Dangling Euro Investments Foreign Retailers Make Mockery of Indian Retail Regulations
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Sep 29, 2008, 9:08:59 AM9/29/08
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Dear All,
The German Consul-General in eastern India, Mr Gunter Wehrmann, has
warned that German companies would cease to invest in West Bengal if
Metro Cash & Carry is compelled to shut down its wholesale outlet in
Kolkata. Wehrmann has said that "If Metro Cash & Carry does not get
the required licence, this will be the death knell for any future
German investment here in the eastern region. Metro is a household
name in Germany and if they are unable to set up a store here, then
other companies will also follow suit and prefer going elsewhere."
On 29th September, hundreds of hawkers under the banner of National
Hawkers Federation, national partner of India FDI Watch will hold a
demonstration before the Metro Shop in Kolkata which is yet to become
operational.
The Forward Bloc controlled Agriculture Produce Marketing Committee
(APMC) had issued the license to Metro to purchase and sale
agriculture produce in 2005 and renewed it twice but, it was cancelled
in June 2007 amid the controversy over Reliance's entry into retail
sector in Bengal.
However, Buddhdeb Bhattacharya, the chief minister bypassing the
Forward Bloc has ordered APMC to issue the licence to Metro by
September 30. Split over the issue are widening within the Left Front
Govt as Forward Bloc has issued a pullout threat. Asok Ghosh, State
Secretary, Forward Bloc has said that his party ministers would quit
the Cabinet if the renewal order was not taken back by 30 September.
Communist Party of India (CPI) wants CPM to sort out the matter and
Revolutionary Socialist Party (RSP) is examining the case. However,
RSP leaders have taken strong exception to the Chief Minister's knee-
jerk action without taking Left Front partners into confidence.
Metro Cash & Carry is a subsidiary of the German retail giant Metro AG
which has presence in 28 countries at 2,330 locations. It opened its
first Indian business to business (B2B) distribution center, Metro
Cash & Carry, in Bangalore on 22nd October 2003 covering 6,300 sq.
meters. There are around 50 sections, stocking more than 18,000
products including wine.
Metro Cash & Carry has so far invested Rs 140 crore in the project and
recruited and trained 350 people in Kolkata. Mr Henry Birr, Vice
President, International Affairs of Metro Group said, "Metro Cash &
Carry had planned to invest $120 million in West Bengal for setting up
four cash-and-carry wholesale centres in Kolkata alone.
Metro Cash & Carry was given permission to do wholesale cash and carry
business by a letter dated 5.12.2000 with reference no. Foreign
Collaboration letter No.FC. II. 563(2000). 651 (2000) by Ministry of
Commerce and Industry, GOI.
Even in Bangalore, small wholesalers of APMC had protested the
inauguration of the Metro Cash and Carry store. Traders had alleged
that Metro is violating the APMC Act by selling agricultural products
and was acting as a wholesaler to lure retail buyers. The traders
association also filed a case against Metro Cash & Carry.
Violation of wholesale permission by Metro :
In the year 2004, Dept. of Commercial Taxes, Gov. of Karnataka
enquired the matter. Karnataka Govt. found that Metro is doing retail
trade in violation of the conditions imposed in foreign collaboration
approval granted by the government of India. A letter was sent to the
Govt. of India for further action. The cross verification by the Govt.
also found purchases clearly establishing that, Metro is involved in
retail trade. It was found by the Govt. dept. that a large number of
people are purchasing goods for personal consumption rather than to
retail. The business of Metro is causing loss of resale tax revenue to
the State, the dept. enquiry said.
The high court of Karnataka also directed the Govt. of India in
October 2007 to watch the business of Metro Cash and Carry from time
to time.
India FDI Watch campaign organized protest in front of Metro on 25th
October 2007, demanding to plug in the loopholes in the Wholesale Cash
& Carry permission granted to Metro. Now, using the loopholes giant
international retailers such as WalMart and Tesco has entered into
India's retail trade making a mockery of the present policy of India
which does not allow any foreign direct investment in retail trade.
