Walmart, others flouting FDI rules: Cobrapost

Foreign companies Walmart, Metro Cash and Carry and Carrefour are flouting FDI rules by selling products to individuals when they are not allowed to do so, a sting operation by Cobrapost alleged on Monday.

As per the FDI rules, these companies are allowed to operate in India on the condition that they will sell the products to wholesale customers (like retail shopkeepers). None of the companies could be contacted for their comments. Carrefour had shut its Indian operations and closed its wholesale stores in India.

The government allowed 100 per cent FDI in wholesale trading under the condition that these companies would not do any retailing, thus restricting their operations to B2B – or business-to-business – commerce only. The business of cash and carry of these companies is about bulk buying only by registered customers, which includes hotels, hospitals and kirana stores.

Cobrapost footage purportedly showed that individuals living near the stores regularly shopped there. Employees told the undercover reporter of the website that they could facilitate shopping for individual customers.

The reporter had approached the employees of the MNCs offering to bring a large number of shoppers to these stores to boost their sales and it would help him pocket a profit in the form of a cut either from his members or from the company itself, a statement said.

“The idea was an instant hit with almost all (company) officials, with some exceptions, as they began to offer help in various ways to facilitate this shopping carnival,” Cobrapost chief Aniruddha Bahal said.