Even as the government won the retail foreign direct investment (FDI) vote in the Rajya Sabha on Friday, following the victory in the Lok Sabha two days ago, foreign retail chains are still not ready to talk about their India plans.
The last hurdle —amendment to the Foreign Exchange Management Act (Fema) — is yet to be crossed, pointed out a source. It, too, has to pass the Rajya Sabha test. Although it may not be a stumbling block, foreign players would rather wait till it is all clear for them in the $500-billion (Rs 25 lakh crore) Indian retail market, said the source.
According to experts, the real action on the ground linked to opening of stores could be expected only after a year.
UK-based Tesco is the only foreign-owned chain to offer a comment after the Rajya Sabha vote. While welcoming the development, the company spokesperson said Tesco was “reviewing the conditions” without elaborating further. “We already have a successful franchise arrangement with Tata’s Star Bazaar stores and we are hopeful that this development will allow more Indian consumers, business and communities to benefit from world-class retail investment,” the spokesperson added. Early this week, Tesco had announced that it had initiated a review in the US market for its ‘Fresh and Easy’ stores there.
The largest retailer of the world, Bentonville-based Walmart, declined to comment on the latest development in Parliament. Its 50 per cent Indian partner in the cash and carry or wholesale venture, Bharti Enterprises, too chose to be silent on the move.
Currently, Walmart is facing an Enforcement Directorate investigation over its alleged investment into a Bharti arm, in violation of the Fema rules. Also, the American chain is probing likely corruption cases in the organisation in relation to the India market, among other geographies.
French retailer Carrefour, which too has been in India with its cash and carry business hoping it can roll out its supermarket stores here, refused to talk around the political developments on retail FDI.