Sonia, Manmohan: Cautious

New Delhi, Feb. 5: Congress president Sonia Gandhi is believed to have requested the Prime Minister to assess issues “relevant” to global retail giant Wal-Mart’s entry into India before taking further decisions.

The appeal, apparently made in a letter to Manmohan Singh, comes a few weeks after the commerce ministry gave clearance to a joint venture between Wal-Mart and Sunil Mittal’s Bharti.

India has not allowed FDI in multi-brand retail yet, but foreign investment is permitted in wholesale trade as well as logistics and back-end support.

According to the arrangement between the two companies, Bharti would manage the front-end of the business, while Wal-Mart would take care of the supply chain, logistics and other back-end operations. The commerce ministry had looked into the proposal, which in normal circumstances does not require any government nod since it falls in the automatic approval route, after the Left said the project would facilitate backdoor entry by a foreign company.

The ministry later said the project, which would be one of the competitors of Mukesh Ambani’s retail chain, conforms to foreign investment rules.

In the letter sent recently, Sonia reportedly sought clarifications from the Prime Minister on how Wal-Mart’s plans for a debut in the Indian market will unfold, sources said.

Sonia said various people who met her shared their concern on the possible impact the entry of transnational supermarkets would have on domestic small-scale retailers.

She requested the Prime Minister to assess the “relevant” issues before further decisions were taken.Congress sources confirmed that Sonia had written a letter. Asked, the Prime Minister’s media adviser said: “I have no idea.” The retail sector was opened up for the first time with the decision to allow 51 per cent FDI but with a caveat stipulating that this will only be for single-brand shops.The Left has objected to allowing FDI in retail. CPM general secretary Prakash Karat had said in a seminar organised last year by an industrial association that employment in the retailsector had increased over the last 15 years and one estimate had it that about four crore people earned their livelihood from retail trade.

Although there is no evidence to suggest that the entry of foreign retailers would reduce job opportunities, Karat had said that monopolistic giants would close the employment avenue.