Bharti, Wal-Mart finalise retail JV

Despite the controversy on retail, Bharti Enterprises announced that its proposed joint venture with Wal-Mart was on track and well within the country's regulatory framework. "The JV on retail has been finalised and legal agreements are being worked out... We expect to sign an agreement in the coming weeks," Bharti Enterprises chairman Sunil Bharti Mittal said after meeting planning commission deputy chairman Montek Singh Ahluwalia, along with visiting Wal-Mart vice chairman Mike Duke. Significantly, minister of commerce and industry Kamal Nath said after meeting Duke on Friday that there was no plan to allow foreign direct investment in multi-brand retailing. He added there would no review of existing FDI policy regarding wholesale cash-and-carry sectors. The development comes close on the heels of UPA chairperson Sonia Gandhi writing to the PM expressing concern about "the Wal-Mart effect" on domestic retailers, and the need to study the impact of transnational supermarkets on the "livelihood security" of small-store owners. Foreign direct investment (FDI) in multi-brand retail is not allowed as per government policy, but 100% overseas investment is allowed in cash-and-carry (wholesale) business. Mittal added Bharti's JV agreement with Wal-Mart would be for cash-and-carry and back-end linkages and asserted that it was within policy guidelines. "Wal-Mart is going to apply for a joint venture, only in the area where policy exists," he said. Bharti, which recently announced an investment of $2.5 billion in the front-end of retail operations, announced that it would partner the small store-owners through a franchise route. He said: "Bharti Retail will not get a preferential treatment from the JV, as it will supply to the kirana stores". Moreover, after meeting Wal-mart executives, Union agriculture minister, Sharad Pawar said the expertise of Wal-Mart in the area of supply chain will definitely be useful for Bharti to set up their own network. Pawar said, on the face of it, it looked like that under the contract with Bharti, farmers would be able to sell their produce at a better remunerative price. Replying to a query, Pawar made it clear that differences among political parties were limited to permitting FDI in the retail sector and not in outsourcing of agricultural produce.
courtesy:economictimes
For more on Retail India visit www.retailindia.tv