The Indian government is launching a probe into Wal-Mart’s lobbying practices in the country.
After Wal-Mart disclosed to the US Senate that since 2008 it spent $25 million dollars on lobbying including lobbying for improved access to India’s market, the Indian government responded with an investigation. Lawmakers from the opposition who are fiercely opposed to foreign retailer, including the Bharatiya Janata Party and the Communist Party of India-Marxist, reacted with outrage to the disclosure. Representatives of each party say that lobbying is prohibited in India and that bribery is a crime.
According to Financial Times, Wal-Mart stated that the money spent on lobbying was done in the US and in accordance with US law.
In a statement, Wal-Mart said:
“The expenditures are a compilation of expenses associated with staff, association dues, consultants, and contributions spent in the US. Our Washington office naturally had discussions with US government officials about a range of trade and investment issues that impact our businesses in the US and worldwide and disclosed this in accordance with the law.”
However, the Indian government will proceed with its investigation.
It is the latest in a series of setbacks for international operations and comes at a particularly sensitive time here because Indian policy makers recently allowed foreign retailers like Wal-Mart to open stores in the country. The investigation seems to have emboldened opposition lawmakers in New Delhi who are trying to overturn the government’s decision on foreign retailers.
Bharti Wal-Mart operates 18 wholesale stores in India that are allowed to sell goods to other businesses like retailers, hotels, and restaurants. Most of its stores are in northern India, but it had planned to expand in the coming months in the south and west. Those plans have now been delayed.
Wal-Mart’s Indian joint venture also supplies about 200 supermarkets that are wholly owned by its partner’s Bharti Retail.