'FDI in retail sector
will provide jobs,
benefit consumers’

Henry V Jardine, US Consul-General, Kolkata, has said that direct foreign investment (FDI) in India's retail sector can provide the economy of scale and benefit the consumer.
Addressing members of the Kolkata Chapter of the Indo-American Chambers of Commerce (IACC) recently, Jardine said the retail sector had the capacity to address some of the concerns about value addition and employment in agriculture.
“So far, domestic investment in retail, at best, has been able to create a limited number of low-paid jobs and one of the reasons for this is the small scale of investment. Entry of foreign capital in retail will deliver economy of scale both to the retail and the consumer,” he said.
Pointing out that West Bengal and Bihar had a comparative advantage in agriculture, Jardine said the two states stood to gain from the recently signed India-US knowledge initiative in agriculture.
“It is important for agriculture in these states to move up the value chain by integrating seamlessly into agri-business and retail,” he said, adding, “the mineral-rich and fertile land of Eastern India has always been the natural choice of industry and commerce. Removal of policies that robbed this region of its comparative advantage is allowing industries to come back to where they belonged. At the same time, the digital explosion has opened up new opportunities here.”
Jardine said agriculture experts from the two countries had successfully addressed a number of sanitary/phytosanitary (SPS) issues, including signing an agreement that will eventually permit export of Indian mangoes to the US, a recognition of India's Agriculture and Processed Food Products Export Development Authority (APEDA) as eligible to certify Indian products as compliant with USDA organic standards. So our two countries are now actively building institutions and putting in place systems that will sustain this relationship in the long run.
“The prospect of Indian and West Bengal's mangoes being sold in the US, I think, is a symbol of the new opportunities in the whole sector of agro-business,” he said.
Jardine said that in addition to agriculture, there were a number of interesting elements in the US-India joint declaration that could benefit Eastern India. The agreement to develop a clearinghouse for coal-bed methane has great potential since two of the 16 virgin CBM beds located in India belong to the West Bengal-Jharkhand region. Clearly, there is scope for joint effort in this area between US and Indian companies.
“As you are well aware, the US-India Civil Nuclear Cooperation Initiative has seen a lot of attention as a result of President Bush's visit. The initiative reflects U.S. confidence in India as a global strategic partner. This nuclear deal is about to herald a chance in India's own legislation that gives the Indian private sector, hopefully along with possibilities of FDI, the opportunity to participate in civilian nuclear energy generation,” he said.
Jardine said the latest CMIE (Center for Monitoring Indian Economy) data indicated that West Bengal was no longer an agro-industrial state and that it had become a service economy with 54 percent of its domestic product coming from the services sector.
Jardine said the two countries had entered a new era in the Indo-US trade relationship and the Indo-American Chamber of Commerce had made a great contribution to bring about this new era.
“Your efforts at promoting dialogue, business linkages and policy reforms have all been critical to laying the foundation for the great progress we have seen just in the past year,” he said.
Jardine said trade formed a significant part of the overall U.S.-India bilateral relationship. And the two-way trade between the two countries in 2004-05 stood at USD 20 billion.”
“We aim at doubling bilateral trade to USD 40 billion within three years,” he said, adding, “the U.S-India Trade Policy Forum has been carrying out extensive discussions on trade issues and priorities and five focus groups on agriculture, tariff and non-tariff barriers (NBT) in industrial products, services, investment and innovation and creativity and are looking into various aspects of our relationship.”
Jardine said the US had been India's largest trading partner and foremost export destination and accounted for 16.48 percent of India's exports and around 6.26 percent of imports.
“India accounts for only about 1.06 percent of the US total trade. There is, therefore, a huge untapped potential to increase bilateral trade,” he said.
He said Indo-U.S. relations first began with the arrival of Benjamin Joy in 1792 and 200
years later, the work of IACC had become instrumental in moving our economic relations into a new era of opportunity and growth.
“ I am happy that IACC has acknowledged this new optimism in India's Eastern region and decided to hold its National Executive in Kolkata,” Jardine said.