FDI will affect small traders unless they adapt: Rangarajan

, Sept 22: Chairman of the Prime Minister's economic advisory council (PMEAC), Dr C Rangarajan, said entry of foreign direct investment (

) into multi-brand retail would affect small traders unless they became a part of the modern retail change process, said a

report published on Friday.

Speaking at an international seminar on 'Organised Retailing vis-a-vis Farm Economy of India' in Hyderabad on Friday, Rangarajan, however, said it was a wrong notion that FDI in multi-brand retail would replace small retailers on a large scale. He said the large retails in advanced countries did not wipe out small shopkeepers. According to him, they retain a personal touch and help people owing to their proximity, the report said.

The PMEAC chairman said once the share of overall modern retail in food products reached about 25-30%, the kirana traders and subsequently the small and marginal traders would be affected. Currently, an overwhelming share of food and grocery in India is being sold through traditional retail outlets, street vendors and stall operators.

Rangarajan said to avoid an adverse effect, the small traders needed to integrate themselves in organised retail, improve their condition by means of infusion of capital and better training and also organise themselves through franchises, the report said.

Rangarajan, who has been speaking in favour of advocating FDI into the retail sector for a long time now, said modern organised retail aimed to reduce the gap between producers and consumers by offering better prices to both parties. He advised farmers to form groups so that they could be in a better position to bargain with the modern retailers.

He said regular supply agreements between farmers' bodies and modern retailers would assure a minimum income to the former and also reduce wastage, transportation expenses and ensure supply of fresh products to buyers.

He said the Agriculture Produce Marketing Committee Act had been amended to provide competitive options to farmers and back private investors.

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