Since then, there has not been much change in the policy for FDI in MBR except that in the budget for 2016-17, the government announced 100% FDI in food retail - both offline and online. In 2013, it exited the JV with BRL as the very reason d’être for which it had entered into a collaborative arrangement with the local partner was not served. That acted as a spoiler.Īs a result, the retail giant put the idea of getting into MBR on hold and decided to focus wholly on cash and carry wherein the government had cleared the way for 100% FDI. The 2012 policy permitting 51% FDI in MBR came with a plethora of riders (see above) which tantamount to micro-managing the initial investment and subsequent operations.
In the run-up to the discussion on the policy for FDI in retail and in the hope that a conducive policy would be put in place, Walmart was seriously contemplating entry into MBR in a JV with Bharti Retail Limited (BRL). But, this was subject to several restrictions such as minimum investment of $100 million (50% of this should be in building back-end infrastructure), investor sourcing 30% of the requirements locally from small and medium enterprises (SMEs) and prior approval of the state government. It also permitted 51% FDI in multi-brand retail (MBR) or the so-called brick-and-mortar. In 2012, the then UPA-II government liberalised the policy to allow 100% FDI in the wholesale cash and carry business.
This was under the then FDI (foreign direct investment) policy which allowed foreign investor 51% stake in this business. It came to India initially in 2007 in the “wholesale cash and carry” business viz sale to wholesalers and other bulk buyers (including institutional agencies) under a joint venture (JV) arrangement with Bharti Retail. The balance 23% will be with minority investors, including Alphabet (a subsidiary of global internet giant Google) which will invest $1.5 billion.
Walmart, the $500 billion retail giant, has acquired 77% stake in Flipkart, a leading Indian brand in e-commerce segment, with an investment of $16 billion.
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