Post-Budget, Bharti Wal-Mart hopeful of FDI in retail

Bharti Wal-Mart, an Indian joint venture of the world's largest retailer Wal-Mart, has said it is optimistic of India allowing Foreign Direct Investment in the retail sector, given the "progressive" nature of the current government.

"We are optimistic that India's progressive government will move ahead with its policies of economic and social reforms, including allowing FDI investment in front-end retail," Bharti Wal-Mart Chief Executive Officer and Managing Director Raj Jain said.

The US retail giant Wal-Mart, which has been waiting for a long period for change in regulatory framework to enter India's front-end retail market, currently has a B2B (business-to-business) joint venture with Sunil Mittal-led Bharti group for wholesale cash-and-carry and back-end supply chain management operations.

India currently allows 51 per cent FDI in single-brand retail, but none in multi-brand.

In a statement, Jain attributed his optimism to Finance Minister Pranab Mukherjee's Budget speech, saying it "underscores the need to reduce the significant wastages in storage and well as in the operations of the existing food supply chains in the country".

"This would greatly contribute to India's growth story by creating employment, strengthening supply chain efficiencies, enhancing earnings of farmers and helping families to save money so they can live better," Jain noted.

While reiterating Prime Minister Manmohan Singh's recent remarks on the need for taking a firm view for opening up of the retail sector, Mukherjee had said that the difference between wholesale and retail prices need to be reduced.

"As the Prime Minister has said recently - 'we need greater competition and therefore need to take a firm view on opening up of the retail trade.' It will help in bringing down the considerable difference between the farm gate prices, wholesale prices and retail prices," Mukherjee said.

Last week, the government's pre-budget statement on the country's financial health, the Economic Survey also showed that the retail prices were rising at about 10 times faster than the wholesale prices.

The survey noted the rate of price rise in wholesale market at 1.6 per cent for the current fiscal 2009-10 as measured by wholesale price index (WPI), against the consumer price index (CPI) inflation of 11.4 per cent.

The CPI-based inflation has been higher than that based on WPI for four consecutive years now with the gap widening every passing year. In 2004-05, the CPI inflation was, in fact, lower than the WPI one and the two were equal in 2005-06, the Survey said.

On other hand, the industry has been arguing that greater competition triggered by opening up of the sector would help in bridging the gap between consumer and wholesale prices.

"We were expecting FDI rules to be relaxed in retail business. It would have benefited retailers as well as the ultimate consumers," Vishal Retail Chief Managing Director Ram Chandra Agarwal said.