2013 · GS Paper 3 · Q9(a) · 5 marks
Discuss the impact of FDI entry into Multi-trade retail sector on supply chain management in commodity trade pattern of the economy.
In short
FDI in multi-brand retail, allowed at 51% in 2012, can shorten farm-to-shelf chains, cut wastage through mandated back-end investment and move commodity trade from mandi auctions to contract-based flows. Post-harvest losses, estimated by ICAR-CIPHET at ₹92,651 crore a year in 2015, are the main target.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 293 words
Shorter chains
Retailers buy directly from farmers and producer organisations, cutting the commission agent and wholesaler layers of the APMC system and raising the farmer's share of the consumer rupee.
Lower wastage
Investment in pack-houses, reefer trucks and warehouses targets post-harvest losses, which ICAR-CIPHET estimated at ₹92,651 crore a year in 2015.
Demand-led planning
Barcoding, inventory software and sales forecasting let chains match procurement to demand, easing both the gluts that crash farm prices and the shortages that raise retail prices.
From spot to contract trade
Trade shifts from mandi auctions to contract farming and private grades that reward quality.
MSME and export linkages
The 30% sourcing rule draws small manufacturers into national chains, and global retailers can source Indian produce and processed food for their stores abroad.
Risks of concentration
Monopsony power over farmers and pressure on kiranas kept investors wary, so Tesco's 2014 venture with Trent was the only foreign proposal cleared.
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Question from the official UPSC Civil Services (Main) Examination 2013 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.