Of FDI, Wal-Mart & controversies: An eventful year for retail

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Retail sector courted controversies during the year with several opposition parties making it a political issue. (Reuters) Retail sector courted controversies during the year with several opposition parties making it a political issue. (Reuters)
SummaryRetail sector courted controversies during the year with several opposition parties making it a political issue.

lobbied for its India entry since 2008, except for a few quarters in 2009. The company, however, stressed that it did not pay bribes to anyone in India.

Another issue that created controversy was Wal-Mart's USD 100 million investment in Cedar Support Services, an arm of Bharti Ventures, when FDI in retail was not allowed here.

Now, the Enforcement Directorate is investigating the alleged violation of FDI regulations under Foreign Exchange Management Act, 1999, by cash-and-carry chain Bharti Walmart – the equal joint venture between Wal-Mart and Bharti group.

Not only Indian authorities, Wal-Mart itself is probing allegations of corrupt practices against it in foreign markets, including India. In March this year, the firm started a worldwide review of its policies, practices and internal controls for US Foreign Corrupt Practices Act compliance.

Following this, Bharti Walmart suspended five people, including Chief Financial Officer Pankaj Madan, as part of the global investigation. After this, the JV decided to put a halt on opening of new cash and carry wholesale stores in India pending the probe.

While Wal-Mart hit the headlines in multi-brand, it was IKEA that made news continuously in the single-brand segment.

The Swedish furniture announced plans to invest Rs 10,500 crore in India to open 25 stores over a period of time. It had proposed to invest 600 million euro (Rs 4,200 crore) to open 10 stores in the first stage.

The remaining 900 million euro (Rs 6,300 crore) for opening 15 more stores.

The Scandinavian retailer, however, wanted the government to relax the clause for mandatory sourcing of 30 per cent from MSMEs. After months of dialogue, the government relented and relaxed it for single brand segment.

The IKEA Group, which manufactures and sells home and office furnishing products, applied afresh after the norms were relaxed. In November, the Foreign Investment Promotion Board (FIPB), cleared the proposal but out of 29 products, the

company was prevented from selling 14 items like textile products, consumer electronics, leather products, lifestyle products and food and beverages at its restaurants and cafes.

However, IKEA has approached FIPB again seeking a review of its earlier application so that it is allowed to open cafeteria at its proposed single-brand retail stores. The proposal has already been scrutinised by the Department of Industrial Policy and Promotion (DIPP) in the Commerce and Industry Ministry.

Another proposal that FIPB cleared was that of British footwear retailer Pavers England to

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