Saturday, 22 September 2012

Corporate and US Lobbying for FDI in Multibrand Retail

ET reports in July 2012 - Less opposition to Retail FDI now claims Commerce Minister
ET's views had an effect
Some of the opposition to FDI in Multibrand retail stems from the suspicion that this decision was not entirely an independent decision made by the Government of India, and there were pressures by self interest groups put on the Manmohan Singh lead UPA government to make this policy move. It has been alleged that this pressure came primarily from two sources foreign governments on the one hand and big business on the other.

This Hindu opinion piece "FDI in retail — UPA ‘retired hurt’" was published after the withdrawal of this proposal in November 2011. The diplomatic cables leaked by Wikileaks and referred to in the above article as also in another Hindu article, shed light on how Hillary Clinton, who has served on the board of Walmart, which is an Arkansas headquartered company(Bill Clinton is a former governor of Arkansas), had been very interested in knowing what was the position of Commerce Minister Anand Sharma on Multi-brand retail.

The article also refers to the statement made by John Menzer, the CEO of Walmart the 2005 annual meeting while addressing shareholders, how Walmart had "energized the FDI lobby and preempted the anti-FDI lobby" in their 6 meetings with the government. He also said in the same meeting that Wal-Mart does not want to wait for policy changes on FDI and wishes to enter with an Indian joint-venture partner to "take advantage of this market while it's still developing.". Of course the Indian partner was non other than Bharti group. It is important to note that only months before the recent policy decisions the Delhi High Court had issued notices to Bharti Walmart Pvt Ltd for alleged violation of FDI norms. On July 12th 2012, Ranjan Bharti had met Commerce Minister Anand Sharma on this issue.

One need not be concocting a wild conspiracy theory to allege that there was corporate and US government pressure on the Indian government to allow FDI in multibrand retail in such a hurry. There is enough evidence in public domain for one to be suspicious. In July 2012 Economic Times carried an article mentioning the following "Wal-Mart Stores, which has been trying to set multi-brand shops in India for a long time, spent nearly $1.5 million on lobbying in the last quarter ended June 30, 2012 on various issues, including matters 'related to FDI in India.'".

 Bharti does not have a great pedigree when it comes to keeping arms length relationship with the government. The Indian organized retailers have been struggling with excessive debt on their books. Kishore Biyani lead Future recently completed a restructuring of the group's assets in order to reduce debt. The FDI policy change in mulit-brand retails has been a boon for these companies and one can imagine that while the government has been promising a possible benefits to consumers and farmers sometime in future the immediate and certain beneficiaries have been the existing corporations who have ended up in this situation because of growing 'too big too fast'.

All in all the previously mentioned Hindu article by P. Sainath has been quite accurate in predicting that the earlier failed attempt to reintroduce the FDI in retail policy was all but a temporary set back, and as he had said, the team batting for Ms Clinton was "only retired hurt for the moment".

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