Indian retailer Bharti Wal-Mart has said it has yet to receive notice of a lawsuit reported to contain allegations it had broken laws on foreign investment.
According to the Indian newspaper Business Standard, environmental activist Vandana Shiva has lodged a case against the company in New Delhi that claims the venture is operating in the multi-brand retail sector.
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The lawsuit alleges Bharti Wal-Mart is indirectly running Bharti Enterprises’ Easyday neighbourhood supermarkets.
The suit said it aims to “expose how many established Indian companies are actually fronting for foreign trading companies that have partnered with them for setting up companies in India for the purpose of carrying on trade, so as to give the foreign partner majority control and economic interest in the Indian retail sector, thereby circumventing the FDI prohibition of multi-product trading in the retail sector”.
Bharti Enterprises says it runs the 187 Easyday outlets. Its joint venture with Wal-Mart operates 17 cash-and-carry stores across India and the US retailer provides back-end support for these stores, which is permitted under FDI guidelines.
When asked for comment, Bharti Wal-Mart said: “We have not received any notice from any court”.
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By GlobalDataIndia currently prohibits foreign investment in a number of sectors including retail. In November last year the Indian cabinet announced reforms, which included a plan to allow foreign companies to own up to 51% of multi-brand retail stores, opening up the market to major retailers. However, these reforms were put on hold in a bid to win more political support for the policy.
