The $476-billion retail chain, Walmart, has been seeking a meeting with the government since May but could not make much headway, according to sources.
At the forefront is American retail giant Walmart, demonstrating a renewed interest in entering India’s fast growing retail market, estimated at $600 billion.
Currently, Walmart operates 20 cash-and-carry or wholesale stores in the country, for which there’s no foreign investment cap.
Commerce and Industry Minister Nirmala Sitharaman is likely to have an ‘informal’ meeting with Walmart’s India head, Krish Iyer, this week, according to a source.
The meeting is expected to take place in Jaipur on the sidelines of the Confederation of Indian Industry Partnership Summit, a top official told Business Standard, on condition of anonymity.
Asked to confirm Iyer’s meeting with Sitharaman, the Walmart India spokesperson said, “As a policy, we do not comment on rumours and speculations.” Walmart did not give any specific reply to queries on its renewed interest in India’s multi-brand retail or on talks with other companies for possible partnerships.
The previous United Progressive Alliance government had permitted up to 51 per cent foreign direct investment in multi-brand retail but the current National Democratic Alliance government is opposed to it.
Since coming to power in May 2014 with a landslide victory, the government has maintained it will not allow FDI in multi-brand retail, even as it has thrown the doors open to foreign investors in defence, railways and real estate.
It has also taken the ordinance route to increase the FDI limit in the insurance sector to 49 per cent from 26 per cent.
However, it seems the US is pushing the government to open FDI in multi-brand retail and e-commerce, too, with the likes of Walmart and Amazon lobbying hard with American authorities.
That could well mean India taking some ‘positive steps towards allowing FDI in multi-brand’, the official said.
In fact, days before US President Barack Obama arrives in India, America wants the discourse to take place within the government.
It has also asked the government to allow FDI in electronic commerce in the business-to-consumer segment.
At present, international e-commerce companies and domestic online retailers with foreign investment operate in India through the marketplace format, where an FDI cap does not exist.
The $476-billion retail chain, Walmart, has been seeking a meeting with the government since May but could not make much headway, according to sources.
It is learnt Walmart’s international president, David Cheesewright, is likely to visit India soon, to convey a positive and changing mood around this market.
The group had to stop business expansion in India, among some other countries, due to an internal probe under the Foreign Corrupt Practices Act in the US two years ago. Walmart also broke up with its India partner, Bharti Enterprises, bringing all expansion plans to a halt.
In fact, its Asia head, Scott Price, had in 2013 said, “Frankly, FDI has passed,” indicating the Indian rules to attract foreign direct investment were too tough.
Earlier this week, Jagdish Bhagwati, trade economist and Columbia University professor, said the Bharatiya Janata Party-led government might open FDI in retail as it had got an absolute majority.
While addressing a lecture in New Delhi, Bhagwati said Prime Minister Narendra Modi was never averse to allowing foreign investment in MBRT.
FDI in MBRT was allowed in September 2012 amidst severe protests by traders and small shopkeepers, after taking consensus from all political parties.
After coming to power, the new government has not rolled back the policy but minister Sitharaman has persistently stated it will not be allowed.
GOVT'S U-TURN ON FDI IN MULTI-BRAND RETAIL?
Image: Walmart Advanced Vehicle Experience. Photograph: Kind courtesy, Walmart
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