Walmart, world’s largest retailer, had informed the Industry Ministry last year that it is comfortable with India allowing 49 per cent FDI in multi-brand retail, in view of “political sensitivity” in the country.
The Union Cabinet in its decision of November 24, 2011 which has since been put on hold, permitted 51 per cent FDI in the multi-brand retail, well above the expectations of Walmart and its Indian joint venture partner — Bharti Group.
In its response to the discussion paper by the Department of Industrial Policy and Promotion (DIPP), Walmart India president Raj Jain, also Managing Director of its joint venture with Bharti, said that the U.S. giant would ideally like 100 per cent FDI. However, for starters, it is comfortable with 49 per cent, he added.
“Bharti Walmart recognises, however, the political sensitivity around the retail sector. Recognising the government’s stand to adopt a calibrated approach, we would endorse a position where as a first step, multi-brand retail is opened up at 49 per cent,” Mr. Jain said in the memorandum submitted to the DIPP on July 30, 2010.
Similar views were expressed the American Chamber of Commerce (Amcham) which has around 500 members, 95 per cent of whom are the U.S. firms with operations in India. “...Given the government’s desire to have a calibrated approach, Amcham recognises the importance of a phased change of allowing the first step of 49 per cent FDI,” it said.
However, French retailer Carrefour and the U.S.-India Business Council pitched for 51 per cent foreign stake in multi-brand retail right from the beginning.