FDI in retail could bring down vegetables, fruits

NEW DELHI: Opening multi-brand go to FDI, on which the government has sought public comments, could stimulate investments in cold chains and lead to a drop in prices of vegetables and fruits, research firm Crisil said on Tuesday”.

“…allowing foreign direct investments (FDI) in multi-brand trade has possible to reduce the prices of fresh food produce such as fruits and vegetables in India greater than the durable,” it said.

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The change in FDI policy is likely to stimulate a flow of investments from organised retailer and logistics companies into establishing quality supply-chain infrastructure for fresh fruits and vegetables, Cirsil said.

The wastage in the supply chain and the commission to trade intermediaries drive up the final price paid by Indian consumers for fruits and vegetables.

“Indian consumers pay nearly 2-2.5 times the price paid to a farmer as compared to 1-1.5 times in developed markets where the penetration of organised retail is much higher,” Director of Crisil Research Mr Nagarajan Narasimhan said.

India does not allow FDI in the politically responsive multi-brand retail sector but 51 per cent foreign investments is permitted in single-brand retail.

The Industrial department had released a discussion paper on opening the multi-brand retail sector to FDI and sought public comments. If allowed, global retailers like Wal-Mart, Tesco, Carrefour and Metro would be allowed to open their front-end outlets selling an array of products.

Pointing that India was losing agri-products, fruits and vegetables to the refrain of Rs 1 lakh crore annually, the discussion paper said that establishment of cold chains and back-end infrastructure could cut down the losses by more than half.

Crisil also said that almost 50 per cent of the annual wastages can be prohibited if fruit and vegetable retailers have access to specialised cold storage facilities and refrigerated trucks.

The examine firm estimated the vegetable and fruit wastages in 2009-10 at about Rs 630 billion. – PTI

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