Local stores and vendors selling fruits and vegetables do not face any threat from organised retail as a majority of Indian consumers prefer to buy from them despite the presence of organised retail stores in select metro cities, says a recent survey by a Delhi-based think tank.

Based on inputs from 1001 respondents, the survey, which is part of a larger study on the country’s consumption pattern of fruits and vegetables to be released by ICRIER on Thursday, makes a case for allowing FDI in multi-brand retail of food and grocery.

“Our survey indicates that if the government allows FDI in multi-brand retail of food and grocery, it would not affect local stores and vendors as consumers prefer to source these items from them. On the other hand, FDI in the sector could give a big boost to food processing,” Arpita Mukherjee, Professor, ICRIER, told BusinessLine .

As per the survey, more than half of the respondents (534) preferred buying fruits and vegetables from the local market. A large number (192) bought from push carts, while around 100 respondents sourced the items from the wholesale market.

Of the 1001 respondents, only about 150 respondents said that they bought fruits and vegetables from the organised market such as Big Bazaar.

The respondents were interviewed across five cities – the National Capital Region (Delhi, Gurgaon, and Noida), Mumbai, Chennai, Hyderabad and Kolkata.

The NDA government has so far not entertained proposals for FDI in multi-brand retail (despite the rules allowing 51 per cent FDI in the sector) because of concerns over the livelihood of thousands of small retailers and vendors. The government is, however, now considering opening up the sector to foreign investors, but is looking at excluding certain areas like food and grocery.

Building a case for allowing FDI in multi-brand retail of food, the study states that organised retailers and manufacturers globally not only help to set up the supply chain for fruits and vegetables, they also train farmers in best farm practices.

“If global companies are not allowed to set up the entire supply chain and run their best business model, they are unlikely to invest in the fruit and vegetable supply chain in India. Unless global retailers invest in India, international small and medium manufacturers will not invest in the fruits and vegetable processing sector of India, thus limiting the choice for consumers,” the report said.