India PM sees bright future with foreign retailers

NEW DELHI: India's prime minister voiced confidence yesterday that allowing in foreign supermarkets will benefit the nation's farmers and consumers, a day after parliament narrowly voted to approve the measure.
After heated debate, Indian lawmakers on Friday rejected an opposition motion against the government's decision to open up the retail sector to foreign companies such as US giant Walmart.
Foreign investment in the retail sector "will introduce new technology and investment in marketing agricultural produce," Singh told agriculture students in the city of Ludhiana in India's wheat-bowl state of Punjab.
"India must take full advantage of modern technology and operational and management experience of big supply chains in the food retail business to make this happen," Singh said,
"I am confident that it will benefit our farmers and the consumers of our country," he said, according to a copy of the speech released on his website.
The Congress-led government hopes the entry of big retail chains such as US-based Walmart — which aims to be one of the first in India to set up foreign-owned megastores — will overhaul India's antiquated supply system.
The government says it wants to link retail and farming through state-of-the-art distribution systems with proper cold storage and transport — giving consumers fresher food at lower prices and farmers bigger incomes.
Commerce Minister Anand Sharma on Friday told Parliament during debate on the retail motion that around 35 percent of India's fruits and vegetables rot before they reach the market.
But opposition parties say allowing the entry of foreign supermarkets could drive the country's millions of small, family-owned stores which dominate India's retail market out of business.
After dithering for years over policy, Singh's government unveiled a string of changes in September, throwing open key sectors such as retail and aviation while proposing greater foreign investment in insurance and pensions.
The market-opening push comes as India faces a sharply slowing economy, a gaping fiscal deficit and high inflation, which has stoked pressure on an administration already under fire for corruption.
Even with the liberalization steps, foreign supermarkets seeking to enter India will have to abide by a number of rules such as investing a minimum of $ 100 million and opening stores only in towns with populations of over one million.