February 1, 2013
NEW DELHI: Walmart and the US government have conveyed their concern over the Centre's move to let states decide on the entry of global supermarkets, in what is being seen as an indication of the world's largest supermarket chain's reluctance to enter the Indian market immediately.
February 1, 2013
NEW DELHI: Walmart and the US government have conveyed their concern over the Centre's move to let states decide on the entry of global supermarkets, in what is being seen as an indication of the world's largest supermarket chain's reluctance to enter the Indian market immediately.
The development would come as blow to UPA which allowed 51% foreign direct investment in multi-brand retail and cited the veto power with states as a major policy flexibility. So far, 10 states and Union Territories have agreed to allow foreign retailers to set up shop, with a majority, including Uttar Pradesh, West Bengal and Tamil Nadu, blocking the entry of global retailers. The fear of a policy reversal along with a change of government in the state is prompting retailers to go slow on their Indian plans.
Apart from the state-led approach, sources said the retail giant also has concerns over the clause mandating 30% sourcing from micro, small and medium enterprises — something that even IKEA had problems with and got the government to change the rules for the single-brand business. It had also sought a clarification from the Centre whether it could source goods from states that did not allow retailers to open stores to meet the 30% stipulation. Commerce & industry minister Anand Sharma had clarified that there were no restrictions on purchasing goods from these states.
Further, US authorities have told the government that the rules mandating a minimum $100 million investment in back-end infrastructure were unclear and has sought clarifications. For instance, they had asked Indian authorities to explain if amount invested in buying real estate would be included in the back-end investment calculations.
In recent weeks, Walmart executives and US officials have met Sharma and his officials and discussed issues related to the rules for entry of retailers.
Walmart did not comment on specific queries from TOI. In response to a questionnaire, a Bharti Walmart spokesperson said, "We remain excited about the opportunity to grow our business in one of the world's most brilliant economies, expand opportunities for farmers and help lower the cost of living for families in India. Since the government of India announced the new FDI rule in mid-September of last year, we have continued to study the requirements placed on FDI in multi-brand retail to better understand how our business would operate in a complex environment."
Walmart was expected to be among the first set of players to enter the Indian market with multi-brand stores since it already has a 50:50 joint venture with the Bharti group for wholesale cash-and-carry stores apart from developing infrastructure. However, four months after the government allowed FDI in retail, none of the retailers, including Walmart, have so far firmed up their plans.
Courtesy: TOI
