Walmart chief executive Doug McMillon writes to Narendra Modi, seeks stable business atmosphere in country

Walmart chief executive Doug McMillon reportedly wrote a letter to Prime Minister Narendra Modi seeking a stable business atmosphere in the country, said a media report.

Last month, the Walmart chief had reportedly met with the prime minister during the latter's visit to the US.

Hailing Modi for improving India's position on ease of doing business, McMillon, in his letter, reiterated Walmart’s commitments to India, including investments to empower small and medium enterprises (SMEs), global sourcing from the country and employment generation for the local people while urging for a stable business environment, said a report in The Economic Times.

Walmart CEO, Doug McMillon. Image courtesy - Flipkart.

The Walmart CEO's letter comes at a time when a small traders' body mounted its opposition against the foreign-owned marketplaces, blaming predatory pricing by these two e-commerce companies for a slump in the businesses of traditional retail during the ongoing Diwali festival, said the report.

McMillon called upon the Modi-led government to reduce the number of permits required to open a store in India, highlighting the measures the government took to reduce licensing norms for hotels, said a report in The Times of India.

“On an average, we currently need more than 45 permits and three years to open a new Best Price store. This is significantly longer than it takes in the US and many markets in which we operate. If you decide to take a “single window” approach for hotels, we would be excited to engage in that discussion for retail, too,” the report said quoting the Walmart CEO.

Walmart had told the US government privately in January that India’s new investment rules for e-commerce were regressive and had the potential to hurt trade ties, Reuters reported citing a company document.

The lobbying effort yielded no result at the time—India implemented the new rules from 1 February—but the document underlines the level of concern at Walmart about the rules. Differences over e-commerce regulations have become one of the biggest issues in frayed trade ties between New Delhi and Washington.

“It came as a total surprise ... this is a major change and a regressive policy shift,” Walmart’s Senior Director for Global Government Affairs Sarah Thorn told the Office of the United States Trade Representative (USTR) in an e-mail on 7 January.

In June this year, India had told foreign e-commerce firms such as Amazon and Walmart’s Flipkart that they had to ensure compliance with new foreign investment rules aimed at deterring them from providing steep online discounts, reported Reuters.

Commerce Minister Piyush Goyal had said that while the government was prepared to listen to concerns about its new foreign direct investment rules (FDI), it was committed to protecting small traders from predatory behaviour by foreign-funded companies, the sources said.

In April this year, almost a year into writing a $16 billion cheque for Flipkart, McMillon had said that the retail giant continued to be committed to the Indian market given the huge opportunity that the country presents.

During a two-day trip to Bengaluru, he had highlighted that a level-playing field is important to ensure growth for businesses operating in the country.

Asked about the regulatory challenges in the Indian market, McMillon had said Walmart had operations across multiple countries and complies with local laws in individual markets but asserted that a level-playing field was important and that was what businesses seek.

In December last year, the government had modified foreign direct investment (FDI) rules for its burgeoning e-commerce sector, which had drawn major bets from not only Amazon.com but also the likes of Walmart Inc, which last year bought a majority stake in homegrown e-commerce player Flipkart.

Accordingly, a vendor cannot procure more than 25 percent of products from group companies of the same marketplace where they intend to sell them, sources clarified.

According to the revised guidelines for e-commerce companies having FDI, such vendors cannot make more than 25 percent of their purchases from group companies of the marketplace.