Walmart seeks more clarity on sourcing norms from DIPP

PTI Posted online: Thursday, Sep 19, 2013 at 0000 hrs
New Delhi : Walmart Stores, the world's largest retailer, today sought additional clarifications from the government on the 30 per cent local sourcing clause, which is mandatory for companies entering the multi-brand segment.

Walmart Asia chief Scott Price discussed the sourcing provision with top officials of the Department of Industrial Policy and Promotions (DIPP), after earlier meeting them on August 30.

"Walmart has sought specific clarifications on local sourcing norms before firming up plans for India. They want to be perfect in meeting government guidelines as they have had a bad experience previously," a senior official said.

The Enforcement Directorate has been probing Walmart's investment of Rs 456 crore in Cedar Support Services Ltd, a subsidiary of Bharti Ventures, over alleged violations of FEMA rules.

Last year, Walmart said it was investigating allegations of corrupt practices against the company in foreign markets, including India, China, Brazil and Mexico.

In June, the company named Ramnik Narsey as interim head of its India operations, replacing Raj Jain.

The official said the retail giant wants clarity on the "modalities" of sourcing.

"In a day or two, they will send a detailed written query to DIPP seeking clarity," the official said, adding that Price was expected to come back in the first week of October.

Walmart has been seeking clarifications from the government over conditions for foreign direct investment in India's multi-brand retailing segment. In July, the company expressed inability to meet an earlier sourcing norm that required 30 per cent procurement from small industries, saying it could procure only about 20 per cent.

Earlier this month, the government diluted the sourcing clause and allowed global multi-brand retailers to source 30 per cent of their products from small and medium enterprises only at the start of the business.

Besides, they have been allowed to set up stores in cities with a population of less than 10 lakh.