The much awaited Budget has brought smiles to the face of food industry. In a landmark liberalizing policy in the sensitive multi-brand retail sector, the Finance Minister has allowed 100% foreign investment in processed food retailing.
However, the product needs to be manufactured in India that will help retailers and suppliers set up food-only retail outlets.
“I would like to announce further reforms in our FDI policy. The changes proposed are in the area of insurance and pension, asset reconstruction companies, stock exchanges etc,” Arun Jaitley said in his Budget speech for 2016-17
According to the officials at Food Processing industry, this move will allow more expansion and investment of food multi-brand retailing in global market.
In last few years, food processing has contributed a lot in the development of the country, contributing to around 30-32 per cent of the employemt.
Recently, Food Processing Minister Harsimrat Kaur Badal had written to the Prime Minister's Office pushing for 100% FDI in multi brand retail in the food processing sector saying such move would create of infrastructure, revenue and uplift the farmers.
In 2013, India allowed 51% FDI in multi-brand retailing but such ventures come with a host of riders such as 30% mandatory local sourcing, $100 million upfront investment and half of it in backend infrastructure.
With the new ruling in the budget, food suppliers can sell their own food products without any restriction as long as they are produced within the country, added officials.