Political rhetoric aside, a large cross-section in Punjab is batting for FDI in retail. Being one of the most progressive agrarian economies, Punjab will be a major sourcing state for any foreign retailer who sets up shop in India.
The ruling party in the state, SAD, may have been forced to take a U-turn on its support for allowing FDI because of political considerations, but in private, SAD leaders agree that it will help the state's sagging agro economy. However, concerns about small traders and farmers persist.
There is almost a consensus on the need for a regulator for the foreign retailers and some protectionist policy for the small domestic companies.
The Tribune spoke to some prominent politicians and an industry representative, asking them about FDI and whether it would help carry the growth story of Punjab's farm sector forward. Here is what they had to say:-
Navjot Sidhu: I believe that FDI in retail sector is in nobody's interest, be it consumers, farmers or traders. The Indian economy is dominated by the services sector which accounts for 58 per cent of the country's GDP. Allowing foreign players, with deep pockets, will kill competition and lead to loss of jobs. International retailers operate on the principle of buying internationally at cheapest prices. A majority of items to be sold by international retailers are going to be sourced from cheaper manufacturing economies like China.
Mohinder Aggarwal: The FDI in retail sector will be in nobody's interest, except big foreign companies that will get access to a huge Indian market. The government cannot allow foreign companies to flourish at the cost of thousands of small retailers and businessmen. All middlemen and small traders will be eliminated when foreign companies set their stores here, thus leading to unemployment.
Amarjit Goyal: Opening of FDI in retail will be beneficial for all, provided the government allows it with some riders. The government should enhance the limit of sourcing from local SMEs to 50 per cent (from the present 30 per cent), and it should be done only from Indian SMEs. Also, the government should ensure that the benefits reach farmers by putting a clause that the farmers be paid more than the actual cost of crop production.
Navjot Sidhu: Without getting into what the SAD is saying, I would like to reiterate that the FDI will not benefit the farmers. Those advocating FDI say the farmers will benefit. I only want to ask what do they have to say on the plight of sugarcane farmers who sell their produce right at the gate of sugar mills. If the farmer does prosper on account of international retailers then why it is that the farmers in the US and the European Union have to be subsidised to an extent of $1 billion per day.
Mohinder Aggarwal: The government is favouring FDI in retail, saying that it will help improve infrastructure. But that may not be the case. Two years ago, the government opened FDI in construction of cold storages, but it failed to attract any foreign player. The government has to realise that infrastructure development will have to be the joint responsibility of the state as well as the Central Government. As far as benefiting farmers in Punjab, even the big agri houses who are currently sourcing their produce from here, are paying only a small percentage of fixed profit to these farmers.
Amarjit Goyal: Punjab will be a major state for sourcing of food grains and vegetables. This will not only help improve the economic condition of farmers, but also help in crop diversification as more farmers will grow vegetables for these companies. We have already seen the benefits reaching those farmers who are supplying to big cash and carry stores in the state.
Navjot Sidhu: We were never for the FDI in its current form. We are not against FDI but want a regulator to keep a check on predatory companies so that they don't get a free hand to source from cheaper manufacturing economies like China. We are also against the government allowing the companies to have 51 per cent stake in FDI as it will allow these companies to have a say in policy determination.
Mohinder Aggarwal: A forceful Opposition is beneficial in the larger interest of the public, as it keeps a check on the government's functioning and also raises the concern of the common man. One cannot ridicule the BJP for taking up the cause of thousands of traders.
Amarjit Goyal: I would not like to comment on this. But a healthy opposition will obviously augur well for all stakeholders. The government will gain in the form of higher VAT returns through these retailers, consumers will get better quality of goods, and farmers will get higher prices for produce.
The ruling party in the state, SAD, may have been forced to take a U-turn on its support for allowing FDI because of political considerations, but in private, SAD leaders agree that it will help the state's sagging agro economy. However, concerns about small traders and farmers persist.
There is almost a consensus on the need for a regulator for the foreign retailers and some protectionist policy for the small domestic companies.
