Wal-Mart confident it can fight India’s inflation

Wal-Mart, the MNC that runs a global chain of large discount

department and warehouse stores is of the opinion that the Indian government’s concerns over allowing foreign direct investment (FDI) in multi-brand retail are misplaced. Doug McMillon, Wal-Mart International President and CEO says that he understands the Indian government’s concerns that such a move will affect kirana shops, but does not agree with that view. Giving the example of Mexico which allowed FDI in multi-brand retail in 1991 after a huge debate over whether the move would ruin local retailers, McMillon points out that even now, half the market in Mexico is controlled by local mom-and-pop stores. The lesson one can draw is, “don’t be obsessive about looking after the interests of retailers.”

Reacting to McMillon’s concerns about the delay in allowing FDI in multi-brand retail, Montek Singh Ahluwalia, Planning Commission Deputy Chairman said while the government is still grappling with the issue, many ministries and the Plan body itself is all for allowing it. But these things need to be discussed and debated in a democracy. Inflation was an important concern for a retail chain like Wal-Mart which is all about lowering prices for customers. Although the Indian retail opportunity was promising, McMillon feels that the retail giant was to make a case that “we can help with inflation in India”.

Wal-Mart was deliberately selling onions at purchase price in India to address consumer needs. The way forward was for the government to allow Wal-Mart to invest in more stores in order to make business profits, so that it can plough money back into India’s food supply and cold storage infrastructure, which, in turn, can help the retail chain keep prices low on essential consumer products. It currently has six cash-and-carry wholesale stores and provides back-end support to over 100 small outlets under the Easy Day brand, in a franchise relation with the Bharti Group.