NEW DELHI: Britain's largest supermarket chain Tesco Plc has lobbied with the government for change in certain conditions for multi-brand retail, and promised to consider investments in India in a few months. In his meeting with commerce and industry minister Anand Sharma, Tesco Plc's chief executive officer Philip Clarke sought some relaxation in the 30 per cent mandatory sourcing from small industry and clarification on investment in back-end infrastructure, sources told ET. "There will be important points of clarification in months ahead and then you will hear more from us then," Clarke said talking to reporters after meeting Sharma in New Delhi on Friday.
Tesco wants its purchases from farmers to be included in the 30 per cent mandatory sourcing from micro and small enterprises, a condition the department of industrial policy and promotion (DIPP) will find difficult to relax. Tesco also wanted clarity on whether expenditure on buildings will be considered a part of back-end infra investment, a condition the government could consider favourably. "We cannot consider farm purchase as a part of the mandatory 30 per cent sourcing from MSME as there is no manufacturing taking place. This is not what the multibrand FDI policy says," a senior DIPP official told ET. "On the back-end investment issue, we do not have an objection. How can you have a warehouse without a building," the official said.
The government allowed 51 per cent FDI in multi-brand retail in September last year, but imposed many conditions on such investment. One of these conditions is that at least 30 per cent of the value of products purchased will have to be sourced from Indian 'small industries', defined as one with total investment in plant and machinery not exceeding $1 million. The government has relaxed this sourcing requirement from micro, small and medium enterprises for single brand retail. It said that such sourcing should be preferably from MSMEs, but no such relaxation was given to the multi-brand retail sector.