SME Times News Bureau | 07 Aug, 2013
A Parliamentary panel has warned that the Foreign
Direct Investment (FDI) policy for retail may not have positive impact on micro,
small and medium enterprises (MSMEs) and has suggested that a regulatory
authority be set up to safeguard the interest of domestic players in the sector,
"The committee is of the opinion that
the FDI for retail may not have beneficial impact on the MSME sector... It is
of the view that not enough safeguards have been provided for to insulate the
SME sector from sudden changes in trade policy," said the report, tabled
in the Parliament.
The Parliamentary Standing Committee on
Industry, headed by Tiruchi Siva, DMK leader, said that the MSME Ministry
should commission a survey to assess the benefits and losses of previous FDI
policies on the sector.
"...the committee feels that FDI in
retail may not benefit the retail sector unless designing, packaging, bar
coding, skill development are improved upon and integrated into supply
chain." it said.
It also said that the implementation of
policy provision should be closely monitored through an institutional mechanism
in the initial years, and not left to self-certification.
The committee suggested that the auditor
should specifically certify the adherence to the 30 percent sourcing norm and
it must be mentioned in the audited report of the companies which would invest
under FDI in retail scheme.
"The committee recommends that 30 percent
sourcing norm should be applicable item wise. The committee emphasises the need
for setting up an institutional mechanism like a Retail Regulatory
Authority," it said.
It has also raised serious reservations
over the prescribed self certification norms. It said that auditors must
specifically certify the adherence of sourcing norms by the retail companies.
"...MSME ministry should conduct
regular survey of MSMEs to monitor sickness/takeover/mergers and other
trends," it said, adding that continued dominance of big foreign retail
giants and their direct dealings with farmers by giving attractive prices in
the beginning will cripple mandis and markets which form part of rural economy.
"Once such mandis are eliminated the
big foreign retail giants will manipulate prices and our farmers would be
forced to sell their products at allow price dictated by them.
"Our own squeezed out retailers and
all those associated with the markets and retail trade would lose their
livelihood and become jobless," it added.
It cautioned against dilution of sourcing
norms and said that without efficient regulatory frame work, this policy would
not give intended benefits to MSME sector and instead it may imperil its very
Further, it said, national board on MSME
must take up the issue of impact of FTAs, trade policy and FDI on the sector.