Foreign Direct Investment Essay

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Foreign Direct Investment The Government of India opened the floodgates for foreign direct investment (FDI) in multi-brand retail trading, on September 14, 2012; thereby boosting the investors’ confidence towards the Indian market and economy. The government, thus, decided to give green signal to FDI up to 51 per cent, under the government route, in multi-brand retail trading. It was clearly stated that at least 50 per cent of the total FDI shall be invested in backend infrastructure within three years of the first tranche of FDI. The government also specifically mentioned that at least 30 per cent of the procurement of manufactured or processed products shall be directed from ‘small industries’ which have a total investment in plant and machinery, not exceeding USD 1 million. The government also allayed the state’s fears by clarifying that it is an enabling policy, therefore, leaving it up to the states to take their own decisions with regard to allowing FDI in multi-brand retail trading in those states. Why? India is the second largest producer of fruits and vegetables in the world. But the sad fact lingering over it is also that it has very limited integrated cold chain infrastructure and storage facilities, hence causing heavy losses to farmers in terms of wastage in quality and quantity of the fruits and vegetables. Along with it, this chain is highly fragmented, and thus, the perishable horticultural products find it difficult to link to far-away markets, including foreign markets, round the year. Adding to it, it is shameful to note that the post-harvest losses of the farm produce, due to lack of adequate storage facilities, have been estimated to be over Rs. 1 trillion per annum. As a result, Indian farmers can only realize one-third of the total price paid by the final consumer as against two-third with a higher

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