Retail FDI plan shot down

Scojo, a US-based non-profit organisation, has the licence to trade in reading glasses via wholesalers, general stores, chemists and micro-entrepreneurs, who are especially trained to operate in rural areas.

But in a recent request to the Foreign Investment Promotion Board (FIPB), the Scojo Foundation had sought an approval for direct retailing through mobile vans.

The commerce ministry and Department of Industrial Policy and Promotion (DIPP) in a meeting, has rejected the proposal, as the distribution of reading glasses through mobile vans operated by an Indian subsidiary of a foreign company is equal to retail trading, which is not in accordance with the existing foreign direct investment (FDI) policy.

Currently, 100 per cent FDI is allowed through the automatic route in cash and wholesale trading but no FDI is allowed in direct retailing.

In its application, Scojo had argued that its business of distributing high-quality reading glasses is targeted at the most disadvantaged section of society in far-flung rural areas.

The company said, a requirement to include an intermediary in the chain will jack up the final cost of product, making it unaffordable for the poor.

The health ministry in a letter to the commerce ministry, had supported Scojo's application as the sale of low-cost reading glasses will correct optical ailments like aphakia, pseudophakia, and presbiopia among children and the poor.

Scojo Foundation has been operating in rural Andhra Pradesh since 2001. Explaining its business model, Scojo said in cities such as Hyderabad and Vishakhapatnam, a mobile unit distribution channel was taking shape.

"A van will visit high-density areas to screen for Presbiopia and distribute reading glasses if required."