Solving India Food Problems - Tesco and Walmart on Food Aid Mission in
India - Let Them Eat Cakes
Tesco and Walmart could move into India to solve country's food
India is poised to lift foreign direct investment (FDI) restrictions
for foreign supermarket giants such as Tesco and Walmart, its
corporate affairs minister has indicated.
By Dean Nelson, in New Delhi 6:21PM GMT 27 Jan 2011 - 33 Comments
In a television interview on India's CNBC-TV18 business channel,
Jyotiraditya Scindia said he was concerned about a 35pc decline in
foreign direct investment in 2010 and that he believed lifting
restrictions in sectors such as multi-brand retail and defence could
reverse the fall.
His comments follow the visit to New Delhi last week by Business
Secretary Vince Cable that saw him lobby India's commerce minister,
Anand Sharma, to further relax restrictions on foreign direct
investment in higher education, defence, financial services and the
Britain has been disadvantaged in its attempt to capitalise on India's
breakneck 9pc annual growth because of heavy restrictions on
investment in sectors where it is strong.Last week Mr Cable told
Indian ministers its current food crisis, in which shortages of supply
have sent prices of staples such onions and grains soaring, could have
been minimised if supermarket giants like Tesco had been able to set
up in India.
The Indian government wants foreign investment to establish new cold
chain logistics systems and warehousing facilities to dramatically
staunch the loss of up to 40pc of its food produce that rots every
year before it reaches the market. More than 17m tonnes of food grain
was left to rot last year because there was no space to store it in
suitable warehouses – a loss of £2bn.
Some of India's leading conglomerates, like Reliance Industries Ltd
and Bharti, have launched domestic supermarket chains but have
struggled to find sufficiently large sites in urban centre locations.
Now, after more than four years of indecision, the New Delhi
government finally looks set to turn to foreign supermarkets to solve
its food problems.
"The next rise in FDI will only come through a greater amount of
opening up in the FDI arena. There are three or four areas that are
today under our ambit, in terms of what we are looking at – retail,
defence being a couple of those," Mr Scindia said.
The issue has been considered by the Ministry of Agriculture and the
chief economic adviser, and a report was sent to the Corporate Affairs
Ministry late last month. "In the next couple of months you will see
traction on this front," the corporate affairs minister added.
He said the reform would extend beyond retail to the whole food
sector. "It's really back-end to front-end – it is extremely important
in terms of also reforming the value chain and bringing much more
value from a logistics point of view to the farmer as well," he added.
Despite widespread support for the move within the dominant Congress
Party wing of the ruling United Progressive Alliance coalition, other
parties in the government oppose it. They represent the 15m small
grocers who currently control the sector and are regarded as a
powerful political lobby.
However, ministers are understood to have been emboldened on the issue
from support from opposition parties in control of some state
The most likely British beneficiary is Tesco, which formed an alliance
with Tata, one of India's largest conglomerates, to help it build a
new hypermarket chain and warehousing and supply systems.It seems
Tesco-isation globalisation is set to continue apace.
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