The world’s largest retailer, Walmart, has said it will not be able to meet the minimum-sourcing clause mandated under multi-brand retail foreign direct investment (FDI) rules that requires multinational retailers to procure at least 30% from India’s small industries.
Walmart is said to have told government officials that it can procure only 20% from small industrial units, sources said.
Company representatives met Department of Industrial Policy and Promotion officials last week and informed about the company’s stand on the contentious sourcing issue, they said.
However, it is likely to be “really” difficult for the government to ease this provision as “it is a politically sensitive issue”.
“We continue to work with the Government of India to better understand the rules that exist for FDI and we appreciate the government’s willingness to consider our requests for clarity on conditions contained in the new FDI policy,” said a Walmart India spokeswoman.
In a recent meeting with commerce minister Anand Sharma, global retail chains had flagged the issue and demanded that the sourcing condition be altered to “preferably” from “mandatory” as is the case in single-brand retail.
Although 51% FDI in multi-brand retail was permitted about 10 months back, no formal proposal has been received by it yet.
(with agency inputs)