US retailing behemoth Wal-Mart is worried that it is being unfairly targeted with allegations of lobbying in India to gain entry into the country's market, Commerce and Industry Minister Anand Sharma told NDTV today.
Mr Sharma, who is in Davos to attend the World Economic Forum, met Wal-Mart CEO Douglas McMillan there today. Sunil Bharti Mittal and Rajan Bharti Mittal of the Bharti Group, Wal-Mart's partner in its India joint venture Bharti Wal-Mart, also attended the meeting.
Mr Sharma told NDTV that "they (Wal-Mart) feel that there should not be any targeting. But we reassured that we are a rule-based and rule-governed country. This is something which was raised (the lobbying issue), and there is no harm. Had this issue been raised in America, it would have got looked into. The government made a statement in Parliament and I am sure it will be done in a time-bound manner and they are free to make their business decisions".
The US retailer would invest in India in a big way, Mr Sharma said, which will lead to "value addition and job creation" in India.
The Government of India today said it will set up a committee to examine the lobbying allegations levelled against the US retailer. The one-man commission will be given three months to complete its enquiry, and the report will be shared with Parliament.
In September last year, the government sanctioned the entry of foreign super-chains like Wal-Mart by allowing 51 per cent foreign direct investment, or FDI, in multi-brand retail.
The Opposition has been demanding an investigation since November when Wal-Mart, in a disclosure filing in the United States, said that it had spent Rs. 125 crore in the last four years to lobby for "enhanced access" to markets in India and other countries.
Both Wal-Mart and the United States government maintain that the money on lobbying was spent in America, and not in India, where lobbying is illegal.
In November, Wal-Mart informed the US Securities and Exchange Commission that it was investigating potential violations of the US Foreign Corrupt Practices Act in Brazil, China and India, among other markets.
Bharti Wal-Mart suspended several employees, including its chief financial officer, as part of an internal corruption investigation.
Earlier this week, the Supreme Court asked the government to explain in three weeks how it plans to protect the interests of small traders after international retail giants like Wal-Mart start selling directly to the Indian customer.
"Has the policy brought some investment into the country or is it just a political gimmick? Has the policy brought some fruits?" the judges asked, while hearing a public interest litigation that challenges the liberalisation of the vast retail sector. The judges asked the centre to explain what mechanism would protect free trade.
Asked about this, Mr Sharma said earlier today that said FDI decisions should rest with the executive, and that the separation of powers should be respected.
"...I do not know in what context it (the court's query) was said. Executive policy decisions are serious decisions and the constitutional demarcation is very clear - the executive's domain, the legislature's domain, the judiciary's domain. It is important for all the three to respect the separation of power and to not transgress into areas which do not belong to them."
He also said that multinational corporations cannot be expected to take investment decisions in a hurry.
"We shouldn't send messages which confuse or demoralize investors at a time when the Indian economy is going through a difficult phase and when such decisions are made." (Watch full video)
Prime Minister Manmohan Singh's decision to allow 51 per cent FDI in multi-brand retail left his government in a minority, with his biggest ally Mamata Banerjee pulling her Trinamool Congress from the fragile coalition. Ms Banerjee said the flagship economic reform was "anti-people". Virtually every opposition party has said the new policy will rob thousands of small traders of their livelihoods.
At a recent Congress conclave in Jaipur, intended as a brain-storming session for the party to prep for the general election next year, Congress president Sonia Gandhi emphatically supported the need for more reforms.