‘Any policy will take time to fructify into investments’
Expressing hope that foreign players will invest in multi-brand retail, Union Minister of Commerce and Industry Anand Sharma on Saturday said any policy would take time to fructify into investments, and ruled out further concessions on sourcing norms.
“In single-brand retail also, it took almost a year for actual investments to come. We are confident that multi-brand will also bring in foreign players,” Mr. Sharma told reporters while returning from Indonesia as part of Prime Minister Manmohan Singh’s delegation.
Asked if the government would make additional concessions to attract foreign investors in multi-brand retailing, Mr. Sharma said, “Any policy needs to be given some time to fructify into investment.”
U.S. retail giant Walmart and Bharti Enterprises ended their six-year-old partnership on October 9. They will discontinue their franchise agreement in the retail business and will independently own and operate separate business formats in India.
“While it is for Walmart to comment on its partnership issues, the impression I have got is they want to remain invested in India,” Mr. Sharma said. “They have committed to invest in back-end retail business on their own, while for front-end retail, they will look for another partner.”
On sourcing norms, Mr. Sharma said any policy could not be company-specific.
“The norms have already have been eased for the benefit of the players but the policy also needs to safeguard the interests of SMEs and domestic industry,” the Minister said.
The government approved 51 per cent foreign direct investment in multi-brand retailing last September and made it mandatory for companies entering the segment to source 30 per cent of their products from local small and medium enterprises.
In July, Walmart expressed inability to meet the sourcing norms, saying it could procure only about 20 per cent.
While the government recently revised the clause to make the sourcing requirement mandatory only at the time of starting the business, Walmart has sought additional clarifications from the government.