Allow 100% FDI in multi-brand retail: Carrefour to govt

Promising to create a strong infrastructure and thousands of jobs in India, French retail major Carrefour has called for allowing 100 per cent FDI in multi-brand stores, and said that the move would ease inflationary pressures.

The government has taken a tentative step to open the politically sensitive sector, which employs 34 million people, to global players with the Department of Industrial Policy and Promotion (DIPP) releasing a discussion paper on the issue.

"Any cap or restriction on FDI in this sector may result in potential loss of opportunities and avenues of inclusive growth of the retail sector," Carrefour has said in its suggestions recently to the industry ministry.

It, however, said if the government wants staggered opening of the sector, the FDI cap should be kept such that a foreign retailer is "entitled to make a minimum of 51 per cent investment with rights to manage the company...".

The firm said each store of 50,000-60,000 sq ft sales area could provide about 200 direct and 250 indirect jobs.

"As per our estimates, if Carrefour starts its retail operations in India, in about 10 years, we would provide direct and indirect employment opportunities to approximately 20,000 people in the stores itself," the firm said.

While global players like USA's WalMart and German-Metro want the government to completely open the sector to foreign investments, Indian business chambers like Ficci and Assocham favour calibrated liberalisation.

India allows foreign investment only in single-brand retail, with FDI cap of 51 per cent.

Carrefour said, "(FDI in multi-brand retail) will help in controlling the inflation rate by offering more competitive and rationalised prices of products to consumers and reduction of wastage across India's farm-to-fork supply chain," it said.

Inflation in India is hovering at about 10 per cent.

The French firm said that improving supply chain and logistics will enable retailers to enhance overall competitiveness, decrease the prices offered to consumers and reduce wastage.

"Carrefour has plans to built appropriate back-end infrastructure to support the retail operations," it said.

The back-end infrastructure includes contract farming, local sourcing, cold chains and other logistic supports.

As per estimates, India loses fruits and vegetables worth thousands of crore rupees annually due to lack of proper cold chains and back-end infrastructure.