FDI must not replace unorganised sector in retail: Kamal Nath

By Liz Mathew, IANS

New York : The Indian government has to ensure that foreign direct investment (FDI) will not replace the unorganised sector in the retail market before allowing international players in the sector, Commerce Minister Kamal Nath said here.


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“The position is still large versus small. Much of India’s retail sector is outside the organised sector. We have to ensure that FDI does not replace them,” Kamal Nath said while addressing a diaspora gathering on the occasion of the mini Pravasi Bharatiya Divas (PBD) held in the city Sunday evening.

PBD is part of the larger Incredible India@60 event in New York, a four-day celebration to commemorate the 60th anniversary of independence of the world’s largest democracy.

However, the minister declined to say if the government has given up its move to allow FDI in the retail sector.

“It is a contentious issue. An expert committee is studying the issue and the report is awaited next month,” he said, adding that the government has allowed multinational giants like Wal Mart to open wholesale market in the country.

“I told them they will get more consumers in the wholesale sector than in their retail shops in other countries.”

The commerce minister also claimed that political opposition to the Indo-US nuclear deal back home would not affect trade ties with the US.

Although Prime Minister Manmohan Singh’s government initiated the move to allow FDI in retail sector, it could not take it ahead due to protests from the communists who extend a crucial support to the government.

Reflecting the political mood in the wake of looming poll clouds in New Delhi, Kamal Nath also indicated that the government has taken note of the concerns expressed against the tax concessions given to the IT sector.

“IT sector has its own advantages. But it is disconnected to the rural sector of India. It is necessary that it should link with the rural sector. We are looking at how to deal with the tax holiday, which is about to end now,” he said.

“Rural India still has not yet tasted the IT sector.”

Urging the Indian community to invest more in their home country, the minister said 77 percent of FDIs are running profitable and 8-9 percent are on breakeven.

However, he said India is not known for being a superpower but for “its arts, culture and ethos”.

“There are 300 million people living with one meal a day. But one also should understand the complexities of its polity governance and problems. India is the only country where we have more than 400,000 elected representatives right from panchayats to parliament,” he said.

The Pravasi Bharatiya Divas was held on the first day of the India@60 programme, organised by Confederation of Indian Industry (CII) and tourism ministry.

Addressing the gathering, CII chairperson Sunil Mittal urged the Indian diaspora to invest more in the education, infrastructure and agriculture sectors.

Nandan Nilekani, chairperson, Steering Committee of Incredible India@60, said: “Improvements in technology are creating a new paradigm for companies not only in terms of lower costs, but also for increased strategic competence and outsourcing and has brought out the value of human capital in India.”

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