Walmart CEO writes to PM, seeks open, stable business environment; pressure tactics, says CAIT

Walmart CEO Doug McMillon, in a letter to PM Narendra Modi seeks 'stable, welcoming regulatory environment' to continue to 'invest in creating more jobs and building infrastructure that benefits Indian suppliers and customers'. Domestic retailers body CAIT dismisses the move as 'pressure tactics'.

Walmart CEO writes to PM, seeks open, stable business environment; pressure tactics, says CAIT

Wednesday October 23, 2019,

5 min Read

The CEO of the world's largest retailer Walmart has written to Prime Minister Narendra Modi, seeking a stable and open business environment that protects investments, and demanding a cut in licences and time required to open a store in India.

Doug McMillon, in his two-page letter dated October 11, also raised data privacy and localisation requirements, and wanted corporations to be allowed to transfer customer data across borders.

"A stable, welcoming regulatory environment will allow us to continue to invest in creating more jobs and building infrastructure that benefits Indian suppliers and customers," he wrote.

Recalling his meeting with Narendra Modi during the Prime Minister's US trip last month, McMillon said Walmart was committed to investing in India and increasing sourcing from the country for its global operations.

Walmart CEO

Walmart CEO Dough McMillon

After investing $16 billion to acquire India's largest ecommerce store, Walmart-owned Flipkart and other online retailers were forced to overhaul their business model in line with changed rules governing foreign direct investment.

Reacting to the missive, domestic retailers body Confederation of All India Traders (CAIT) termed the Walmart letter as "pressure tactics". Stating that there was no instability in the economic foundations or policy structure of the government, CAIT said the letter was "pressure tactics" to make headway into the Rs 45 lakh crore business.

In his letter to the Prime Minister, McMillon said high numbers of overlapping permits were a challenge in the retail sector. "On average, we currently need more than 45 permits and three years to open a new Best Price store. This is significantly longer than it takes in the US and many markets in which we operate."

A new Best Price store, he said, contributed to 2,000 direct and indirect jobs. "This is slowing our ability to serve customers and create new jobs," he said. "We would hope to work with your government to find effective ways to streamline licensing and permitting procedures for retail as well."

Doug asked for a "single window" clearance model for retail stores.

Acknowledging the government's concerns regarding data privacy of Indian citizens, he, however, sought that businesses be allowed to transfer data generated in the country overseas .

"Flipkart and PhonePe have invested in local data infrastructure to ensure Indians can benefit from the growth of the data economy in India," he said. "As a company that has selected India as a hub for our global retail technology innovation, we also believe it is important to allow businesses appropriate means to transfer data across borders."

India a 'priority market'

Stating that regulators may have concerns, he said Walmart was willing to work with the government to ensure details of policy do not unnecessarily have a negative impact on the industry.

The letter comes at a time when the world's largest brick-and-mortar retailer is preparing to launch FarmerMart in India. The food retail platform, under Flipkart, will be selling locally-produced and packaged food products directly to customers.

India, he said, was a priority market for Walmart. "We will continue to grow our business the right way in the country."

"Our experience in other markets has demonstrated that an open and competitive retail sector creates jobs, supports small business in agriculture and local manufacturing, and helps to develop a more skilled and diverse workforce," he said.

"With an open, stable regulatory environment, we can better serve Indian communities, source more from Indian farmers and other small suppliers, and add to the more than 1,00,000 direct jobs we already support in the country."

He said there were significant opportunities to grow sourcing from Indian companies to sell within the country as well as outside.

"Over 95 percent of what we sell in our Best Price stores in India is sourced locally. Flipkart has over 1,00,000 sellers that identify micro, small and medium-sized enterprises, and we are confident that the connections we make as we grow our business will allow us to add to the billions of dollars of exports we already source from India."

'A valuation game of numbers'

CAIT, however, in a letter to the Prime Minister decried the pressure tactics by Walmart.

"We would like to bring to your kind notice that the people those who are giving sermons are already engaged in several kinds of unethical and unfair business practices around the globe and have been penalised several times and are facing investigations in different countries. Recently, Walmart was fined $283 million by US authorities over bribery charges in India, Brazil, China and Mexico for the period pertaining to 2011. Walmart has to pay the above amount to US Department of Justice and Securities And Exchange Commission of USA," it said.

The traders body said that business model of Amazon and Flipkart is nothing but a valuation game of numbers to increase market share and completely destroy the basic foundation and market structure of such a robust Indian retail sector, and also find ways to re-route the money.

"The CAIT has urged the Prime Minister not to concede any ground to these unscrupulous corporates or buckle to the pressure they are attempting to create for their own personal gains by disregarding the sanctity of India's well-defined laws and policies," the association said in a statement.

(Edited by Teja Lele Desai)