)
A parliamentary panel asked the government to create a regulatory body to address the problems of Medium and Small Scale Entrepreneurs (MSMEs), including possible joblessness, in the retail sector following its liberalisation.
There are questions about the how such a regulatory body will work because the retail sector is on the concurrent list where every state government has the autonomy to decide its own policy on it.
Even as a debate continues to rage on whether opening the retail sector to Foreign Direct Investment (FDI) will help or harm the small retailer, members of the Congress party too signed off on the report of the Parliamentary Standing Committee on Industry which was made public today. The report was unanimous and there were no dissent notes.
The United Progressive Alliance (UPA) invested enormous political capital in opening up the retail sector to FDI earlier in its tenure and had to pay the price when ultimately the Trinamool Congress, one of its most important allies, walked out of the UPA alliance because of differences on several policies including FDI in retail.
At that time, the appointment of a regulator for the sector was considered but was dropped following outcry from industry.
“We have recommended a regulatory authority to look into the problem (impact of FDI in multi-brand retail on MSMEs),” Tiruchi Siva, DMK leader and Chairman of the Committee told reporters.
According to Siva, if multi-brand retail chains are not regulated well, it will impact medium, small and micro enterprises (MSMEs), farmers and domestic mandis.
“Once mandis are eliminated, the big foreign retail giants will manipulate prices and our farmers will be forced to sell their products at low prices dictated by them (foreign retailers),” the panel said in a report.
Siva was of the view that multi-brand chains should be regulated so that customers are not fleeced and farmers are not underpaid for their produce.
After the Decision to liberalise the retail sector was taken, the Congress held a big rally in Delhi, where it said there would be no joblessness because of this decision. Today, its MPs seem to have conceded that there could be some job-loss.
Taking serious note of the implementation of sourcing norms, the committee suggested the 30 per cent procurement requirement should be applicable item-wise. A proposal that Indian retail giants also be forced to procure 20 per cent from MSMEs was apparently not pursued. This proposal came from the Left parties.
While allowing 51 per cent FDI in multi-brand retailing, the government had made it mandatory for at least 30 per cent of the value of manufactured or processed products to be sourced from small industries.
The panel also suggested the MSME ministry should commission a survey to assess the benefit and losses of previous FDI policies on the MSME sector to ascertain if they have created any back-end infrastructure, imparted skills to domestic manpower or upgraded managerial skills, as is being envisaged in the current FDI policy.
The report of the parliamentary committee, members said, was deeply influenced by the data submitted by Praveen Khandelwal, of the Confederation of All India Traders (CAIT), a body that broadly works in tandem with the Bharatiya Janata Party (BJP) although it has no institutional affiliation to it.
