Govt flaunts ease of doing business ranking but stays silent on retail FDI

Many fear that with general elections in 2019, it would be status quo on foreign investment norms

Even as the government on Saturday went all out to showcase its rise in the World Bank’s Ease of Doing Business rankings, global retail biggies expecting some announcement around foreign direct investment (FDI) during the World Food Fair event, were left wanting for more.

According to a number of high-level executives from various global retail players who met Cabinet ministers — Harsimrat Kaur Badal, Suresh Prabhu — and officials from the Prime Minister’s Office (PMO) and NITI Aayog, the government has remained non-committal on making changes as well as allowing FDI in retail.

“This was a perfect event where announcement on allowing FDI in non-food items could have happened. They did not do that. During our meeting with the ministers, no discussion happened around FDI in retail. As we have been saying for the last many years, till that happens we would not find India a market to invest in,” said a senior vice-president of a Europe-based retail chain.

 

Industry biggies such as Walmart have again made it clear that they expect an approval to sell at least 25 per cent non-food items via the updated FDI norms for food-only retail. “At least 25 per cent FDI should be allowed in non-food... We have been saying it through Ficci,” said Krish Iyer, President and CEO of Walmart India, during one of the sessions at the World Food India.  

Many of the players, who were expecting the PM to make an announcement on FDI in retail, now fear that with the general elections in 2019, it would be status quo on foreign investment norms. “Next year would be all about populist agenda. So, coming out with changes in FDI norms would be a move against Indian retail. I do not think anything is going to change for us,” said a retail player with business-to-business and business-to-customer chains worldwide. 

Industry experts believe while India’s ranking in overall ease of doing business might have gone up, it still lags in retail. “FDI in retail is still complicated. Things like single brand and multi-brand retail are unique to India. There is practically no ease of doing business in brick and mortar retail and a lot of work needs to be done,” said Arvind Singhal, Chairman and Managing Director of Technopak.

Union Food Processing Minister Harsimrat Kaur Badal in March this year had in an interview with Business Standard said the government was working on allowing global retailers to sell a percentage of non-food items. She had said the changes might happen before the World Food India event. “Before (the) World Food India, a lot of things might just get tied up,” she had said. 

The ministry of food processing industries (MoFPI) has come out with a ‘food plus’ component in the policy on FDI in retail under which companies would be allowed to sell a percentage of non-food items at food-only retail stores. The ministry had put forth conditions that the non-food items would have to be made in India, and global retailers would have to put investment in the back-end, at the ‘farm gate’ level which would directly benefit cultivators.