“FDI in (food) retail will lead to demand-driven farming and that can result in clusterised high-growth farming,” food processing minister Subodh Kant Sahay told the The Telegraph.
Cabinet secretary K.M. Chandrasekhar is believed to have gone even further — reportedly endorsing a proposal of the department of industrial policy and promotion (DIPP) to open up multi-brand retail to foreign investors.
The DIPP has now been asked to work with the ministry of food processing to prepare a separate road map for foreign participation in food retail.
The move has the support of senior ministers such as commerce minister Anand Sharma; the finance ministry and the Planning Commission are also giving it a serious thought.
Finance ministry officials, however, said the move might find a passing reference in the forthcoming budget and would not be taken up before the assembly polls in Tamil Nadu and Bengal.
“What is being looked at is opening up food retail with limited minority foreign investment stake. The whole idea is that we need to build a modern food retail infrastructure which will incorporate cold storage chains, movement systems and cut out middlemen,” said officials.
However, any move to open up retail now will irk the Trinamul Congress with whom the Congress will jointly contest the Bengal elections. The Left and the BJP are also opposed to the proposal.
“For the time being, what the food processing ministry and the DIPP will be looking at is how to get the foreign chains involved in such retail operations from back-end but with a minority stake as well as how to get them to export and sell abroad our food brands,” said the officials.
Five years ago, Sahay had floated a proposal to help domestic food-processing parks to sell their brands in the overseas market through alliances with transnational food retail chains. In return, the global players were to be given entry to the high-end market in the metros.
Officials said the government was likely to impose export conditions on the foreign chains such as selling Indian processed food abroad.