Food Inflation in India

Published: 2021-09-13 17:05:09
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Category: Philosophy

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Opening up multi-brand retail for up to 51 percent foreign direct investment would help curb inflationary pressure and modernize the sector. This will allow global retailers like Wal-Mart, Carrefour and Tesco to enter the Indian market through strategic partnership in the multi-brand retail segment. These supermarket chains like Wal-Mart and Carrefour would modernize the retail sector in India.
Food inflation in India can be reduced by 50-70 basis points by allowing foreign direct investment in the retail sector as it would ease massive bottlenecks in the supply chain by reducing waste and improving the efficiency of the business model through supply chain management. Getting foreign investment is one part, but the real benefit will be that it will help modernize the retail sector and control food inflation, a big problem at the moment. The move would send a positive signal not only to foreign investors but also domestic investors who were worried that the government was suffering from a policy paralysis. The committee of secretaries has also recommended that at least half of the foreign investment in any project should be invested in back-end infrastructure like cold storage chains and warehouses which will significantly reduce the wastage and modernize the logistics and supply chain.
Indian laws do not allow foreign direct investment in multi-brand retail, and cap it at 51% in single-brand retail and 100 percent foreign direct investment in cash and carry wholesale trade. No overseas investment is allowed in multi-brand retail. However, foreign investors can invest in wholly-owned wholesale back-end retail operations in India.FDI cap of $100 million as suggested by the committee of secretaries would provide sufficient safeguard to small retailers.

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