FDI in Retail: How Can It Benefit India’s Farm Sector?

Prime Minister Singh’s recent push to relax FDI requirements in a host of sectors is a welcome signal that India is once again open for business, with support from the very top. The opening up of the multi-brand retail sector received the most attention, because it shows a level of political will that has been absent from the central government for years. FDI in retail has remained controversial on account of its potential impact on millions of workers in the unorganized retail sector, as well as on manufacturing employment and on the farm sector. Policymaking in this area has been gradual, incremental and contentious.

On a recent trip to India, U.S. Deputy Secretary William Burns voiced support for the new reforms, stating that FDI limits in multi-brand retail will “bring many benefits for Indian citizens; for farmers who will have higher revenues and less losses post-harvest; for consumers will have wider choices at lower prices; and for India’s infrastructure which would benefit from a strengthened supply chain.”