labels: industry - general, retail, markets - general, bharti enterprises
Kamal Nath says government would review Bharti-Wal-Mart dealnews
28 November 2006

Mumbai: A day after global retailer Wal-Mart announced a tie-up with the Bharti group for an entry into the Indian market, the government said it would examine whether the retailing venture is within the "permissible limits" of foreign investments.
While foreign investment is permitted in wholesale trade as well as logistics and back-end support, the government has not allowed FDI in multi-brand retail format.

"We will have a look (at) whether permissible limits have been adhered to," commerce and industry Minister Kamal Nath said on the sidelines of the India Economic Summit. "We will see whether it as per rules and regulations." The government will see the possible benefit to farmers and its impact on local neighbourhood stores, he added.

Under the joint venture arrangement, Bharti would manage the front-end of the business, while Wal-Mart would take care of the supply chain, logistics and other back-end operations.

The CPI(M) has opposed the tie-up between Wal-Mart and Bharti Enterprises saying this was not possible under the existing policy framework and would amount to the entry of FDI in the retail sector through the "backdoor".

"This agreement is not permissible under the existing policy on foreign investment in India. It is an attempt to circumvent the existing policy regulations to gain a foothold in the Indian market", CPI(M) leader Basudeb Acharia said in the Lok Sabha during zero hour .

Demanding government's effective intervention to ensure that FDI did not enter the retail sector through the backdoor, he said the move would "definitely displace massive number of retailers and squeeze the domestic manufacturers by its (Wal-Mart) massive buying power" and create unemployment.

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Kamal Nath says government would review Bharti-Wal-Mart deal