Deferred investment in Indian retail supply chain to affect farmers, consumers

The Indian government has raised the tender for opening up the country's retail sector for foreign direct investment but industry watchers cautioned that the expected gains to farmers and consumers can only come through a seamless back-end supply chain, which is still some distance away.

Lack of clarity on government policy on foreign direct investment in retail may have forced logistics majors to defer planned investment to set up cold-chains and warehouses across India. This means that prices of goods may not plunge immediately after the floodgates for foreign investment are opened for deep-discount retail mega stores, experts said.

In a discussion paper released earlier this month, the department of industrial policy and promotion said foreign direct investment in retail might be an efficient means of addressing the concerns of farmers and consumers.
The paper concluded that opening this investment in retail could also assist in bringing the technical know-how for setting up efficient supply chains, which can act as models of development.

However the price advantage for consumers and agriculture income gains will only kick-in once retailers start procuring directly from farmers through an efficient supply chain.

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