Wal-Mart Chief pitches for 100 pc opening of FDI in retail
Pitching for 100 per cent opening of Foreign Direct Investment (FDI) in the Indian retail sector, US retail giant Wal-Mart Stores Inc today said such as move will help in containing inflation.
"Wal-Mart has expressed that 100 per cent FDI would be the solution for all constituents and stake holders (in the Indian retail sector)," Wal-Mart Stores Inc President and CEO Mike T Duke told reporters here.
He, however, said Wal-Mart respects the India's calibrated approach towards opening the retail sector to FDI. India currently allows 51 per cent FDI in single-brand retail, but none in multi-brand. Recently, the government had initiated a discussion on opening FDI in multi-brand retail.
The government has also relaxed FDI norms thereby lifting restriction that required retailers to source products from FDI-backed group wholesale firms only for internal use.
Duke said allowing FDI in retail could help in contain inflation in India by reducing wastage of farm produce, as 30 per cent to 40 per cent of the total produce do not reach the end consumers.
"In India there is the opportunity to work all the way up to the farmers in the back-end chain. Part of inflation is because of produces not reaching the end consumer," Duke said, adding increased efficiency will help in bringing down inflation.
India's has been struggling to contain high food inflation, which has been hovering over 15 per cent. Citing experiences in other global markets both in mature and emerging, Duke said organised retail has helped in increasing efficiency of operations of supply chain thereby helping to contain inflation.
In the backdrop of the proposal to open the retail sector to FDI, Duke has met the Commerce Minister Anand Sharma. Asked if he expected some concrete developments on the ongoing deliberations of opening the sector further to FDI, coinciding with US President Barack Obama's Indian visit next month, he said: "I cannot comment on that... it is not really my position to set the position of the Indian government."
Opening of FDI will also help in increasing Wal-Mart's sourcing of products from India by developing more vendors here. "There is clearly more potential for increasing sourcing from India," Duke said.
In April this year, Wal-Mart Asia President and CEO Scott Price had said in April this year that "in the next 12 months we could talk about exports worth tens of millions of dollars... maybe hundreds of millions in the next 4-5 years."
When asked how could Wal-Mart's relation with Bharti change if 100 per cent FDI is allowed in India, Duke said the two parties will take a collaborated approach in case of a policy change.
"Depending on the policy change, the two parties (Wal- Mart and Bharti) will collaborate and evaluate a structure, which is beneficial for both. We have a very successful joint venture right now," Duke added.
In 2007, Wal-Mart had partnership with India's Bharti Enterprises to establish Bharti Wal-Mart Private Ltd, a 50:50 joint venture for wholesale cash-and-carry and back-end supply chain management operations in India.
The JV launched its first 'Best Price Modern Wholesale' cash-and-carry store in Amritsar in May 2009. Currently, the company operates four such stores in Amritsar, Zirakpur, Jalandhar and Kota.
The JV is expected to open 10 to 15 wholesale cash-and- carry facilities and employ approximately 6,000–7,000 people over the next three years. The JV company also supplies to Bharti Enterprises' front -end retailing arm, Bharti Retail that runs 'Easy Day' stores.
The US retail giant Wal-Mart has been waiting for a long period for change in regulatory framework to enter India's front-end retail market.
