With
FDI in retail mired into controversy, a Parliamentary panel has
suggested that states should frame appropriate policies to encourage
private investment in agriculture as a viable alternate to foreign
investment.
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'The
Committee strongly feels that the state government should extend
necessary incentives to private players to invest in backward linkages
.... The only drive required is in the shape of right policy-mix that
encourages creation of investor-friendly environment in the country,'
the Parliamentary Standing Committee on Commerce said in its report.
It said that this approach would help the government ride the economic growth path 'without looking much outside for FDI in sectors like retail business' and will also put Indian agriculture on sustained growth trajectory. Availability of huge domestic market along with immense export potential of agricultural and processed food products is one big reason that the country can see explosion of infrastructure necessary for backward linkage, it said. The government has suspended its decision on allowing 51 per cent FDI in multi-brand retail sector, after continuous logjam in Parliament. In its decision, the government has said that the global retailers would have to invest half of their total investment in the backend infrastructure. 'The committee is immensely perturbed to note that the colossal loss caused to the country on account of wastage of agricultural produce. It is of the view that the only way out to this abyss is that desired investments are made available for creation of post harvest infrastructure with steady electricity supply in rural areas,' it said. The report said that because of lack of proper backward and forward linkages for food processing industries, India, second in food production globally, is able to process only two per cent of the total production. It has strongly recommended the Planning Commission and the concerned ministries to devise efficacious policy/schemes complemented with adequate funds for creation of post harvest infrastructure as well as general infrastructure during the 12th Plan. The committee emphasises on putting in adequate investments in creation of scientific storage capacity in the country and also addressing the problem of inadequacy of cold chains. 'The Committee is of the opinion that various central schemes for construction of cold chains should be dovetailed in one and a nodal body may be appointed for the development on integrated cold chains in the country through various models,' the report said. As on December 2009, out of the total installed cold storage capacity, fruits and vegetables had a share of 0.39 per cent, meat and fish had 0.77 per cent and milk and products had a share of 0.28 per cent storage. The Committee is perturbed with this sorry state of affairs for cold storage facility for perishable commodities. It also suggested that there is a need to sensitise banks to extend loans to the food processing industry under priority sector lending. It strongly feels that mandis must be reformed and evolved in manner where the processors and the farmers can meet directly, without interference of middle-men. 'The Committee recommends the government to push the model APMC Act vigorously so that contract farming for exports along with other agricultural marketing reforms may be adopted across the country,' the report added. It is also of the view that taxes, octroi should be rationalised for agriculture and food processing industry in rural areas, which in turn will give support to investments in backend infrastructure. |