Walmart wants mandatory local sourcing norm reduced to 15%

US retail giant Walmart has askedthe government to reduce the mandatory local sourcing norm to15 percent, saying it cannot meet the stipulated levelrequired to open multi-brand stores in India.

“The company had said that it cannot meet the mandatory30 percent sourcing norm and can procure only about 20 percent from small units. But it has asked to reduce it to 15 percent,” sources said.

Walmart’s demand comes after the government diluted thecontentious sourcing clause last year to allow foreignmulti-brand retailers that want to set up stores in India toprocure 30 percent of their products from small and mediumenterprises only at the of start of business.

The Department of Industrial Policy and Promotion (DIPP),though, has clearly conveyed to Walmart that the governmentwill not ease this clause, the sources said. A Walmart India spokesperson said: “We continue to studythe feasibility of the FDI policy and remain steadfast in ourbelief in the important value Walmart brings to India.”

“Walmart is committed to India and the market. We arepleased with our established and successful cash-and-carrybusiness and plan to grow that business,” the spokespersonadded.The foreign direct investment policy for multi-brandretailing requires at least 30 percent of the value ofmanufactured and processed products procured to be sourcedfrom Indian small industries at the first engagement.Several global retailers had raised concerns about thesourcing restriction.

The government allowed 51 percent FDI in the multi-brandretail sector in September 2012. Only UK-based retailer Tescohas so far applied to open supermarket chains in India.In October, Walmart and Bharti Enterprises ended asix-year partnership after agreeing to independently own andoperate separate business formats in India and discontinuetheir franchise agreement in the retail business.

PTI