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Food industry winners and losers in BJP’s election manifesto

By RJ Whitehead , 09-Apr-2014

Food industry winners and losers in BJP’s election manifesto

With India’s lengthy election process now underway, the expected frontrunner, the Bharatiya Janaya Party, has released its manifesto, and while the food processing industry as a whole could stand to benefit from its pledges, companies like Walmart would likely lose out.

In the lengthy and verbose 52-page document, the BJP set out with policies it claims will reboot India’s stalled economy. 

Should the party win the election, it promised it would found “agro food processing clusters”, with high value, export-quality and vacuum packed food processing facilities. The manifesto also committed to growing India’s manufacturing sector “to make India a hub for cost-competitive labour-intensive mass manufacturing.”

However, while the document was largely in favour of foreign direct investment, this does not apply to the multi-brand retail segment, which includes organised grocery chains.

Walmart wary

Companies like Walmart, which is supposedly pumping Rs13bn (US$217m) into its Indian wholesale operation, would find the decision to grant foreign, multi-brand retailers, made by the current Congress-led government, is reversed. Although the company recently pulled out of its consumer retail partnership with Bharti, It had left the door open for a return, which might be in jeopardy if BJP is elected.

While much of Walmart’s investment is being directed to online retail, the BJP doesn’t clarify how it will approach e-commerce. The company responded to the BJP’s stated policy intentions by announcing plans to add another 50 stores to its Indian network.

"Wal-Mart is committed to India and we are excited about our growth plans. We will continue to focus on the cash-and-carry format as we are very happy with the way it has shaped up in the last few years,” said Scott Price, Walmart Asia’s chief executive.

A BNP-led future doesn’t look good for seed makers like Monsanto and DuPont, with a new government likely to push for a lengthy continuation of the GM moratorium that is currently in place in India.

Genetically modified foods will not be allowed without full scientific evaluation on its long-term effects on soil, production and biological impact on consumers,” the manifesto stated.

Congress pledges

The Congress Party, which had earlier released its manifesto, stated it had no aversion to foreign direct investment in any category. “We will promote greater integration with the global economy and encourage foreign direct investment, especially in labour intensive sectors,” it said, adding that its decision this parliament to allow FDI in retail had “transformed the agrarian economy as it will create a beneficial value chain from farm-to-fork.”

Congress also focused on more community-led policy in relation to food by pledging to expand the BJP’s Antyodaya programme, which targets food to the very poorest, by introducing protein-rich pulses and cooking oil.

And, quite expectedly, the document paid close attention to what it called its achievements with its Food Security Bill legislation from earlier this year, as a reminder to the hundreds of millions of poor who would benefit from greater subsidised grain handouts.