The Tribune spoke to some prominent politicians and an industry representative, asking them about FDI and whether it would help carry the growth story of Punjab's farm sector forward. Here is what they had to say:-
On FDI in retail sector
Amarinder Singh: Allowing FDI in retail will augur well for the farmers of Punjab and all other food producing states. The foreign players entering the Indian market in multi-brand retail will not only pay better prices to farmers but also help bring quality and good manufacturing practices in agriculture. Navjot Sidhu: I believe that FDI in retail sector is in nobody's interest, be it consumers, farmers or traders. The Indian economy is dominated by the services sector which accounts for 58 per cent of the country's GDP. Allowing foreign players, with deep pockets, will kill competition and lead to loss of jobs. International retailers operate on the principle of buying internationally at cheapest prices. A majority of items to be sold by international retailers are going to be sourced from cheaper manufacturing economies like China.
Mohinder Aggarwal: The FDI in retail sector will be in nobody's interest, except big foreign companies that will get access to a huge Indian market. The government cannot allow foreign companies to flourish at the cost of thousands of small retailers and businessmen. All middlemen and small traders will be eliminated when foreign companies set their stores here, thus leading to unemployment.
Amarjit Goyal: Opening of FDI in retail will be beneficial for all, provided the government allows it with some riders. The government should enhance the limit of sourcing from local SMEs to 50 per cent (from the present 30 per cent), and it should be done only from Indian SMEs. Also, the government should ensure that the benefits reach farmers by putting a clause that the farmers be paid more than the actual cost of crop production.
On advantages for Punjab
Amarinder Singh: Punjab is one of the top food producing states. The state's experience with agri conglomerates, be it Bharti Wal-Mart, Tata Khet Se, or Pepsi Co, has proved that farmers supplying their produce to these companies are earning much more than those selling in mandis. In latter's case, it is the middlemen who are making profit. The corporate sector has also brought better agriculture practices by providing better seeds, educating farmers on efficient use of fertilisers/ pesticides; and helped them improve post-harvest technology. Navjot Sidhu: Without getting into what the SAD is saying, I would like to reiterate that the FDI will not benefit the farmers. Those advocating FDI say the farmers will benefit. I only want to ask what do they have to say on the plight of sugarcane farmers who sell their produce right at the gate of sugar mills. If the farmer does prosper on account of international retailers then why it is that the farmers in the US and the European Union have to be subsidised to an extent of $1 billion per day.
Mohinder Aggarwal: The government is favouring FDI in retail, saying that it will help improve infrastructure. But that may not be the case. Two years ago, the government opened FDI in construction of cold storages, but it failed to attract any foreign player. The government has to realise that infrastructure development will have to be the joint responsibility of the state as well as the Central Government. As far as benefiting farmers in Punjab, even the big agri houses who are currently sourcing their produce from here, are paying only a small percentage of fixed profit to these farmers.
Amarjit Goyal: Punjab will be a major state for sourcing of food grains and vegetables. This will not only help improve the economic condition of farmers, but also help in crop diversification as more farmers will grow vegetables for these companies. We have already seen the benefits reaching those farmers who are supplying to big cash and carry stores in the state.
On parties playing politics
Amarinder Singh: There is no doubt that the hue and cry on FDI is merely to gain political mileage. The UPA has taken a step in the right direction to help recover the country's economy. Opening FDI in retail will also help curtail inflation, as it would bring better supply chain management. The fear allayed by the Opposition that the entry of foreign companies will ease out the mom and pop stores has no basis. Everywhere in the world, neighbourhood retail stores have coexisted with big retailers. Navjot Sidhu: We were never for the FDI in its current form. We are not against FDI but want a regulator to keep a check on predatory companies so that they don't get a free hand to source from cheaper manufacturing economies like China. We are also against the government allowing the companies to have 51 per cent stake in FDI as it will allow these companies to have a say in policy determination.
Mohinder Aggarwal: A forceful Opposition is beneficial in the larger interest of the public, as it keeps a check on the government's functioning and also raises the concern of the common man. One cannot ridicule the BJP for taking up the cause of thousands of traders.
Amarjit Goyal: I would not like to comment on this. But a healthy opposition will obviously augur well for all stakeholders. The government will gain in the form of higher VAT returns through these retailers, consumers will get better quality of goods, and farmers will get higher prices for produce.
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