Decision on FDI in Retail Unlikely in Near Future.

New Delhi Decision on much-awaited FDI in multi-brand retail is likely to be delayed further in wake of fresh inter-ministerial differences on the politically sensitive issue.

Differences between the Ministry of Consumer Affairs and the Department of Industrial Policy and Promotion surfaced, even as Wal-Mart said today it is waiting for a policy clearance to pump in investment in the sector.

"There are some differences among ministries over FDI in multi-brand retail. Our Department is processing what stand we have to take," Food and Consumer Affairs Minister K V Thomas said on the sidelines of a CII event here.

He said his ministry would formulate, within a week, stand on the terms and conditions which should be enforced for allowing the foreign direct investment (FDI) in the multi-brand retail, estimated at over USD 500 billion market.

"The question is not about the percentage of FDI only. There are large number of small shops in villages...," he said.

En route his return from the US, Prime Minister Manmohan Singh had also expressed concern about protecting the small traders.

"It is our task to go about it in a manner, in which the nation enjoys the benefits of more FDI in retail trade, without hurting our domestic interests. I can assure that we will do nothing which will hurt the essential interests of the small Indian trade community," Singh had said yesterday.

Wal-Mart India President, Raj Jain, who was also present at the CII meeting, said, "There would be manifold increase in investment (by us) if FDI in multi brand retail is opened up,"

At present, world's largest retailer operates in India through a cash and carry model. Though 100 per cent FDI is permitted in this format, Walmart has a joint venture with Bharti Enterprises for nine wholesale stores in the country.

The Food Minister said the multi-national companies are interested for business in cities alone."Who will look after interest of small shop keepers in remote villages? They should be properly protected," Thomas asked.

He said in his recent meeting with traders in Mumbai, a concern was raised about some big companies stocking food material which could trigger price increase.

The Committee of Secretaries (CoS) headed by Cabinet Secretary Ajit Kumar Seth has recommended that 51 per cent FDI could be allowed in multi-brand retail, which is dominated by neighbourhood kirana stores.

It also suggested that at least 50 per cent of the investment and jobs should go to rural areas. Global players will have to commit a minimum of USD 100 million investment in infrastructure.

Our investment in India will grow if FDI rules relaxed: Walmart

The world's largest retailer Walmart today said its investments in India will grow manifold if foreign direct investment regulations on multi-brand retail are relaxed in the country.

Walmart said it will ramp up its investment here to strengthen supply chains and enhance direct linkages with farmers in order to provide "quality products at affordable" prices to Indian consumers.

"There would be manifold increase in investment by Walmart in India if FDI in multi-brand retail is opened up," Walmart India President Raj Jain told reporters on the sidelines of a CII event here.

Walmart currently has nine cash-and-carry stores in India through a joint-venture with Bharti Enterprises.

"Investment in India is not a problem, policy (FDI regulations) is a problem," Jain said.

At present, India does not allow FDI in multi-brand retail, which has restricted international players to the wholesale cash-and-carry business.

In the wholesale business, 100 per cent FDI is allowed, whereas in single brand retail, 51 per cent overseas investment is permitted.

While a committee of secretaries has given a green signal to FDI in multi-brand retail, the move requires political approval. The government is still in the process of finding a political consensus on the issue.

Walmart currently works with a large number for farmers for direct sourcing of products.

"We already work with farmers in the North and will soon start that in South too... We are doing as much as we can, but our investments cannot be monetised on the back of wholesale alone," he said.

Through wholesale, the company anyway can not control the prices that end-consumers pay for the final products, he added.

Jain, however, did not share absolute numbers on the quantum of investment being made by the company in the country and the expected increase in case FDI is allowed in multi-brand retail in India going ahead.

Source : expressindia.com