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Corporate Jul 12, 2012

PIL against Bharti Walmart for violating FDI policy

A public interest litigation filed in the Delhi High Court on Wednesday alleged that US retail giant Bharti Walmart has illegally been carrying out multi-brand retail despite having permission to only carry out Wholesale Cash and Carry trade (business to business). Currently foreign direct investment is not allowed in multi-brand retail.

Cash-and-carry trade is a form of trade in which goods are sold from a wholesale warehouse and customers settle the invoice on the spot in cash and carry the goods away with themselves.

Reuters

The high court has sent notices to Bharti Walmart, Bharti Retail as well as the central government, seeking their replies on the petition filed by environmental activist Vandana Shiva.

Senior lawyer Pinky Anand, appearing for Shiva, alleged that many Indian companies were acting as "front" for foreign firms to give their offshore partners a "majority control and economic interest" in retail sector.

"This instant case seeks to expose how established Indian companies are fronting for foreign trading companies... so as to give the foreign partner majority control and economic interest in the Indian retail sector," the PIL said.

The retail giants are depriving Indian small traders of their "solitary source of livelihood", it said adding that the activities of foreign companies "adversely affecting the multi brand retailing scenario" here and causing problems to lakhs of people in organized and un-organised sector.

The government had last year cleared FDI in multi-brand retail. But political protests stymied the move.

Walmart entered in a Joint Venture with Bharti Enterprises in 2007 for carrying out cash and carry wholesale trade in India. Protests had prevented Walmart's entry into retail, but, in 2007, it did get a backdoor entry for whole sale only through a joint-venture with Bharti. Their stores go by the names of Easyday and Best Price Modern Wholesale.

"Union of India permitted Foreign Direct Investment only in the cash and carry wholesale sector in India, without implementing appropriate checks to ensure that such companies are not able to intrude the Multi Brand retail sector," the petitioner stated.

Agencies


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