For now invest in back-end infra

Davos: India has told global retail chains like Wal-Mart and Tesco that they should invest in the back -end infrastructure, even as the issue of opening multi-brand retailing to foreign direct investment (FDI) is under "active consideration" by the government.

The message was conveyed by Commerce and Industry Minister Anand Sharma to Wal-Mart CEO Mike Duke and Tesco Chief Executive Terry Leahy here on the sidelines of the World Economic Forum meeting.

"Multi brand can only come when the back-end infrastructure is created, that is where the farmer will get the remunerative prices at the door step.

In addition, tens of millions of jobs will be created.

You cannot say that I will have a front end in the absence of a back-end infrastructure," Sharma told reporters here.

Asked over the concerns of the retailers over policy delay on FDI in multi-brand retail, he said, "nobody is saying that the entire value chain will not be created. For India, investors will have to work out their individual model".

Sharma said his broad message to them was: "that every investment is an act of trust…Believe in India and you will not go wrong."

Asked how long will it take to take a decision on the FDI in retail, he said there cannot be any timelines.

In July last year, the Indian Government had floated a discussion paper on liberalising the politically-sensitive multi-brand retail. The sector employing over about 33 million people is dominated by mom and pop stores.

The minister said the investors need to devise India- -specific model and replicate.

Besides, it was pointed out to them that there has to be a minimum investment in back-end and "job creation and at least half of them in the rural areas," he said.

While FDI in multi-brand retail is prohibited in India, foreign investment in single brand retail — since being opened in April 2006 — is about Rs 900 crore, said the paper, on which comments are invited by July 31.

Pointing that India was losing agri products, fruits and vegetables to the tune of Rs one 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.

As per the Indian Planning Commission, infrastructure for the farm sector such as cold chain would need an investment of Rs 64,312 crore.

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