New Delhi, Feb 23: The entry of US giant Wal-Mart into retail appears to be snowballing into a major controversy with the Prime Minister's office expressing disappointment over Industry Ministry's response to Congress President Sonia Gandhi's concern and asking for a fresh study.
On a day when Wal-Mart Vice-Chairman Mike Duke was here meeting Industry Minister Kamal Nath and a few others, a letter from the PMO to Department of Industrial Policy and Promotion surfaced.
"After perusal of the comments sent by DIPP, the Prime Minister observed that the President, AICC, had raised a specific issue in her letter, referring to the need for a careful study of the likely impact of the entry into retail trade of 'transnational supermarkets' on the livelihood security of small scale traders and vendors and that the DIPP has not responded to this issue in its comments," the PMO letter, written a few days ago, said.
The letter said that the Prime Minister wanted the DIPP to commission a study of the possible impact of large scale retail operations both by transnational supermarkets and major Indian business houses on small retailers.
Asked whether a review of FDI retail policy was needed and if his ministry would conduct the study, Kamal Nath said "there is no question of relook since there is no proposal to allow FDI in multibrand retail."
After his meeting with Duke and Wal-Mart's Indian partner Sunil Mittal, Chief of Bharti group, Nath said that Wal-Mart was proposing to come to India through 'cash and carry' and back-end operations which were as such allowed under the prevailing policy.
"Whatever is allowed under regulation will be allowed," he said while holding that there was no need for any fresh study on the impact of FDI in retail since there were a number of other studies being conducted.
Nath said FDI in wholesale cash and carry has been allowed for a long time and there was no move to review it.
While the government has not seen the agreement that Wal-Mart signed with Bharti for entering India but "whatever complies with the regulations will be allowed", he added.
Nath asked Wal-Mart Vice-Chairman to increase sourcing from India by 25 per cent every year. Currently, they source 600 million dollars worth of goods from the country while from China they buy merchandise goods of nine billion dollars.
When asked whether the letter from PMO would have any impact on Bharti-Wal-Mart business plans, Bharti group chief Sunil Mittal said: "I am not privy to the letter so I cannot comment."
Earlier, Duke began his day in Delhi meeting Bharti officials and government decision makers, including Planning Commission Deputy Chairman Montek Singh Ahluwalia and Agriculture Minister Sharad Pawar.
Pawar said his meeting with Wal-Mart and Bharti was to discuss ways of improving sourcing and procurement from farmers.
He endorsed the contract farming route for procurement of farm products and said on the face of it, it looked like that under the contract with Bharti, farmers would be able to sell their produce at a better prices.
Bureau Report