The country's leading retail chains have raised apprehensions that the collaboration between Bharti Enterprises and Wal-Mart could provide backdoor entry to the world's largest retailer.
Retailers point out that the government allows 100 per cent foreign direct investment in wholesale cash-and-carry and Bharti Enterprises and Wal-Mart are planning a joint venture in this area.
However, there is nothing preventing them from supplying products to only stores controlled by Bharti Enterprises, which is planning to set up a nationwide retail chain.
According to sources, Reliance Retail boss Mukesh Ambani has met Commerce Minister Kamal Nath to seek a level field for Indian retailers.
Other Indian retail chains are waiting for Bharti Enterprises to file its application before the Foreign Investment Promotion Board before they voice their apprehensions to the government.
"The FDI rules have already been breached in spirit because the government has allowed the big boys to come in. And while the government has allowed 100 per cent FDI in the cash-and-carry business, there are grey areas that can be exploited," said the chairman of a retail chain in the country.
However, a Bharti executive cleared any such apprehension. "The cash-and-carry business, which will be run as a joint venture with Wal-Mart, will be open to any retailer in the country, big or small, that wants to take advantage of it. It is not meant only for supplying to the retail chain that Bharti will be setting up on its own," he said.
"We are finalising the details of the agreement. It will come through in January. We have adhered to the government's permissible limits with regard to foreign investment in the retail industry. We have not violated government regulations," clarified Rajan Bharti Mittal, Joint MD, Bharti Enterprises, speaking on the sidelines of an ICC India-Ficci seminar.
Under existing rules, foreign players running cash-and-carry stores can sell to distributors, retailers and hotels among others, but not to consumers.
The government has also allowed FDI up to 49 per cent for single-brand retailers. But Wal-Mart, Metro, Tesco and Carrefour are all multi-product retail chains.
