India’s BJP-led government on Monday (29 February) made an unexpected announcement in the budget that paves the way for retailers such as Walmart and Tesco to sell multi-brand food products as long as they are sourced and manufactured within India, reports The Economic Times of India.
After years of opposing any foreign investment in multi-brand retail, top BJP officials with the ministries of commerce and food processing confirmed that finance minister Arun Jaitley's announcement in the budget would allow overseas investment in multi-brand processed food retailing — an area considered sensitive as small retailers fear their businesses will be jeopardised by the entry of large corporations.
It is welcome news for global retailers that have lately been confused by a growing anti-multi-brand retailing stand taken by the BJP-led government even as India, in 2012, had opened the segment for 51 per cent FDI.
'This decision by the government to allow up to 100 per cent foreign direct investment (FDI) through FIPB in marketing of (processed) food products produced and manufactured in India is very progressive and will help in reducing wastage, helping farm diversification and encourage industry to produce locally,' said Krish Iyer, CEO of Walmart India. 'This far-reaching reform will benefit farmers, give impetus to domestic food processing industry and create vast employment opportunities.'
Also in Monday’s budget, the finance minister allocated US$12.7bn to boost farming growth and help the rural poor, reports the BBC.
Finance minister Jaitley said he planned to double the income of struggling farmers in the next five years.
He has pledged to set up 89 projects for irrigation, doubling investments in rural roads to help farmers get produce to market, getting cooking gas to millions of poor households and funds for women entrepreneurs from underprivileged families.The government would raise spending on a massive rural employment scheme, a crop insurance programme and increasing rural access to the Internet. It would also work to ensure all the country's villages had electricity within two years, Jaitley said.
Nevertheless, India's budget has come under criticism for failing to address problems within the farming sector.
Chief minister Siddaramaiah complained that the allocation to the agricultural sector has not increased, adding that it offered “nothing concrete” to rejuvenate the rural economy, according to The Hindu.
The budget has set aside negligible allocation for the Accelerated Irrigation Benefit Programme (AIBP) and cut funding for centrally-sponsored schemes, he told the paper.
“Overall, the budget has neglected agriculture, irrigation and rural development sectors,” he said.
