannot afford to spend as much on fresh produce as corporatization of the food chain takes hold? So should be just reject the American/western way and stick to our current way, as many of those opposed to the Wal-Mart way are recommending? Then what happens to the farmers who seek better market access and greater returns, who want to eliminate waste and spoilage. Isn't FDI retail lucrative for him at least to begin with, before predatory practices set in. Which way should we go? Will we, to paraphrase John Kerry, end up being "for it, before we turn against it?" The answer, without it sounding like a cop-out, is to embrace the middle way. We need all the systems and logistics that FDI retail will bring, but we need to tweak it to make sure we don't go the American way. In some ways we should be reassured by what has happened already: the arrival of American retail food chains such as KFC, McDonalds, and Pizza Hut, did not destroy Indian eateries or Indian eating habits. We took the best practices from them, and today many Indian food outlets have the same look and feel of their western counterparts while continuing to serve the Indian palate. So the arrival of Wal-Mart may just herald the birth of the Agarwal-Mart.

14. FDI in retail positive for Indian economy

CHENNAI: With an overall FDI ( foreign direct investment) inflow of $16.74 billion FDI in single brand retail fell marginally from 0.03% in December 2011 to 0.02% in June 2012, as per a recent report by Knight Frank. "While the macro economic data continues to reflect weakness, the business sentiment has significantly improved on the back of recent government measures like cutting back on fuel subsidy and liberalization of FDI policy in sectors like retail, aviation, broadcasting and power exchanges," says the Knight Frank report. The retail industry in India needs a strong back end support and the permission for foreign investment in a phased manner will help in addressing the technology and experience gap that the industry is facing currently. The impact of big foreign retail players on the domestic unorganised players would be positive. In fact, it is likely that these unorganised players would move to a higher equilibrium level of efficiency in a medium to long term horizon, added the report. Moreover, the sentiment boost by the recent measures will impact the overall real estate sector as relaxation of FDI limits in the retail sector would have direct a impact on the commercial real estate market.