New retail norms: Cos to seek more clarity from Sharma

New retail norms: Cos to seek more clarity from Sharma

Global retailers including Metro,Auchan,Carrefour,Tesco,and Walmart

Global retailers including Metro,Auchan,Carrefour,Tesco,and Walmart will be meeting commerce minister Anand Sharma this week to work out ways for investing in the sector. The ministry has come out with new classifications for investment in the multi- and single-brand retail that companies say have made their entry conditions tough into the Indian market.

The meeting scheduled later this week is also expected to see participation of Indian retailers including Reliance Retail,Tata group’s Trent,Landmark and Pantaloon who have confirmed their presence for the meeting. The meeting is likely to be dominated by issues like definition of group companies,mandatory 50 per cent FDI investment in back-end infrastructure and 30 per cent sourcing from small and medium enterprises (SMEs).

The DIPP had sent invitation to 21 retailers including both global and Indian. Along with those mentioned above,the list included Kroger,Walgreen,Home Depot,Costco Wholesale Corporation,Schwarz Unternehmens Treuhand,and Aldi. Many of these companies have no presence in India and are yet to confirm their participation.

US-based Walmart,which has cash and carry business in India through a joint venture with Bharti Enterprises,had asked the department of industrial policy and promotion (DIPP) as to what will constitute group companies. The query was in relation to an April 2010 circular on cash and carry business which restricts businesses to limit their sale to group firms at 25 per cent of their turnover. The US retail major wants the cap to be raised to 40 per cent.


“The DIPP is of the view that 25 per cent is a reasonable limit. We have not decided on the definition of group companies yet. It is under consideration and will soon be clarified,” a commerce ministry official told The Indian Express.

The issue is likely to feature in the meeting which Prime Minister Manmohan Singh has called with key ministries including commerce and industry,finance and steel among others in the first week of July,the official said.

Tesco,Carrefour and Walmart have also sought clarity on the issue of whether the 50 per cent mandatory investment in the back-end will be for the first tranche of the minimum FDI of $100 million only.