DIPP asks RBI to probe Walmart's investment in Bharti arm
The commerce and industry ministry has referred to RBI the issue of alleged violation of FDI norms by Walmart in its Rs 456-crore investment made in a Bharti Group company.business Updated: Oct 18, 2012 20:29 IST
The commerce and industry ministry has referred to RBI the issue of alleged violation of FDI norms by Walmart in its Rs 456-crore investment made in a Bharti Group company.
The Department of Industrial Policy and Promotion (DIPP), which was directed by the Prime Minister's Office to look into the matter, has written to the RBI to examine whether there was any violation of the Foreign Exchange Management Act (FEMA).
"Since the RBI is the focal point for foreign remittances, the matter has been referred for examination," a senior official in the ministry said.
When contacted a Walmart spokesperson said, "We are in complete compliance with India's FDI laws. All procedures and processes have been duly followed and details filed with relevant Indian government authorities, including the RBI."
According to the ministry official, in a letter written on October 10, DIPP has asked the RBI to examine whether the investment, first made by Walmart in Cedar Services, was passed on to Bharti Retail, which runs Easyday chain of stores, in violation of FDI regulations and FEMA.
The PMO's direction came after Communist Party of India (CPI) Rajya Sabha MP from Kerala MP Achuthan wrote to Prime Minister Manmohan Singh saying the investment made by Walmart in Bharti group firm Cedar Services violated FDI rules.
In September, in a written reply to the Rajya Sabha, Commerce and Industry Minister Anand Sharma has said that WalMart Stores Inc had invested Rs 455.8 crore in Cedar Services in 2010 via its Mauritius arm but the RBI has no FDI data of the same.
Sharma had said that on March 29, 2010 Cedar Services issued 45.58 crore compulsorily convertible debentures CCDs, with zero per cent yield, of face value of Rs 10 each.
The CCDs are convertible into 425,965,859 equity shares of Rs 10 each, at a premium of Rs 0.70 per share.
At that time, FDI was not allowed in multi-brand retail in India.
Under FEMA guidelines, the recipient Bharti Group is required to inform RBI about the investment that it received from Walmart but this was not allegedly followed.
First Published: Oct 18, 2012 20:26 IST