Wal-Mart set to enter Indian retail scene

New Delhi, Feb 25: The world's largest retailer Wal-Mart along with Bharti Enterprises is set to enter the India retail scene with its cash-and-carry venture to be finalised in the next few weeks, despite disturbances in political circles and trade unions.

''The discussions are at the final stage..the joint venture will be signed in the coming weeks...around March while the legal agreements are being worked out,'' Bharti Enterprises Chief Sunil Mittal said on Friday.

Mr Mittal, who met a number of ministers including Commerce and Industry Minister Kamal Nath and Planning Commission Deputy Chairman Montek Singh Ahluwalia, along with visiting Wal-Mart Vice-Chairman Mike Duke said his company will ''go ahead with the JV with Wal-Mart''.

Mr Nath said: ''This is a question of expanded capacities.

The consumers are the people we have to look upto. Our outlook has always been to protect the small retailers. The retail sector has undergone huge expansion.'' ''I have urged Wal-Mart to increase its sourcing from India by 25 per cent, which presently stands at 600 million dollars,'' Mr Nath said after his meeting with the Wal-Mart Vice Chairman and Bharti Head on Friday. He added that the US retailer brought products worth nine billion dollars from China.

Mr Mittal opined that his JV was ''no different'' from the retail ventures announced by other corporate big shots like Reliance and Tata, and the agreement was well within the government regulations.

''The agreement exists where the policy is. We have not faced any regulatory hurdles so far.'' In the wake of a letter sent by the Prime Minister Office to the Commerce Ministry, Mr Mittal said ''the letter of the PMO is to the ministry. We are not privy to it''.

The move towards the joint venture comes on the heels of UPA Chairperson Sonia Gandhi writing to the Prime Minister advising caution in allowing Wal-Mart entry into India.

Foreign direct investment (FDI) in multi-brand retail is prohibited in India, but 100 per cent overseas investment is allowed in cash-and-carry (wholesale) business.

The Commerce Minister, reacting to the letter, said: ''One has to see whether the sector can cope up with the expanded limits.'' Mr Nath denied all claims of the Bharti-Wal-Mart JV being affected by the clarification sought by the PMO from his ministry, saying there was no need for a ''relook'' at the FDI policy since it is not allowed in retail.

''There would be no review of the existing FDI policy regarding the wholesale and cash-and-carry sectors. The PMO letter has just asked for its impact on the small retailers,'' he said.

The PMO, which had earlier sent a letter to the commerce ministry, has again snapped a letter to the Department of Industrial Policy and Promotion (DIPP) ''to commission a study on the impact of transnational supermarkets, like large scale retailers or Indian businesses, on livelihood security of those engaged in small scale operations, before taking further decisions on FDI in retail''.

This letter has asked for a study to be done by a ''regulatory body or acadamic institution,'' the time frame for which ''should be reasonable so that it can be feed into policy making in the near future.

The Wal-Mart retail venture, however, is being welcomed by Union Agriculture Minister who says ''effort of Bharti will be useful for Indian farmers as they will be able to get remunerative prices''. Mr Mittal has also hinted that his 100 per cent subsidiary Bharti Retail's investment can go up from the 2.5 billion dollars announced earlier this week if the company buys land for the proposed retail chain.

''The 2.5 billion dollars by 2015 will be used only for setting up the stores. The investment can go up if we buy real estate,'' he said.

Bharti, which last week announced an investment of 2.5 billion dollar in the front-end of retail operations, said the JV would also look at supporting the 'kirana' (neighbourhood grocery) chain too.

He said: ''Bharti Retail will not get a preferential treatment from the JV, as it will supply to the kirana stores,'' which many fear would be wiped out if foreign retailers are let in.

The Wal-Mart team of executives visited India amidst protests from trade unions and small shop owners, who fear job losses if the retail sector is opened up to foreign companies keen to tap India's 300 billion dollar industry that is forecast to more than double by 2015.

UNI