M A I N   N E W S

Govt: No major changes in single-brand retail 
Ruchika M Khanna/TNS

Chandigarh, July 19
The government is not likely to go in for any major changes in single-brand retail, especially with regard to the sourcing of goods from micro, small and medium enterprises (MSME).

Commerce Minister Anand Sharma in Chandigarh

Foreign investors will have to source 30 per cent of its goods from domestic MSMEs.

Union Commerce Minister Anand Sharma made this very clear on the sidelines of his meetings with the Chief Ministers of Punjab and Haryana that had been convened to have consultations on the issue of going ahead with multi-brand retail.

Amid talk of the government willing to tweak certain rules to ease out Swedish furniture retail giant Ikea’s foray into India, the minister made it clear that the condition on sourcing from local small and medium enterprises would not be relaxed. “But we are willing to talk to them wherever clarity is required,” he said.

In June, Ikea had announced its plans to invest euro 1.5 billion (around Rs 10,500 crore) in India over a period of 15 to 20 years.

In a phased roll-out, it plans to set up 25 furniture stores, restaurants and food marts under the Ikea brand.

Initially, the company will invest euro 600 million (Rs 4,200 crore). Another euro 900 million (Rs 6,300 crore) will be invested later.

The minister said that Ikea was already sourcing furniture, furnishings and steel fixtures from textile clusters and small steel hubs in India.

“Ikea is already sourcing goods worth 500 millon euros from here. Over the next 15 years, their total sourcing from the country is expected to go up to 1.5 billion euros,” Anand Sharma added.

The Commerce Minister said that the government had kept the roll-out of multi-brand retail on hold for the time being.

“This will be the real game changer. The objective of keeping it on hold is for the larger purpose of consultation with all stakeholders - the farmers, traders, consumer organisations, small and medium industry and all state governments.

“Most of the state governments are ok with the policy that has a distinct India signature. Fifty per cent of all investments will be in rural areas to establish an integrated value chain - from modern warehouses to cold storages and cold chain transportation.

“FDI in multi brand will generate employment in rural areas, lift the agrarian economy and consumers will have to pay less for better quality. Since it will promote investment in post-harvest technology, it will reduce post-harvest losses that are abnormally high at 40 per cent. Seeing the benefits, most of the agrarian states have endorsed it,” he said.

The minister, however, declined to say much on the reasons for Punjab Chief Minister’s unwillingness to endorse multi-brand FDI.

“Initially, the Punjab Government had accepted the opening of FDI multi-brand retail, but later they changed their stand,” he said.

When asked if the frequent strikes at the Maruti unit at Gurgaon - and the arson there yesterday - would shake investor confidence in India, Anand Sharma replied in the negative.

“The Indian government has a binding commitment to the reforms agenda and the government is committed to ensuring an investor supportive regime. India is still among the most sought-after investment destinations.

“Last year alone, the foreign direct investment in India had crossed $50 billion. Yes, our exports are getting wired because of the global downturn, but we will soon come out of this situation,” he said.