Hiring on, Bharti-Wal-Mart plans to kick off ops by Sept

NEW DELHI: Even as the controversy over FDI in retail is flaring up, the Bharti Group has informed the government that its joint venture with Wal-Mart would start operations in August or September this year.

Recruitment, negotiations with potential customers and market surveys are now on for the project, the group’s company secretary Vijaya Sampath has said in a letter to the Department of Industrial Policy & Promotion (DIPP).

The joint venture’s activity will be in compliance with FDI guidelines and clearances would be sought for all activities that require government approval, says the letter which assumes significance in view of the directive from Prime Minister’s Office (PMO) for a study on the impact of retail giants on small retailers.

“When our business & funding plans are finalised, we expect to commence operations in August-September 2007,” says Bharti’s letter to DIPP. The Mittal family-controlled group is expected to work on two ventures with Wal-Mart and the details are to be finalised soon.

The first venture relates to a retail network by Bharti which will be supported by Wal-Mart’s expertise in setting up back-end infrastructure like logistics, cold chain, sourcing and merchandising. The second one is a Wal-Mart venture for wholesale trading which is expected to get strategic support from the Bharti Group.

“We reiterate our commitment to the growth of the Indian economy and confirm that our activities will be in compliance to the FDI guidelines and government policy in this sector and suitable approvals will be sought where required,” says the letter to DIPP.

Interestingly, it was on the basis of a communication from the Bharti Group that the DIPP had informed the PMO that the proposed collaboration with Wal-Mart does not flout FDI rules. Nothing prevents a domestic company like Bharti from setting up a retail venture and foreign companies like Wal-Mart are allowed to invest in wholesale trading ventures.

However, the PMO has sought a detailed study on the impact of giant retail on tiny vendors like those who sell fruits and vegetables. The study is also supposed to cover the impact on various aspects like retail prices and employment generation due to the advent of retail in organised format.

The Bharti Group has emphasised that its joint venture with Wal-Mart will create employment, probably in reaction to apprehensions that it may lead to displacement of jobs. “Another focus area is the recruitment and training of personnel for the various positions and tasks.We are confident that the sector will create a large number of direct and indirect employment opportunities as well as entrepreneurial growth for the SME segment,” says the letter to DIPP. Officials of the Group have also been emphasising that the JV will become a good source of supply for small retailers.