The CPI(M) is now seeking to link Wal-Mart?s presence in India to its opposition to the Indo-US civilian nuclear agreement. It has contended that the entry of US retail giants is part of the strategic relationship that Washington wants to nurture with New Delhi.
?By this deal, not only are the US nuclear reactors going to be imported to India. But Wal-Mart will also come. It will ruin lakhs of small shopkeepers and retail traders,? Prakash Karat, party general secretary, was quoted as saying in the CPI(M) Kerala state committee?s organ Deshabhimani.
In the interview to its affiliated media organisations on the eve of the Left’s five-day campaign against the deal, Karat has maintained that the deal is harmful for the country’s “economic sovereignty”.
“This is not a simple deal. It’ll affect the sovereignty of the country’s strategic relations, defence and economy,” he added.
Meanwhile, the government has sought details of the 50:50 JV with Wal-Mart from Bharti Enterprises. Since government guidelines allow 100% foreign direct investment in back-end retail operations like cash-and-carry wholesale trade, the Bharti-Wal-Mart combine does not need Foreign Investment Promotion Board clearance.
But, given the sensitive nature of the deal, especially after some political parties saw it as a backdoor entry into India by the US retailer, the government thought it fit to call for details of the agreement, official sources said.
Bharti Enterprises has responded to the government?s queries, saying the “joint venture has complied with the applicable requirements of laws and guidelines in India, including FDI”. The company has said that it has entered into a JV agreement on the basis of equal partnership with Wal-Mart to set up wholesale cash-and-carry operations in India. It has also said that the two companies have signed an agreement for technical know-how and high-grade training for the retail venture.
The government has been under pressure from Left parties and traders? organisations to keep expansion by India?s retail giants under check. The Left feels such expansion in various retail formats will cut into the margins of local traders. The Left also alleges that Wal-Mart is using the JV as a pretext to enter India.
In a draft proposal on retail, Left parties have asked the government not to allow foreign retailers like Wal-Mart to provide technical support to Indian partners in cash-and-carry JVs. The government had asked Bharti twice, once on December 1, 2006 and then on February 13 this year, for the JV details.
Bharti had even recently said once FDI in multi-brand retailing was opened, the two companies would like to enter into a JV for front-end retail as well.