APMC Act Reform and FDI Liberalisation in Food Retail in India: Process, Enforcement and Impact

As part of the institute’s yearly Postgraduate Course, four Country Working Groups are formed to allow German students to conduct research on a pressing developing country issue. This year, one of the Country Working Groups of the 49th Post graduate course will investigate the income and efficiency effects of two regulatory reforms impacting the marketing chain of fruits and vegetables in South India: APMC Act and retail FDI Liberalisation. The Model APMC Act which was re-introduced in 2003 as a state-controlled agricultural produce marketing scheme, has largely failed, has experienced staggered implementation and has given rise to exploitative middlemen. The FDI Liberalisation in Retail means that more multinational supermarket chains will come into the market to significantly influence local fruit and vegetable marketing systems through purchasing activities with local growers.  While the APMC Act and FDI Liberalisation in retail are essentially “twin policies”, the pace at which they are expected to impact stakeholders is varied. The federal structure of India has resulted in the following: Kerala (No APMC/No FDI), Tamil Nadu (Yes to APMC/No FDI) and Andhra Pradesh (Yes to amended APMC/Yes to FDI).  Using a mixed political economy and institutional economic approach, the Indian Country Working group will look at the motivations underlying different policy modalities in three states, evaluate resulting income and efficiency effects of different policies and develop policies towards inclusive growth based on research results and stakeholder perceptions.