Multi-Brand FDI In Retail -Allowed in cities over 1 million population -30% compulsory sourcing from smaller enterprises -Arthiyas:

Local business term for middlemen (Kaccha Arhat -> Pakka Arhat - > Ma rket/Company -> End User) (Excellent credit terms, something that the foreign fi rms will find difficult to replicate) -APMC (Agricultural Produce Market Committee) Act currently monitors spot and fo rward sale and purchase of commodities. Once FDI retail is in place and the fore ign brands start coming in the APMC laws and price regulations will have to go. (A difficult situation to be in) - minimum FDI of USD100mn, half of which must be invested in back-end infrastruc ture fresh - agricultural produce may be unbranded as the government holds the first right to procure agri products. Beneficiaries 1.Farmers (Currently framers only get 14% of the shelf price) 2.Organized Retailers (Both Indian and Foreign) Examples of Agrentina and Brazil (Organized retailers prefer entering as JV partners) 3.Government 4.End Consumer 5. Consumer goods companies like HUL (higher market share in modern retail), P&G etc Losers 1. Intermediaries: Commission Agents, Farm Agregators, Wholesalers, Distributors (Indian scenario is completely different from international as there are millio ns of stores and average land holding per farmer is very less in India and hence the need for layers of middlemen. The existence of multibrand owers also withou t middlemen is doubtful. However, so many layers would still not be required) Fears: 1. There is genuine fear in India that foreign multinationals like Wallmart and Tesco would flood India with 'subsidised' products from China to maximise their profits. India already has adverse trade balance with China, which it is trying to deal w ith. Potential additional imports from China through multinationals would make t hings worse. Multinationals should perhaps offer to deal in agricultural products to start wi th to create goodwill and confidence. Subsequently they can get access to other products. Here also, due to WTO rules Indian government can not perhaps specify minimum share for Indian products. 2. Market power shifting from government to private hands (whether or not it is good for a developing economy like India is debatable) 3. Currently the big retailers in India are also sourcing from middlemen. Domain knowledge, financing both to the farmer and the wholesalers, and the ability to buy an sell everything are some of the qualities that the big retailers might n ot be able to replicate. However, certain big investments like cold storage and supply chain can only be done by these big retailers. Indicates that peaceful co existence of retailers and middlemen is possible. Also, the per farmer land hold ing is only 2.5 hectares, which is very small. Large retailers cannot be expecte d to directly be in transactionary terms with each of them. (Scope for an innova tive sourcing model). Advantages: 1. Job creation (10 million, however the quality of jobs may not be as good. Can be compared to the BPO rush of the late 90s and early 2000s) 2.Efficient back end and supply chain (less wastage) (most of the organized indi an retail players are in losses and can't exist like this in eternity)

3. Farmers expected to get 2/3rd of the shelf price through direct sourcing