The entry of multi-brand, international retailers will not hurt small grocery stores in India, a top Walmart executive, told Indian government leaders at the World Economic Forum's annual meeting in Davos in Switzerland.
''I understand the Indian government's concerns that such a move will affect kirana shops, but I do not neccesarily agree with that view,'' said Doug McMillon, president and CEO, Walmart International. ''We can in fact help fight inflation in India.''
McMillon cited the example of Mexico, which allowed foreign direct investment in the multi-brand retail sector in 1991, following stiff opposition from retailers. But even today, half mom-and-pop stores controlled about 50 per cent of the market, he pointed out.
Noting that Wal-Mart had been sourcing products from India for long, McMillon said during the recent onion crisis, the American retailer deliberately sold onions at purchase price in India.
While India allows 51 per cent FDI in single-brand retail, it does not allow international players into multi-brand retail.
However, foreign retailers are allowed to invest up to 100 per cent in the cash-and-carry (or wholesale) segment. Walmart has a tie-up with the Bharti group and operates six cash-and-carry stores in India, besides providing back-end support to about a hundred small outlets.
Besides Wal-Mart, Carrefour and Metro are also present in the wholesale segment in India.
Planning Commission deputy chairman Montek Singh Ahluwalia, who is also in favour of 100 per cent FDI in multi-brand retailing, told the Forum at Davos that this was a contentious issue in India and would have to be debated thoroughly before the government could take a decision.