FDI in retail will boost GDP growth: CII

The government's decision to allow FDI in multi-brand retail will improve investment sentiment and contribute to the country's overall economic growth, CII today said.

"At a time when declining investments have led to slower GDP growth, the entry of foreign funds in retail would go a long-way in boosting confidence," CII President B Muthuraman said.

India's Gross Domestic Product (GDP) grew by just 6.9% in the second quarter of this fiscal against 8.4% expansion in the year-ago period due to poor performance of manufacturing, agriculture and mining sectors.

The chamber said FDI in multi-brand retail would give a boost to the organised retail sector which positively impacts several stakeholders including farmers, MSMEs and consumers.

Foreign investments in the sector would not affect the traditional trade (kirana shops) and it would continue to grow, it added.

Further, CII said with the entry of foreign funds in the sector, a new level of efficiency in the retail chain could be achieved, creation of millions of new jobs in the organised sector and lower prices for the final consumer.

"It would result in an aggregate increase in income of $35–45 billion per year for all producers. Besides, it would create 3–4 million new direct jobs and about 4–6 million new indirect jobs in areas like logistics, distribution and repackaging by 2020," the chamber said.

From farmers perspective, CII said investments which would flow in agricultural back-end and supply chain would ensure food security through curbing wastages and improving quality for future generations.

Furthermore, it would lower food items prices for consumers that can help in curbing inflation.

Food inflation stood at 8% for the week ended November 19.

The chamber said FDI in the sector would also benefit small and medium enterprises (SMEs).

"FDI can help small units to improve their products quality, supply in large volumes and become a vendor to international players."

The opposition as well as ally Trinamool have slammed the government's move to allow 51% FDI in multi-brand retail stating that their states were not consulted before taking the decision.