Response to question for Jan 7-13: WHAT WOULD BE THE IMMEDIATE BENEFITS, AND FOR WHOM?
FDI in multi brand retail will result in the strengthening of the back end supply chain infrastructure for all products, ranging from storage to processing and manufacturing infrastructure, which would reduce post-harvest losses.
Direct purchase by the retailers would also drastically reduce the number of needless middlemen thus farmers will get better prices for their products. Consumers will benefit from the reduction in prices that would result from the supply chain efficiencies to the improvement in the quality of the products. Food safety standards would also get better with improvised testing and storage facilities.
Lowering of prices would lower inflation and the current incomes of the economically disadvantaged sections would hence be able to buy more than before. Small and medium manufacturers are also going to be benefited as 30 per cent sourcing from these industries has been made mandatory. This would provide the necessary scales for these entities to expand their capacities in manufacturing, hence adding up to the employed population and also boosting the manufacturing sector of the country.
These industries also stand to get added advantages of technology up gradation, which would give them an upper hand in productivity and local value addition, thereby raising the profitability and earnings of the small manufacturers. New manufacturing opportunities will also open for the country’s micro, small and medium enterprises. Investments in the organized retail sector will see gainful employment opportunities in agro-processing, sorting, marketing, logistic management, small manufacturing sector like textiles and apparel, construction, IT, and other infrastructure.
National Institute of Bank Management, Pune
(This entry is part of our FE MASTERMIND contest. The views expressed in this article are personal and not that of the newspaper.)