FDI IN RETAIL: CAIT sends communication to PM

Jalandhar/New Delhi, October 19, 2012: The Confederation of All India Traders (CAIT) in a communication sent today to Prime Minister Dr. Man Mohan Singh has drawn his attention towards the Notification of allowing FDI in Retail which has given unusual and extraordinary benefits to global retailers which will prove to be much draconian to Indian Small Industries.

The CAIT has also expressed deep anger over the role of Industry bodies like FICCI, ASSOCHAM and CII who have never raised even a single word about the most detrimental provision of FDI Notification for Indian Small Industries rather supporting the FDI in Retail which may accrue benefit to Indian Corporates. These bodies do have sizeable number of Associations of small industries and it was imperative upon them to object such an unjustified clause but instead they prefer not to even inform the small industry about this provision. 

CAIT Secretary General Praveen Khandelwal while inviting attention of the Prime Minister towards the clause of 30% procurement of goods from small industries said that the basic fundamental of the clause has been diluted to the extent that will enable the global retailers to win over the Indian Small Industry which over a period of time will suffered self-death.

Khandelwal said that though it has been stated in the Notification that the Foreign Investor shall have to procure 30% material from Indian "small industries" but the procurement requirement would have to be met in the first instance as an average of first five years beginning 1st April of the year in which first tranche of FDI is received and from 6th year this requirement would have to be met on annual basis.

He said that  it makes amply clear that global retailers will be free to outsource even 100% of their procurement from anywhere over the globe during at least first four years or even in fifth year as well but they have to procure 30% of their purchase from Indian "small industries" during any time between five years. No yearly procurement has been made mandatory to the extent of 30% from first year of their operations of business activities.

The said provision of the Notification will prove to be much detrimental to the interest of Indian small industries due to the fact that if 100% outsourcing is made by global retailers in even first four years, they will outsource cheapest goods from anywhere over the globe and will dump the Indian market with such goods. Such a situation will create an uneven level playing field where having limitations on every aspect, the Indian small industries will not be able to compete with them and as a result of which the very existence of the Indian small industries will not be able to survive. As a result of which closure of small industries cannot be ruled out and not only the small industries but even the workers and other class of people earning their livelihood from small industries will also lose their job and mass scale of unemployment will be generated.

The CAIT has appealed the Prime Minister to take serious cognisance of the matter and withdraw the said notification in the larger interest of the Country. It is also suggested that an open debate should be carried out by the Government with an open mind with all stakeholders and political parties to assess the merits and demerits of FDI in Retail.