Retailers meet Sharma, flag policy concerns, leave empty-handed

Commerce ministry mulls to issue revised guidelines with greater clarity on the issues

The government failed to give any definite answers to the questions posed by the retail industry today, but assured foreign and domestic multi-brand chains that their concerns would be addressed.

Commerce and industry minister Anand Sharma had called top representatives of retail companies for a roundtable to discuss the policy hurdles faced by the industry.        

Nine months after the government announced the multi-brand policy, allowing up to 51 per cent foreign investment in the sector, the commerce and industry ministry is planning to issue revised guidelines with greater clarity on issues.

Sources in the government said that some of the issues, including whether 50 per cent of investment made by a retail chain should go into backend infrastructure only in the first tranche or as a continuous process,required change in the policy and those would be taken to the Cabinet for further discussion and approval.

On the issue of moving the Cabinet again for changes in the policy, a senior official of the Department of Industrial Policy & Promotion (DIPP) told Business Standard, "let's examine it."

He added that a decision would be taken on that in a day or two. While the industry sought dilution of the sourcing norms for multi-brand retail, in sync with single-brand guidelines, besides  clarity on backend and frontend investments, Sharma said, "it is important for the government to hear the concerns of the industry and address them." Without giving any on-the-spot solution or answer, the minister said, "we believe that we have the capacity to address those concerns. We will try to address the concerns and accordingly the guidelines will be given out."

Also, to consider a higher FDI level across many sectors including multi-brand retail, Prime Minister Manmohan Singh would have discussions with his Cabinet  colleagues on July 1.    

Retailers who met Sharma on Thursday included Rajan Bharti Mittal, vice chairman and managing director of Bharti Enterprises; Walmart senior vice-president and interim India head Ramnik Narsey; Carrefour India MD Jean Noel Bironneau; Tesco Asia finance director Harjeet Drubra; Reliance Retail chief executive (lifestyle) Bijou Kurien, among others. Representatives of business chambers CII and Ficci were also part of the round table.

After the meeting, Sharma said, "the purpose of this meeting has been to interact with the multi brand retailers and potential investors. It is an ongoing dialogue between the government, the businesses and the investors." So far, not even a single application has been made by any of the foreign retailers proposing India plan.  

Bharti group's Mittal told reporters that retailers suggested to the government that the 30% sourcing cap from small local enterprises for multi-brand retail should be made 'preferably', instead of 'mandatory'.

In single brand retail, mandatory has been replaced with preferably in the condition on 30 per cent sourcing from MSMEs. The second issue raised was about the definition of MSME.

Also, the issue regarding investment in the infrastructure was raised. "After investing first tranche into back-end infrastructure, investors should be free to invest in other operations also".

According to the current policy a minimum investment of $100 million needs to be made by a retailer, 50 per cent of which must go into fresh backend.