New Delhi
14 January 2011
Soaring prices of onion might have brought tears to the eyes of many Indians,
but Britain sees it as another reason why Government of India must open retail sector to
foreign multi-brand chains such as Tesco and Sainsbury's of the UK or for that matter,
Wal-Mart of the US.
British high commissioner to India Richard Stagg cites the 'onion crisis', which he
describes as an intriguing example showing "imperfections in the supply chain" that
affects producers and consumers alike, to suggest that entry of foreign retailers into the
Indian market could help to "avoid the sharp peaks and troughs" in prices of
commodities and make the supply chain "more smoother".
The envoy's pitch for foreign direct investment (FDI) in Indian retail sector came ahead of
British business minister Vince Cable's visit to India next week. Cable will be visiting
Mumbai and New Delhi between January 17 and 19 to identify opportunities for the UK
businesses in infrastructure development.
Retail is one of several sectors which Europe, Britain included, and the US are waiting to
open up to FDI. Financial and legal services, defence production, and insurance, are the
other areas of interest to them.
Stagg hoped the Insurance Amendment Bill, which proposes to raise the FDI cap and
which has been pending before Parliament since 2008, would become a reality. He saw
"considerable scope" for British enterprises in the Indian defence sector, particularly in
"modular construction" of ships which obviates the need for big dockyards. It involves
fabrication of parts of the ship at multiple locations and later assembling them.
Conspiracy theorists in India would like to believe the onion crisis was fabricated to
justify the approval for FDI in retail, but commerce minister Anand Sharma has denied
any link between the two. The government though has been holding informal discussions
on FDI, coinciding with the circulation of a discussion paper by the department of
industrial policy and promotion.
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