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Walmart to study FDI fineprint before setting up food-only outlets

June 22, 2016

Walmart has been trying to open multi-brand retail stores in India for over a decade

The world's largest retail chain, Walmart, is looking at the new regulatory environment for setting up food-only outlets in the country.

The government on Monday permitted 100 per cent foreign direct investment in retailing food produced or manufactured in India.

In an e-mail response to Business Standard, the company said it would study the final policy document before deciding on a course of action.

"The decision by the government to allow up to 100 per cent  FDI in marketing of food products is progressive. We will study the policy document when the government issues it,” said Rajneesh Kumar, senior vice-president and head of corporate affairs, Walmart India.

Walmart has been trying to open multi-brand retail stores in India for over a decade. There are restrictions on FDI in multi-brand retailing.

Walmart entered India in 2007 in partnership with Bharti Enterprises to operate cash and carry stores under the name of Best Price Modern Wholesale.

In October 2013, Walmart dissolved the partnership and went into the wholesale business on its own, as 100 per cent FDI is permitted in cash and carry.

AIMING BIG
  • Walmart has been trying to open multi-brand retail stores in India for over a decade now
  • There are restrictions on FDI in multi-brand retailing
  • Walmart entered India in 2007 in partnership with Bharti Enterprises
  • Experts said the govt announcement could coax major chains to enter India
  • About 95% of the merchandise sold in Walmart's 21 cash and carry stores in India is sourced locally
Experts said the government announcement could coax major retail chains to enter India. "Companies like Walmart and Tesco may look to embrace this new policy through a special purpose legal entity for trading in specific product categories,” said Amarjeet Singh, partner, tax, KPMG in India.

More than 95 per cent of the merchandise sold in Walmart's 21 cash and carry stores in India is sourced locally.

"Through our Direct Farm programme, we are building a differentiated supply chain. Walmart also has a global sourcing office in Bengaluru,” added Kumar.

Finance Minister Arun Jaitley during his budget speech this year had proposed to significantly relax the FDI policy in several sectors, including food processing, insurance, pensions and asset reconstruction companies.
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