Wal-Mart Stores Inc and Carrefour SA may need to invest at least $100 million to start retail stores in India after a state panel set terms in its recommendations for opening the market in the South Asian nation."The government will consider and take an early policy decision," Anand Sharma, minister for commerce and industry, said in parliament yesterday. He said India's cabinet will decide on the panel's recommendations, which propose easing ownership rules for stores that sell more than one brand.India bars foreign ownership in multi brand retail operations. Overseas investors are allowed a 51 per cent holding in shops selling one brand, and 100 per cent in wholesale stores. Wal-Mart and Carrefour, who already operate wholesale outlets in India, are seeking to expand in a market that Business Monitor International estimates may double to $785 billion in 2015 from $396 billion this year."International retailers should not have an issue on the quantum of money that needs to be invested," said Saloni Nangia, senior vice president at Technopak Advisors Pvt., a consultant based near New Delhi. "This would surely be a part of the investment they are looking at."
Arti Singh, a spokeswoman for Wal-Mart's India operations, did not respond to two calls on her mobile phone. Mohan Shukla, director of corporate affairs for Carrefour India, did not answer to two calls made to his mobile phone."Allowing foreign investment in retail would be good for Indian consumers but some of the conditions being speculated on could make it difficult to implement," Greg Sage, a spokesman at Tesco Plc, said in an e-mailed response to questions. The UK's biggest retailer has a franchise and a wholesale-supply arrangement with Trent Ltd., a part of India's Tata Group.Trent shares gained 0.3 per cent to Rs1,208.65 at 12:57pm in Mumbai trading. Pantaloon Retail India Ltd, India's largest listed store owner, rose as much as 3.5 per cent, and was trading at Rs326.65. Shopper's Stop, which surged 4.3 per cent yesterday, was trading at Rs412.15. The Bombay Stock Exchange's Sensitive Index advanced 0.1 per cent.Overseas investment in multi-brand stores may be allowed up to 51 per cent, the panel is said to have recommended, a finance ministry official with knowledge of the matter said on July 22, requesting not be identified before a public announcement. The trade minister did not comment on the ownership limit yesterday."The recommendations of the committee of secretaries are very specific," Sharma said. "There has to be a defined percentage which will go only into the building of infrastructure, and the minimum investment as has been recommended should not be less that $100 million."The panel has suggested half the jobs generated by foreign investors in retail should be in the rural sector, and at least 30 per cent of all products should be sourced from small and medium enterprises, Sharma said. The government has not formally received the recommendations, he said.Foreign companies have set up wholesale operations in India to gain a foothold in the nation. Bharti Walmart Pvt., a venture with billionaire Sunil Mittal's Bharti Enterprises Pvt., runs seven wholesale stores, while Carrefour opened its first such store in December. Germany's Metro AG owns six cash-and-carry stores in India, according to its website.
Wal-Mart may open hundreds of retail shops in the country if the rules are changed, Raj Jain, chief executive officer of its India venture, said last year.Allowing foreign direct investment in multi-brand retailing would help cut waste, Jain said in May. About 40 per cent of India's fruit and vegetables rot before they are sold because of a lack of cold-storage facilities and poor transport infrastructure, according to the government.
From / Gulf News