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Improving supply chains with FDI

India’s opening up of retail services to foreign investors will bring in capital and expertise to make supply chains more efficient.

Analysts have estimated that up to 35 percent of Indian fruits and vegetables spoil before they get to market, largely as a result of an antiquated supply system that includes many wholesale markets and middlemen.

Partly as a result, Indian food prices often rise quickly when there are minor disruptions in the supply or harvest of staple crops like onions and potatoes. Food inflation in recent months has been hovering near 10 percent.

While some companies have begun building supply networks in parts of India, Mr. Singhal said it would take three to five years of investment to establish a more efficient supply chain. Companies will need to work from the ground up, setting up warehouses, buying trucks and establishing relationships with farmers and other suppliers.

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