French retailer Auchan is keen to to invest over $2 billion in multi-brand retail in India over the next few years, as it has done in Russia.
The company, which has 13 stores in India under the franchisee route through a partnership with Max Hypermarket India, has sought clarity on whether it can have common back-end facilities for both its foreign direct investment (FDI) and non-FDI ventures.
The new rules, which permit up to 51 per cent FDI in multi-brand retail, stipulate a minimum $100-million investment, with half of this to be channeled into back-end facilities, including storage, warehouses, cold chain and other agri-market infrastructure.
“Auchan has been asked to go ahead and make its proposal for FDI and the details could be sorted out later,” an official in the Department of Industrial Policy and Promotion (DIPP) told Business Line.
Auchan Global Chairman Vlanney Mulliez had met Commerce and Industry Minister Anand Sharma on Tuesday to discuss the company’s plans in India.
“The company representatives said the retailer has invested $2 billion in Russia over 10 years and wants to do the same in India. They said India’s position was even better than Russia’s and there was more scope,” the official said.
Since FDI is allowed only in 10 States in India, Auchan wants to take both the FDI and franchisee route to open 60 stores all over the country.
“The company wants to be sure that it can have common back-end for both its FDI and non-FDI ventures to meet the minimum back-end infrastructure investment norms,” the official added. Multi-brand retail companies such as Walmart and Tesco, that have already invested in back-end operations in India, have been seeking clarity on whether those investments would be counted as part of their back-end investment obligation when they bring in FDI.
The DIPP is not too keen to allow this as such investments are old and were made before the new FDI policy allowing foreign investments in multi-brand retail became operational.
“In Auchan’s case, if the company is seeking to make fresh investments in back-end, there shouldn’t be a problem if it wants the facilities to be common for its FDI as well as non-FDI ventures,” a Delhi-based services sector expert told Business Line.