Walmart tells govt can't meet 30% sourcing clause

Walmart was quoted as saying that they can only procure about 20% from small industries

The world’s largest retailer, Walmart, has expressed its inability to the government on meeting the sourcing norm in the multi-brand retailing segment that requires 30 per cent procurement from small industries, stating it could procure only about 20 per cent.

According to sources, representatives of the company had met department of industrial policy and promotion (DIPP) officials in the second week of this month and informed about the company’s stand on the contentious issue.

However, they said it would be “really” difficult for the government to ease this provision, as “it is a politically sensitive issue”.

 

When contacted, a Walmart India spokeswoman said: “We are still very early in the process on FDI (foreign direct investment) but are excited by the opportunity in front of us. We continue to work with the government to better understand the rules that exist for FDI and we appreciate the government’s willingness to consider our requests for clarity on conditions contained in the new FDI policy.”

Under the FDI policy for multi-brand retail trading, at least 30 per cent of the value of procurement of manufactured/processed products shall be sourced from Indian ‘small industries’.   

Several global retailers have raised their concerns over the restriction. In a meeting with Commerce and Industry Minister Anand Sharma, the global chains have flagged the issue and have demanded altering the condition to 'preferably' from 'mandatory' as in the case of single- brand retail. Although the government has permitted 51 per cent FDI in multi-brand retail about 10 months earlier, no formal proposal has been received by the DIPP yet.