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US-based retail major Walmart’s Asia-CEO Scott Price has met Industry Department officials seeking further clarity on foreign direct investment rules in multi-brand retail, especially those related to domestic sourcing.
Price, who had a meeting with Department of Industrial Policy & Promotion Secretary Saurabh Chandra, wanted to understand the implications of the recent changes in the FDI policy on multi-brand retail, including sourcing norms, a DIPP official told Business Line .
The company also wants the Government to ease sourcing norms further, the official added.
Walmart is already in India as part of Bharti-Walmart, a 50:50 cash-and-carry joint venture with Bharti Enterprises, which generates annual revenues worth $500 million. The company, which has 10,900 stores in 27 countries, had expressed keen interest in investing in multi-brand retail sector in India when the country allowed 51 per cent FDI in September last year.
It is, however, yet to come up with a formal proposal for the same.
“We appreciate the Government’s willingness to consider our requests to provide clarity on the conditions contained in the policy,” a Walmart Spokesperson told Business Line .
It has also been reported that the company is weighing its exit options from the country, but Walmart denied it.
India recently diluted conditions for bringing in FDI in the multi-brand retail sector, coming under pressure from foreign multi-brand retail companies such as Walmart, Carrefour and Tesco that were pushing for easier investment rules before putting their money into the country,
While the condition for mandatory 30 per cent sourcing from the domestic small sector remains in the policy, the definition of small sector has been expanded to include units with total investment in plant and machinery up to $2 million instead of the earlier threshold of $1 million.
Foreign retailers will not have to change their vendors once they outgrow the $2-million investment threshold as the new rules say that the ‘small industry’ status would be reckoned only at the time of first engagement with the retailer.
Walmart, apparently, is not satisfied with these changes and is looking for a further dilution in sourcing conditions.
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