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Battle on retail front moves to cash-&-carry turf

Battle on retail front moves to cash-&-carry turf

Author | Source: The Economic Times | Wednesday, May 02,2007 8:59 AM

Battle on retail front moves to cash-&-carry turf

New Delhi: The campaign against FDI in retail is now going to a different turf. Anti-FDI organisations have alleged that multi-national retail chains are also circumventing rules to get a foothold in the cash-&-carry business.

"We have conclusive evidence of instances where companies have done so. There are several lacunae in the Bharti Wal-Mart cash-&-carry joint venture as well," says a communication circulated by an anti-FDI group to various policy makers.

The campaign has already mobilised support of some prominent UPA leaders, including union ministers Priya Ranjan Das Munshi and Meira Kumar. The joint forum working to stall the entry of foreign retailers in India include Federation of Associations of Maharashtra (FAM), Acorn-India FDI Watch campaign and the Confederation of All India Traders (CAIT).

"It is now obvious that cash-&-carry wholesale is merely a confusing phraseology coined by international companies to conduct their operations in retail trade," the joint forum said in a letter to policy makers. One of the organisations involved in the campaign, FAM, has alleged that a German retailer which got the permission to operate in the cash-&-carry model in India in 2003, has issued cards to employees and families associated with various commercial organisations, including some well-known Bangalore-based IT companies, to show that sales are only being made to a company having sales tax registration numbers.

According to the licence that the german firm has from the government, it can only sell to retailers having a sales tax registration. "The proposed scheme between Wal-Mart & Bharti is also nothing, but an arrangement to circumvent the existing law, both in spirit and letter," the communication says.

"It seems that in the present arrangement, the JV will acquire goods from manufacturers and producers and sell to Bharti's retail venture," it adds.

However, Bharti chairman Sunil Mittal has categorically stated that the cash-&-carry will be an entirely separate business from retail. "The JV will operate as any other company in the cash-&-carry business and sell to all retailers at the same price. There will not be any preferential pricing for Bharti retail," he had said.

FDI in cash-&-carry was opened up to 100% in 2000, at a time when an increasing number of international retail conglomerates had started showing interest in the Indian consumer boom. Subsequently, Metro became the first foreign chain to get a government licence in 2003, followed by the African chain Shoprite.

In the last 7-8 months, almost half a dozen international players, including the British retailer Tesco and the US chain K-Mart have apprised policy makers in India of their intention to invest in the sector.

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