Monthly Archives: June 2013

DIPP Meeting

June 4th, 2013

As you know, superstores including Walmart, Carrefour, Tesco were studying the policy riders for 51% FDI in multibrand retail. As the DIPP received a number of queries from superstores, a multi-ministry meeting of concerned officials is being held today in DIPP to issue clarifications.

It is likely that the DIPP

– Would ask global superstores to invest 50% of only the first tranche of investments (minimum $100 million) in back-end infrastructure.

– Would declare that the 51% foreign direct investment limit in multi brand retail is composite one, including FDI and foreign institutional investment (FII).

 – Would allow superstores to create back-end infrastructure in states that do not allow any FDI in multi-brand retail. As of now only 11 states have agreed to allow global retailers. Yesterday the new govt. of Himachal Pradesh announced its agreement with FDI retail policy.


Yet Another Roadblock for Walmart

On 3rd June 2013, Govt. of India defined Group firms as two or more enterprises that directly or indirectly are in a position to exercise 26% or more voting rights in the other enterprise or appoint more than 50% members on board of directors in the other enterprise.

Amidst widespread opposition to the Walmart’s backdoor entry of FDI in Multibrand retail (through Bharti-Walmart, the 50:50 joint venture between Walmart and Bharti for operating Cash-and-carry outlets in India), in April 2010 Govt. of India framed a policy that asked cash-and-carry businesses (Bharti-Walmart) to limit their sale to group firms at 25 per cent of their turnover. In absence of clear definition of what group firms meant Bharti-Walmart’s cash & carry business (20 Best Price Stores) continued to sale almost 85% of their products to Bharti Retail’s 200 Easy Day stores.

Now, Bharti-Walmart will either have to limit its sale to Easy Day to 25 per cent of its turnover or restructure its corporate structure.