More trouble for India ops as Walmart can't meet 30% local sourcing norm

New Delhi: The world's largest retailerWalmart has expressed its inability to the government onmeeting the sourcing norm in the multi-brand segment that requires 30 percent procurement from small industries,stating it can procure only about 20 percent.

According to sources, the representatives of the companyhad met Department of Industrial Policy and Promotion (DIPP)officials in the second week of this month and informed aboutthe company's stand on the contentious sourcing issue.

"Recently there was a meeting between Walmart andofficials of DIPP. The company has said that they will not beable to meet the mandatory 30 per cent sourcing norm and canonly source about 20 percent," sources said.

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However, they said that it would be "really" difficultfor the government to ease this provision as "it is apolitically sensitive issue".

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When contacted, Walmart India spokeswoman said: "We arestill very early in the process on FDI but are excited by theopportunity in front of us.We continue to work with the Government to betterunderstand the rules that exist for FDI and we appreciate theGovernment's willingness to consider our requests for clarityon conditions contained in the new FDI policy".

As per the foreign direct investment (FDI) policy formulti-brand retail trading, at least 30 per cent of the valueof procurement of manufactured/processed products shall besourced from Indian 'small industries'.Several global retailers have raised their concerns overthe sourcing restriction.

In a meeting with Commerce and Industry Minister AnandSharma, the global chains have flagged the issue and havedemanded to alter the condition to 'preferably' from'mandatory' as in the case of single brand retail.Although the government has permitted 51 percent FDI inmulti-brand retail about ten months back, no formal proposalhas been received by the DIPP yet.

PTI