Sharma acts blasé on Walmart shelving India plans
07 Oct 2013
As retail giant Walmart makes it increasingly clear that its partnership with India's Bharti Group is on the verge of death, commerce and industries minister Anand Sharma on Sunday said that India's foreign direct investment (FDI) policies are not company-specific.
Walmart's Asia head Scott Price said in Bali on Sunday that Walmart's wholesale franchise with Bharti was ''not tenable'' as a base. This was widely read as an end to the partnership; and perhaps a shelving of Walmart's retail plans despite a slight relaxation of FDI rules in this sector.
"These are business decisions to be made by them. It is unfortunate if they don't look at the potential of the Indian market. India's FDI policy can't be company specific," Sharma told The Indian Express.
Price had said on the sidelines of the Asia Pacific Economic Cooperation (APEC) forum in the Indonesian capital that the company had created a franchise with Bharti hoping that there could be a potential freeing up of retail FDI policies that could justify a base in India. ''But frankly, the opportunity has passed. That means the existing franchise to Bharti is not tenable as the base," he said.
The US retail giant is in a fifty-fifty joint venture with Bharti, running the Best Price Modern Wholesale Stores in India.
Although India permitted 51 per cent FDI in multi-brand retail in September 2012, uncertainty about the exact rules has deterred the big retailers from announcing plans for the Indian market. The biggest stumbling block has been the mandatory 30 per cent sourcing from Indian small industries.
The union government has since then relaxed the sourcing norms by changing the definition of small industries, along with the criterion for cities where such retail chains can open stores and the conditions relating to mandatory back-end infrastructure. However, foreign retail chains remain chary, considering the policy flip-flops that have begun to define the Indian government.
On the sourcing issue, Price said, "We don't see how any foreign retailer can comply, and quite honestly no domestic retailer is complying either."
Sharma said he would be meeting Price in mid-October, and would then ask him in what context these comments were made.
''It is very important that farmers, MSMEs (medium and small industries) feel part of the policy," Sharma said.
(Also see: Walmart looks to acquisition in China for Asia expansion)
