- Walmart voiced a concern that other international retailers, too, have brought up with the Indian government. The company reportedly told the government that it can at best procure 20 per cent of its manufactured/processed from Indian 'small industries', not 30 per cent.
- Mr Babbar made clear that the government's policy has not been made "for one business house. It's a national policy in an open world.
- Concern over India's sourcing restrictions in multi-brand retail also figured in talks during US Vice President Joe Biden's New Delhi meetings, including the one with Prime Minister Manmohan Singh. Mr Biden's delegation, talking about investment opportunities, pushed for simpler rules to make it easier for foreign firms to open shop in India.
- Late last month, representatives of both foreign and domestic retail companies, including Walmart, Tesco, Carrefour, Bharti, Aditya Birla Group, Tata, Reliance and Pantaloon, among others, met Commerce and Industry Minister Anand Sharma, asking the government to tweak FDI norms in multi-brand segment. They demanded that these must be made similar to rules for single brand retail.
- In the single brand retail sector, 100 per cent FDI is allowed and companies are asked to "preferably" source 30 per cent supplies from SMEs. For multi-brand retailers, this procurement is mandatory.
- The retailers also want foreign firms to be allowed to put only 50 per cent of the first tranche of investment in back-end infrastructure. Existing rules say that foreign retailers in the multi-brand segment will have to make a minimum investment of $100 million in India, of which 50 per cent must be in the back end chain. This $100 million investment must be new and retailers cannot acquire existing assets of Indian companies.
- New rules announced in the beginning of June that require foreign supermarkets to set up their own warehouses and stores in India have also acted as a deterrent, as these would increase costs and hurt cash-strapped local retailers eager to partner with foreign companies.
- Walmart has been hit by internal turmoil as well. Walmart India head Raj Jain quit on June 26 and neither the company nor Mr. Jain offered a reason for the departure. Earlier this year, in February, an under-construction godown for Bharti-Walmart was sealed by government officials for allegedly violating rules.
- Bharti-Walmart is a joint venture between Walmart and Bharti Enterprises that operates wholesale stores in the country. They have not opened a new wholesale store in the country since October last year despite announcing plans to open eight in 2013. They have 20 such stores in India; the first one was opened in 2009. The Bharti-Walmart wholesale joint venture lost Rs 277 crore on sales of Rs 1880 crore in 2011, according to the most recent regulatory filing. According to Walmart sources, the retailer was unlikely to apply for its first retail store licence before March 2015. The company has said it needs a further 12 to 18 months after winning government approval to open each store, which means its first retail outlet in the country would open in 2016 at the earliest.
- Walmart has also been involved in lobbying activities in the US to enter the Indian market. An Indian probe into this is on.
- Walmart voiced a concern that other international retailers, too, have brought up with the Indian government. The company reportedly told the government that it can at best procure 20 per cent of its manufactured/processed from Indian 'small industries', not 30 per cent.
- Mr Babbar made clear that the government's policy has not been made "for one business house. It's a national policy in an open world.
- Concern over India's sourcing restrictions in multi-brand retail also figured in talks during US Vice President Joe Biden's New Delhi meetings, including the one with Prime Minister Manmohan Singh. Mr Biden's delegation, talking about investment opportunities, pushed for simpler rules to make it easier for foreign firms to open shop in India.
- Late last month, representatives of both foreign and domestic retail companies, including Walmart, Tesco, Carrefour, Bharti, Aditya Birla Group, Tata, Reliance and Pantaloon, among others, met Commerce and Industry Minister Anand Sharma, asking the government to tweak FDI norms in multi-brand segment. They demanded that these must be made similar to rules for single brand retail.
- In the single brand retail sector, 100 per cent FDI is allowed and companies are asked to "preferably" source 30 per cent supplies from SMEs. For multi-brand retailers, this procurement is mandatory.
- The retailers also want foreign firms to be allowed to put only 50 per cent of the first tranche of investment in back-end infrastructure. Existing rules say that foreign retailers in the multi-brand segment will have to make a minimum investment of $100 million in India, of which 50 per cent must be in the back end chain. This $100 million investment must be new and retailers cannot acquire existing assets of Indian companies.
- New rules announced in the beginning of June that require foreign supermarkets to set up their own warehouses and stores in India have also acted as a deterrent, as these would increase costs and hurt cash-strapped local retailers eager to partner with foreign companies.
- Walmart has been hit by internal turmoil as well. Walmart India head Raj Jain quit on June 26 and neither the company nor Mr. Jain offered a reason for the departure. Earlier this year, in February, an under-construction godown for Bharti-Walmart was sealed by government officials for allegedly violating rules.
- Bharti-Walmart is a joint venture between Walmart and Bharti Enterprises that operates wholesale stores in the country. They have not opened a new wholesale store in the country since October last year despite announcing plans to open eight in 2013. They have 20 such stores in India; the first one was opened in 2009. The Bharti-Walmart wholesale joint venture lost Rs 277 crore on sales of Rs 1880 crore in 2011, according to the most recent regulatory filing. According to Walmart sources, the retailer was unlikely to apply for its first retail store licence before March 2015. The company has said it needs a further 12 to 18 months after winning government approval to open each store, which means its first retail outlet in the country would open in 2016 at the earliest.
- Walmart has also been involved in lobbying activities in the US to enter the Indian market. An Indian probe into this is on.
With inputs from agencies
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