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New Policy On FDI In Multi-Brand Retail Soon: Scindia

admin — Fri, 08 Oct 2010 10:56:25 +0000

The Government today indicated that a new policy on foreign direct investment in the politically sensitive multi-brand retail sector will come soon. At present, India does not allow FDI in the lucrative retail sector, which employs 33 million people and is dominated by mom & pop stores (kirana shops).

“Let me assure you that it (the inter-ministerial committee set up for the purpose) will not take inordinate amount of time…there cannot be an open-ended time line, we are monitoring the progress of that group,” State Minister for Commerce and Industry Joytiraditya Scindia said at a CII meet here.

A six-member committee is evaluating the stakeholders’ comments, received by the Department of Industrial policy and Promotion (DIPP), the nodal department on FDI policy, on its discussion paper on opening the sector for FDI. “They (the committee) are working on the feed back. There is going to be a single recommendation that will come out and then a consensus will have to be built around that before we take that in terms of a policy,” Scindia added.

The DIPP, in July, initiated a debate on the sensitive issue of allowing FDI in the multi-brand retail sector. It received inputs from stakeholders, including business chambers, WalMart India and French retail major Carrefour, besides the wings of the government.

The concept paper had favoured opening of the sector, subject to creation of back end logistics by the foreign retail stores. The committee comprises officials from ministries of Micro, Small and Medium Enterprises, Agriculture, Finance, Rural Development, Commerce and Industry and Consumer Affairs.

While multi-brand retail is closed for foreign investors, 51 per cent FDI is permitted in single brand retail while there are no restrictions on inflows in wholesale cash and carry format business. According to the discussion paper, India annually loses more than Rs one lakh crore in agri-products, including fruits and vegetables, due to lack of proper infrastructure like cold chain storage and warehousing.

While there had been political resistance to the idea on the presumption that global players would swallow the small ‘mom & pop’ (kirana) stores, the industry has been pitching for allowing FDI in the retail sector.

Wal-Mart steps up India rollout, hopes rules ease

admin — Thu, 13 May 2010 00:49:38 +0000

Wal-Mart Stores Inc, the world’s biggest retailer, will accelerate its rollout of wholesale stores in India, a crucial growth market that has long frustrated overseas operators with restrictive rules. Raj Jain, chief of Indian operations for Arkansas-based Wal-Mart, said the firm now expects to open 10-12 wholesale centres in India over two-to-three years, from an earlier target of five years, as real estate prices have become more attractive and it gains confidence in operating in the country.

Food price inflation and the need for food security should spur the government to open the sector to foreign direct investment (FDI), he added. “We will quicken the pace of expansion,” Jain said in a late Tuesday interview at his offices in Gurgaon, a fast-rising suburb of New Delhi that houses a host of multi-nationals. “We have more confidence in running the stores, we feel more confident about real estate compared to two years ago,” he said.

Retail rents fell by 30-40 percent from late 2007 peaks. Wal-Mart currently runs wholesale operations in India in an equal partnership with India’s Bharti Enterprises. India’s $450 billion retail sector is dominated by small local operators, a powerful constituency that has stood in the way of foreign multi-brand players such as Wal-Mart and No.2 Carrefour being allowed to operate their own retail stores.

Instead, foreign players must operate through franchise tie-ups with local partners or operate cash-and-carry, or wholesale, outlets of the kind Wal-Mart is rolling out. While the government is yet to liberalise rules for foreign retailers in India, Jain said India has moved beyond the question of whether or not organised retail is positive for the country.

“Everyone realises this country needs organised retail and that it won’t overnight replace mom-and-pop stores,” he said, sitting at a conference table adorned by a small shopping trolley filled with candy. Food inflation is a nagging problem in India, eating into disposable incomes and prompting political protests. Some 40 percent of fresh produce in India, which has a population in excess of 1.2 billion, is wasted due to inadequate supply chains and lack of cold storage.

Jain said opening retail to foreign investment would enhance food distribution and security, which the government realises. “Now it’s a question of having the political will and the timing of the decision,” he said.

Bharti Walmart to foray into south, west India within 2 yrs

admin — Wed, 14 Apr 2010 12:02:00 +0000

Bharti Walmart, the 50:50 joint venture between Bharti Enterprises and US-based Walmart Inc, on Tuesday said it will enter the southern and western parts of India within the next 18-24 months as it looks to expand presence in the country.

The wholesale firm had earlier announced plans to have 10-15 outlets within the next three years in Punjab, Haryana, Delhi NCR, Rajasthan, Uttar Pradesh and Madhya Pradesh.

“Within 12-18 months we should be able to be in the southern markets. We are focusing on all four southern states. And probably after that, within two years, we will be in west India,” Bharti Walmart Managing Director and CEO Raj Jain told.

He said the company has started scouting for locations in the southern and western states but is yet to take a decision on the total number of outlets likely to be set up in those regions.

“The cash-and-carry outlets in south and west would follow our existing format of 50,000-80,000 sq ft size,” he said.

The firm today opened its second outlet in Chandigarh. Its first store in Amritsar was inaugurated in May last year.

“This year we will open five more outlets in North India, taking our total retail space to over 3 lakh sq ft from one lakh sq ft now,” Jain said.

Regarding today’s Walmart Asia President Scott Price’s announcement that the American retail giant will increase sourcing from India, Jain said, “We are looking to start exporting mangoes soon and also put more emphasis on basmati.”

Bharti Walmart will open a new technical training centre in Delhi later this year in collaboration with the state government on lines with the existing centre in Punjab.

“The centre in Amritsar has already trained 2,000 students in courses like retail, wholesale and supply chain management, of whom 700 have secured placements in various places. We now want to replicate it in Delhi,” Jain said.

Walmart to make India major sourcing market

admin — Wed, 14 Apr 2010 11:54:12 +0000

Walmart, the world’s largest retail player, today said it will increase sourcing from India for its global operations and expects the country to become one of its major suppliers within 4-5 years. ”We see India as a mega place for our worldwide sourcing. Indian products can be exported to other Asian countries, Europe and even the US,” Walmart Asia President and CEO Scott Price told reporters here.

The Bentonville (Arkansas)-based company already sources goods worth $125 million a year from Punjab alone, mainly cotton. Price said the aim is now to increase the figure manifold. ”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. Our global sourcing organ has been restructered and I had a talk with its head and both of us agreed that India has an immense potential,” he said.

Asked about the products the company is keen to source from India, Price said the country has an immense number of items to offer and a final decision has not been taken. Walmart, which is currently present in India under a 50:50 joint venture with Bharti Enterprises in the wholesale cash-and-carry segment, also called for a relaxation of the country’s retail FDI norms.

“The government is itself identifying areas where improvement is required. FDI in retail has to be opened further, although it could be in stages,” Price said, however, adding that the company is satisfied with its JV with Bharti. Meanwhile, the JV – Bharti Walmart Pvt Ltd — today opened its second Indian store here. The first outlet in Amritsar was inaugurated in May last year.