Wal-Mart Under Fire in India, Government Signals Probe

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India's government was open to an inquiry into lobbying by Wal-Mart Stores Inc., a top minister said on Tuesday (December 11), after reports highlighted that the company spent $25 million in the United States to help gain access to markets including Asia's third largest economy.


Parties opposed to Prime Minister Manmohan Singh's push for retail reforms are pressing for an in-depth investigation to see if any money was paid in India as well.


In a recent disclosure filing, Wal-Mart told U.S. authorities it had spent $25 million on lobbying activities in the United States over the past four years to help win market access to markets including India - considered one of the last major frontiers for global retailers.


India's opposition parties, led by the right-wing Bharatiya Janata Party (BJP), have seized on media coverage of the filing as evidence the company had engaged in lobbying in India, even though the filing referred only to lobbying activities in the United States.


"The government views this with concern and has no hesitation in ordering an inquiry on this, in as much as it concerns payments made in India. We want to get to the bottom of this. We are very deeply concerned about this and we will take all steps to unearth all the facts in this regard. We would announce further steps on this inquiry in the house," Parliamentary Affairs Minister Kamal Nath said in New Delhi.


The policy will allow global retailers such as Wal-Mart Stores Inc to set up shop in the country's $450 billion retail sector, and is aimed at drawing more overseas investment and taming inflation.


Last week opposition lawmakers had tried to stall a bill paving the way for the opening of the retail sector to foreign supermarket chains as they consider their entry as threatening the livelihoods of local family store owners.


However, BJP sought for a judicial probe and demanded that its report be submitted within 60 days.


"I had said in my proposal that there should be a judicial probe and its report should be submitted within 60 days. This is what we wanted. We would like the government to respond whether the government is willing to accept the proposal or not," said BJP leader Yashwant Sinha.


Wal-Mart, which discloses issues and expenditures associated with lobbying in various markets on a quarterly basis in the United States, said the allegations it had lobbied in India were "entirely false".


On Friday (December 7) the ruling UPA government won a second parliament vote on allowing foreign supermarkets into the country, paving the way for Prime Minister Manmohan Singh to press ahead with more reforms, including freeing up a cash-strapped insurance sector.


While the upper house vote was symbolic, the government's victory was a boost for its push to implement a controversial economic reform agenda seen as crucial to reviving growth and reducing a bloated fiscal deficit.


The government had already won a vote on retail reform in the lower house of the parliament two days earlier.


India's economy is set to grow at its slowest pace in a decade in this fiscal year, and the government's overspending on subsidies on fuel and food has prompted global ratings agencies to warn of a downgrade.


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