Policy spanner in works

NEW DELHI: Policy prevents Wal-Mart from having any stake in Bharti’s front-end retail venture. However, Bharti is likely to source technology and know-how from Wal-Mart for its front end operations and pay royalty for these, apart from sourcing goods from the cash and carry joint venture.

Nothing in the policy on FDI in retail prevents Bharti from using Wal-Mart’s name in its retail operations and paying a fee for this franchise. While Bharti is yet to make up its mind on the name of its retail chain, the message from the ruling party at the Centre is loud and clear: Don’t embarrass us by putting Wal-Mart in the name, leaving scope for the Opposition to campaign that the government has allowed foreign investment into retail.

Once the cash and carry and retail operations start procuring farm produce and manufactured goods on an extensive scale, these suppliers would constitute an interest group strongly in favour of organised retail. But the growth of a farm and SME lobby of beneficiaries of organised retail would be gradual, while opposition to organised retail is already high-pitched, thanks to politicisation. Interestingly, during the NDA regime from 1999-2004, the Congress had maintainted its ideological position against the opening up of the retail sector.

Priya Ranjan Das Munshi, who was then chief whip of the Congress in the Lok Sabha, had even opposed the move to allow 100% FDI in cash & carry in 2000. However, ever since the UPA government assumed power in 2004, international retailers like Wal-Mart had managed to win over some prominent Congress leaders, including high-profile Cabinet Ministers.
Things were moving along fairly smooth for the Bentonville, Arkansas headquartered retailer in India, till Sonia Gandhi took the matter in hand this January. She wrote a letter to the prime minister, asking him to conduct a comprehensive study on the “impact of transnational retailers on small mom & pop stores.”

ICRIER was duly commisioned to conduct a study on the subject by the department of industrial policy and promotion. Opposing voices from overseas have also joined the anti-Wal-mart chorus. The American labour leader and leading anti-Wal-mart crusader Wade Rathke flew down to India to share his experiences with Indian counterparts, comprising organisations such as India FDI Watch, Confederation of All India Traders and Federation of Associations of Maharashtra (FAM).
mayur.jha@timesgroup.com