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G. Srinivasan

FOR the reform-weary National Democratic Alliance (NDA) facing the elections in four States, even a remote suggestion that the time is ripe for allowing in retailing giants is anathema.

One wonders why the Ministry of Commerce and Industry under the savvy Mr Arun Jaitley should rush to issue a clarification on a story carried in certain sections of the business press about the Wal-Mart proposal to procure/shop from India goods worth $5 billion. Not that the $247-billion retail leviathan is eyeing India to set up shop that might give domestic retail minnows ranging from hyper and super bazaars to select private sector industrial houses such as the RPG group, Shoppers' Stop, and Trend a run for their money.

As the foreign direct investment policy expressly forbids FDI in retailing, no major foreign chain could be contemplating entering this field.

Recently, a German group, Metro, opened shopin Bangalore to offer a range of products. Though Metro is a wholesaler, with a cash-and-carry system, and does not entertain plastic payments, a la retail outlets, there was much hue and cry about the super mall, with some political parties pitching in too.

Vis-à-vis Wal-Mart, eyebrows are being raised on why the Government should hold a brief for the company, stating that the global retail giant with a well-established office in Bangalore currently sources about $500 million worth of goods from India and that only preliminary discussions were held with no commitment by Wal-Mart on the amount or the volume of sourcing.

Wal-Mart sources home furnishings, T-shirts and night-suits from Bangalore, Tirupur and Karur, and intends opening a rep office in the North to buy garments. Interestingly, no less a person than the former Union Textile Minister, Mr Kashiram Rana, had told a news agency even in May that Wal-Mart was keen on making India its sourcing hub for $5-billion worth of apparel by 2010.

So why is the news that Wal-Mart plans to shop $5 billion worth of Indian goods unnerving the authorities when, in fact, they should be tom-tomming the fact that a world-class retail company is interested in sourcing Indian products.

In its zeal to pacify allies and sister outfits or the trading community, whose margins would be reduced if big retailers enter India's oceanic markets, the Commerce Ministry should not raise hackles by `misreading' the motives or intentions of the retail giant.

As long as the national policy prohibits domestic retailing by foreign companies, the latters' sourcing of Indian products for sale abroad should be seen as the opening of another export avenue.

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