Franchising Does Not Flout Rule: Bahl

Moneycontrol.com:

Earlier today, Bharti Retail announced a franchise arrangement with Wal-Mart but it did not give details. To a combination of wholesale cash and carry and a franchise arrangement, the Bharti Retail deal can scud the ban on FDI in multibrand retailing without violating it. So, should foreign franchisers be disallowed in areas where FDI is banned?

The Finance Secretary as Chairman of the Foreign Investment Promotion Board in a note for debate, admits that it is possible to flout the ban on FDI in retailing through the franchise route. He refers specifically to the Bharti-Wal-Mart deal and says he wants the FIPB to arrive at a conscious policy on foreign franchising in areas where FDI is not permitted, to the automatic route like retailing, rather than allow it as a default option. Debating this issue are Senior Parter, AZB & Partners, Ajay Bahl and Corporate Lawyer and Director and Chief Executive of ICRIER, an economic research agency, Rajiv Kumar.

Excerpts from an interview given to CNBC-TV18.