The world's largest retailer Wal-Mart has solicited support from the US government for entering the multi-billion dollar Indian retail market, where foreign investment norms are posing hurdles to its entry.
The US-based Wal-Mart Stores, one of the world's top revenue grossers with over USD 400 billion of total annual sales and present in 15 countries, is lobbying hard with lawmakers here to help it expand into India, possibly through
bilateral talks between the related authorities of the two countries.
The company is lobbying with the US Congress members as also the departments of commerce, trade and treasury, among others, to put forward its case on issues like "discussions on India and Foreign Direct Investment", and "enhanced market access for investment in China and India."
Its presence in India is limited to business-to-business wholesale market and back-end supply chain management business
through a joint venture with Sunil Mittal-led Bharti group and it has been trying for many years now to enter Indian retail market, as India does not allow foreign direct investment in
multi-brand retail business, in which Wal-Mart specialises.
The company had signed the JV with Bharti Retail in August 2007 and soon after that it began lobbying with the US lawmakers about its India plans.
As per the lobbying disclosure reports filed by the company with the US Senate, Wal-Mart has since then spent a staggering amount of over USD 11 million (more than Rs 52 crore) on issues related to India, as also other matters, in
over two years now. In 2010 itself, the company spent USD 1.37 million (over Rs 6 crore) on lobbying in the first quarter.
Lobbying is legal in the US and the companies are required to submit a disclosure of the same every quarter.
Interestingly, the latest quarterly lobbying disclosure report comes amid speculations that India might soon propose to permit 100 per cent FDI in multi-brand retail, a development which would allow Wal-Mart to enter Indian retail market.
On many occasions, the top officials of Wal-Mart, which already sees nearly half of its sales coming from outside the now-stagnating US market and is looking to expand further
internationally, have said that India is very important for their future growth.
In February this year, Raj Jain, CEO of Bharti Wal-Mart, the Indian JV, had said that he was optimistic of India allowing FDI in the front-end retail sector, given the
"progressive" nature of the current government.
Besides its wholesale retail venture, Wal-Mart also provides back-end supply chain management and technical upport services to Bharti Retail, which independently operates front-end retail stores.
Walmart has also been sourcing a variety of products from suppliers in India for more than 20 years, for its global operations.
Walmart's office in the southern Indian city of Bangalore, in fact, serves as a Global Procurement hub for the sourcing of merchandise from India and Sri Lanka to Wal-Mart's stores globally. The major products sourced from India include home textiles, apparel, leather accessories, jewellery, and house wares.
Wal-Mart Asia President and CEO Scott Price, during his India visit last month, said that the retail giant would like
to further increase its sourcing from India for their stores all over the world.
Price further also expressed hope that the Indian government takes care of issues related to FDI and "Wal-Mart will keep persisting because its efforts in India is critical to its global growth strategy."
"Confronted with saturated markets in the US and other developed countries, the company needs to establish a bigger presence in emerging markets like India, where modern stores make up just 5 per cent of the country's retail industry,"
Price had noted.
Some estimates peg the size of Indian retail industry at as high as USD 500 billion.
In India also, the corporates have been asking the government to open up the retail sector for foreign players and an industry delegation reportedly petitioned even the
Prime Minister last week on this issue.
However, there have been stiff opposition from some political parties, including the Left, on fears that it would lead to loss of livelihood to millions currently earning their bread through operating small neighbourhood stores.