Commerce minister Kamal Nath with Bengal chief minister Buddhadeb Bhattacharjee in Calcutta on Friday. Picture by Amit Datta

Calcutta, Aug. 11: Soon our local ‘mom and pop’ (kirana) stores could get their supply from foreign companies, if the commerce ministry’s big idea clicks. The ministry is toying with the plan as a model for foreign direct investment (FDI) in retail.

“There are two kinds of retail — big and small. Whether it’s big foreign retailers or large domestic companies, their huge resources pose a natural threat to the unorganised sector. Moreover, there is no regulation for these big players. However, such threats exist even in the manufacturing sector,” commerce minister Kamal Nath told The Telegraph.

Nath was in the city to inaugurate the campus of the Indian Institute of Foreign Trade.

“Large foreign companies can bring their technology and supply chain management expertise in cold chain and food processing to India. They will help improve the existing retail chain and the benefits would surely boil down to the kirana stores too. We cannot afford to displace small retailers,” Nath said.

When asked if this model would be the next step after single-brand FDI in retail, he said it was just one of the various models the ministry was looking at. “After all, there is retail in every sector,” he said. The sector is growing at 26 per cent annually.

The commerce ministry, through the Agricultural and Processed Food Products Export Development Authority, has also embarked on a survey which involves signing up local retail bigwigs in agri-processing for interacting with global giants like Walmart, ASDA, Carrefour, and Tesco.

The first phase of the survey will consider the sourcing requirement of the global majors and the second would work out viable business propositions.

An investment of Rs 750 crore is necessary to rev up the supply chain infrastructure to make this project a success.

Another key concern is the integration of 15 million unorganised retailers across the country, 98 per cent of whom operate out of less than 500 sq ft.

Nath said American companies source billions of dollars worth electronic components from China but their pet excuse for avoiding India is that they cannot sell the finished product back in the country as they do in China. The situation is similar in certain sports goods as well, the minister said.

WTO talks

On WTO talks, Nath said the ball was now in the court of developed countries.

“They cannot expect us to liberalise when they subsidise. Especially, when about 3 per cent of the world’s farmers are in the developed countries and $1 billion is spent on subsidies daily. The developed countries would have to take the lead henceforth,” he said.

On IT SEZs

The new SEZ model will make the IT industry take the next step from business process outsourcing to knowledge and engineering process outsourcing, Nath said. The land clause issue of 25 acres has been done in consultation with IT companies.