U.S. retail giant chain Walmart has conveyed to the Industry Ministry its inability to meet the 30 per cent condition which requires procurement from small industries. It is, however, ready to accept 20 per cent.
Re-think mode
Highly-placed sources in the Department of Industrial Policy and Promotion (DIPP) said that Walmart had orally conveyed its stand on the issue to the officials of the Department. A number of other multi-national chains of the U.K. and France have also expressed their inability to meet the 30 per cent mandatory sourcing norm, forcing the government into re-think mode.
The government is already considering tweaking certain norms in the multi-brand retail FDI (foreign direct investment) guidelines, especially after Commerce and Industry Minister Anand Sharma met CEOs and heads of domestic and international retail chains over a round-table last month.
Officials in the DIPP said representatives of the company told them that 30 per cent was not achievable and they would rather peg it at 20 per cent.
Since sourcing from small scale industries has become a politically sensitive matter, the government is still trying to figure out how to address the concerns of the MNCs and, at the same time, not attract political opposition. As per the FDI policy , at least 30 per cent of the value of procurement of manufactured/processed products shall be sourced from Indian small industries. During their meeting with Mr. Sharma, CEOs of global chains had pointed out that this condition was unacceptable and wanted the government to replace the word ‘mandatory’ with ‘preferably’.
