The Hindu : Business : Wal-Mart chief seeks FDI in retail sector

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Friday, May 13, 2005

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Business

Wal-Mart chief seeks FDI in retail sector

Special Correspondent

The company hopes for policy change to enter India

WHAT'S IN STORE?: The Prime Minister, Manmohan Singh, with the President and Chief Executive Officer, Wal-Mart International, John B. Menzer (third from left) during a meeting at Parliament House in New Delhi on Thursday. — Photo: PTI

NEW DELHI: The President and CEO of Wal-Mart International, John B. Menzer, on Thursday met the Prime Minister, Manmohan Singh, to discuss opening up of the retail sector in this country for foreign direct investment (FDI). He told newspersons after the meeting that Wal-Mart sought to invest "significantly" in India both for opening stores and outsourcing from the market.

He described it as a "good meeting" while expressing the hope that there would be a change in the FDI policy so that his company could enter the Indian market. As for whether the world's largest retailer would be prepared to invest in case 26 per cent FDI was allowed, he said this would depend on the market and what the Government offered. At the same time, he was confident that opening up the retail sector would not affect small players, as there was room for everyone in the Indian economy.

At present, he said, India was the fastest growing export market for the company. The sourcing from Indian was around $1.5 billion last year and this was expected to increase by 30 per cent this year. The low costs here were a big attraction. In contrast, Wal-Mart bought about $18-billion worth of goods from China. Mr. Menzer said Wal-Mart was sourcing products from the textile sector like apparel and home furnishing apart from other products like jewellery. He also referred to farm produce as an area where Wal-Mart could help by providing a cold chain in the country. By having retail here, he said the company would be close to the market. Since much of fruit and vegetable production in this country were now spoiled, he said it could investing in things like cold chains.

Left protest

The Wal-Mart CEO's meeting has been preceded by protests from the Left parties about proposals to allow FDI in the retail sector. The Communist Party of India (CPI) sent a letter on Tuesday to the Prime Minister to reconsider any proposal to allow FDI in retail trade as it would destroy employment and create monopolies. Besides, it stressed that this would go against the agreed principles of the UPA Government's Common Minimum Programme.

The party expressed surprise that the Union Commerce and Industry Minister, Kamal Nath, had in a recent TV interview confirmed that the Government was considering allowing FDI in retail in grocery which in its view would wipe out small retailers in the country

In the letter, the CPI General Secretary, A. B. Bardhan, recalled that Dr. Singh while being Leader of the Opposition had opposed the proposal saying that such reforms would destroy rather than create employment.

He also referred to the fact chief executive of Wal-Mart, the world's largest retailer, was to meet the Prime Minister and other concerned ministers and officials to seek an entry into the Indian retail market.

"In our view, allowing FDI in retail trade will not only destroy employment but is also not in the long-term interests of consumers as it will create monopolies. We believe this is also against the agreed principles of the Common Minimum Programme", the letter stated.

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