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The Commerce and Industry Ministry has distanced itself from the formal break-up of US retailer Walmart and its Indian partner Bharti Enterprises in its cash-and-carry venture on Wednesday, stressing that policy-making cannot be dictated by an individual company.
“Policy cannot be company-specific. We have already put in place an enabling policy for foreign direct investment in retail,” Saurabh Chandra, Secretary, Department of Industrial Policy & Promotion (DIPP), told Business Line .
A cash-and-carry business involves selling on a wholesale basis to retailers and not directly to consumers. Scott Price, Walmart’s Asia-CEO, had blamed India’s FDI policy for the company’s decision to split with Bharti.
“We created a franchise in retail with Bharti in the hope that there could be a potential freeing up (of FDI) that would allow it to potentially be the base of the business. But, frankly, the FDI has passed,” Price had said on the sidelines of the APEC conference in Bali, Indonesia, last week.
“Each company takes its decisions based on what its board believes is best for it,” Chandra said. He added that Walmart would not require any clearances to continue the cash-and-carry venture on its own after the break-up of the 50:50 joint venture with Bharti Enterprises, as 100 per cent FDI is allowed in back-end retail.
The DIPP had recently communicated to Walmart that it was not in a position to dilute its FDI policy in multi-brand retail to accommodate the company’s demands.
The American retailer was pushing for further lowering the mandatory sourcing requirement from the small sector to 20 per cent from the existing 30 per cent.
India allows 51 per cent FDI in multi-brand retail subject to mandatory investment and sourcing conditions.
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