Worry not, Indian retail does not depend on Wal-Mart: Chidambaram

Even though Wal-Mart’s decision to end a six year joint venture with Indian conglomerate Bharti Group is being seen as a blow to the government’s efforts to attract foreign investment, Finance Minister P Chidambaram does not think the retail sector or FDI in India has taken a setback .

In an exclusive chat with CNBC-TV18, Chidambaram termed Walmart’s departure as a merespec in India’s retail market and said that its absence will not hurt India’s retail sector.

“India’s retail market is driven by millions of standalone stores. India’s retail market has been strengthened by Indian retail chains. So why do we assume that Wal-Mart will make a huge difference to India’s retail market,” he said in an interview with CNBC-TV18.

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[caption id=“attachment_1139297” align=“alignleft” width=“380”]  Finance Minister P Chidambaram[/caption]

Defending India’s FDI policy amid reservations being raised by retail giants P Chidambaram on Saturday had also said that the government will not tweak sourcing norms.

“We have a policy. Genuine investor must work within that policy. It may not be the ideal policy from his point of view. But this is the policy that we have today. You have to take it as it is,” Chidambaram said. “I am confident that one or two multi-brand retailers will enter India before the financial year is out. I think, one is just at the door step,” he said, without naming anyone.

Bharti and Wal-Mart said on October 9 that they have reached an agreement to independently own and operate separate business formats in India and discontinue their franchise agreement in the retail business.

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The US retail giant has been pitching for relaxing local sourcing norms under the foreign direct investment policy for multi-brand retail. The Indian government has said there is no plan to relax the mandatory 30% local sourcing norms for foreign players in the sector.

Meanwhile, Chidambaram said the government is taking a number of steps to shore up the country’s forex reserves.

“Tapering will start. I think Ben Bernanke hinted again today that tapering will start. We are in fact prepared for tapering.” he said.

Chidambaram outlined five steps taken by the government to shore up forex reserves.

“First, we are shoring up our foreign exchange reserves since the FCNRB revised policies were announced, we have had about$ 7.4 billion coming in,” he told CNBC-TV18 in Washington where he is attending an intervention at the IMF Committee plenary meeting.

Secondly, he said the government entered into an agreement with Japan for a $50 billion swap arrangement.

Third, portfolio investment has brought in about $2 billion already while the government is encouraging oil marketing companies (OMCs) to borrow abroad to finance their oil purchases.

Fourth, the government has liberalised ECB norms which bring in some money.

Fifth, there are a couple of telecom investments round the corner.

“I think one of them has already announced the number, $2 billion. That is likely to come in November or December. So a number of things, number of steps have been taken but I think this time Ben Bernanke will be a little more careful, more calibrated and he will perhaps communicate his actions well in advance,” added Chidambaram.

On the NSEL matter he said that if the exchange has defrauded any of its investors or clients, it must pay a price. “The Economic Offences Wing (EOW) of the Maharashtra Police has registered a case. They made one arrest before I left. I didn’t know about the second arrest. Those who have committed the acts of malfeasance or misfeasance will pay a price,” added Chidambaram.