India's commerce and industry minister Anand Sharma has reportedly asked global retail chain executives not to rush the Indian government into allowing foreign direct investment (FDI) in multi-brand retail, according to online Indian publication Rediff.com.
Rediff.com said Mr Sharma told the CEOs of Wal-Mart, Tesco and Carrefour during a meeting at the current World Economic Forum in Davos, Switzerland, that he could not set a timeline, but the Indian government would take a decision on FDI in multi-brand retail in due course.
According to the report, Mr Sharma told retailers they should continue to invest in 'back-end' infrastructure "in the meantime".
Multi-brand can only come when back-end infrastructure is created, the minister is quoted as saying. "You cannot say that I will have a front-end in the absence of a back-end infrastructure.
"I told them that every investment is an act of trust. Believe in India and you will not go wrong. They should continue to invest in back-end infrastructure. I obviously can't discuss our policy decisions with them. I can only say, count on us."
In July 2010, the Indian government floated a discussion paper on liberalising the politically-sensitive multi-brand retail sector, which is dominated by mom-and-pop stores and employs over 30m people.
The paper said India was losing millions of rupees worth of fresh produce annually due to lack of cold chain and 'back-end' retail infrastructure.
Prior to the meeting with Mr Sharma Wal-Mart International president and CEO Doug McMillon reportedly said India's concerns over allowing FDI in multi-brand retail were misplaced.
According to Rediff.com, Mr McMillon gave the example of Mexico, which allowed FDI in multi-brand retail in 1991 after an intense debate.
"Even now, half the market in Mexico is controlled by local mom-and-pop stores," he is reported as saying. "The lesson I can draw is, don't be obsessive about looking after the interests of retailers."
India currently allows 100 per cent FDI in single-brand retail and 51 per cent in cash-and-carry stores.
