Karnataka in no mood to welcome multi-brand FDI

Multi-national chains such as Carrefour, Tesco and Walmart may not step into Karnataka, at least for now.

Though Karnataka, Bangalore in particular, is touted as one of the ideal places to kickstart FDI in multi-brand retail, the party in power - BJP - will not allow it to come as the party is opposed to the move at national level.

The guidelines for FDI in multi-brand retail clearly states that retail sales outlets may be set up in those states which have agreed or will agree in future to allow FDI in multi-brand retail under this policy. The establishment of the retail sales outlets will be in compliance of state laws and regulations, such as the Shops and Establishments Act.

Industries minister Murugesh R Nirani indictated that retail ventures of FDIs is welcome to the state. He said the issue would be discussed with senior leaders of the party before coming to conclusion. However, a senior minister maintained that FDI in multi-brand retail will not be allowed to enter the state as BJP at the national level is opposed to the move. ""When BJP is spearheading Bharat bandh on September 20 against FDI, how can the system be implemented here?'' asked a minister.

Experts opine that entry of multi-brand retailers is necessary to the state as it is estimated that post harvest crop losses is between 35-40% in the state, so setting up of advanced processing units, cold chain and warehouses would largely benefit the farmers. While the state is one of the largest producers of fresh agricultural produce, including fruits, vegetables, flowers, grains, pulses, fresh poultry, fishery and meat products, which require advanced processing units and cold storage for further boosting the sector, Bangalore is among top cities for the MNCs to invest.

"Its not only the money, even advanced technology is brought by the MNCs. Centre's move would be advantageous to Karnataka as the post harvest waste is nearly 40%. Right from point of produce to storage to processing to distribution to final value addition in terms of a product would be available for farmers through FDI. Cold storage chains would greatly reduce post harvest losses," M Lakshminarayan, president of Bangalore Chamber of Industry and Commerce (BCIC) told Media.

He cited the instances of dumping thousands of tonnes of tamotoes in Kolar region and potatos in Hassan district on road when they don't get competitive prices. All these can be minimized by setting up advanced cold storages and processing units in districts and taluks, Lakshminarayann said.

However, Dr Abdul Azeez, economist and visiting professor at National Law School of India University (NLSIU) maintained that MNCs may keep up their words and impose high costs on farmers for utilizing their service. "I doubt MNCs would set up cold storage and processing units in every village. Even if an advanced unit is set up in taluk or district headquarters, a farmer producing 50 or 100 kg produce will have to travel from far of villages incurring expenditure on transportation. This apart, local business will suffer a lot," he said.

Even if welcomed, very few cities like Bangalore, Mysore,Hubli-Dharwad, Gulbarga will be eligible as these cities have more than 10 lakh population. EOM