The German Consul-General in eastern India, Mr Gunter Wehrmann, has
warned that German companies would cease to invest in West Bengal if
Metro Cash & Carry is compelled to shut down its wholesale outlet in
Kolkata. Wehrmann has said that "If Metro Cash & Carry does not get
the required licence, this will be the death knell for any future
German investment here in the eastern region. Metro is a household
name in Germany and if they are unable to set up a store here, then
other companies will also follow suit and prefer going elsewhere."
On 29th September, hundreds of hawkers under the banner of National
Hawkers Federation, national partner of India FDI Watch will hold a
demonstration before the Metro Shop in Kolkata which is yet to become
operational.
The Forward Bloc controlled Agriculture Produce Marketing Committee
(APMC) had issued the license to Metro to purchase and sale
agriculture produce in 2005 and renewed it twice but, it was cancelled
in June 2007 amid the controversy over Reliance's entry into retail
sector in Bengal.
However, Buddhdeb Bhattacharya, the chief minister bypassing the
Forward Bloc has ordered APMC to issue the licence to Metro by
September 30. Split over the issue are widening within the Left Front
Govt as Forward Bloc has issued a pullout threat. Asok Ghosh, State
Secretary, Forward Bloc has said that his party ministers would quit
the Cabinet if the renewal order was not taken back by 30 September.
Communist Party of India (CPI) wants CPM to sort out the matter and
Revolutionary Socialist Party (RSP) is examining the case. However,
RSP leaders have taken strong exception to the Chief Minister's knee-
jerk action without taking Left Front partners into confidence.
Metro Cash & Carry is a subsidiary of the German retail giant Metro AG
which has presence in 28 countries at 2,330 locations. It opened its
first Indian business to business (B2B) distribution center, Metro
Cash & Carry, in Bangalore on 22nd October 2003 covering 6,300 sq.
meters. There are around 50 sections, stocking more than 18,000
products including wine.
Metro Cash & Carry has so far invested Rs 140 crore in the project and
recruited and trained 350 people in Kolkata. Mr Henry Birr, Vice
President, International Affairs of Metro Group said, "Metro Cash &
Carry had planned to invest $120 million in West Bengal for setting up
four cash-and-carry wholesale centres in Kolkata alone.
Metro Cash & Carry was given permission to do wholesale cash and carry
business by a letter dated 5.12.2000 with reference no. Foreign
Collaboration letter No.FC. II. 563(2000). 651 (2000) by Ministry of
Commerce and Industry, GOI.
Even in Bangalore, small wholesalers of APMC had protested the
inauguration of the Metro Cash and Carry store. Traders had alleged
that Metro is violating the APMC Act by selling agricultural products
and was acting as a wholesaler to lure retail buyers. The traders
association also filed a case against Metro Cash & Carry.
Violation of wholesale permission by Metro :
In the year 2004, Dept. of Commercial Taxes, Gov. of Karnataka
enquired the matter. Karnataka Govt. found that Metro is doing retail
trade in violation of the conditions imposed in foreign collaboration
approval granted by the government of India. A letter was sent to the
Govt. of India for further action. The cross verification by the Govt.
also found purchases clearly establishing that, Metro is involved in
retail trade. It was found by the Govt. dept. that a large number of
people are purchasing goods for personal consumption rather than to
retail. The business of Metro is causing loss of resale tax revenue to
the State, the dept. enquiry said.
The high court of Karnataka also directed the Govt. of India in
October 2007 to watch the business of Metro Cash and Carry from time
to time.
India FDI Watch campaign organized protest in front of Metro on 25th
October 2007, demanding to plug in the loopholes in the Wholesale Cash
& Carry permission granted to Metro. Now, using the loopholes giant
international retailers such as WalMart and Tesco has entered into
India's retail trade making a mockery of the present policy of India
which does not allow any foreign direct investment in retail trade.
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